The new tax and emigration change South Africans should know about

 

The draft Taxation Laws Amendment Bill (TLAB), which is open for public comment, will introduce changes for South Africans looking to take their retirement funds abroad.

In an analysis of the proposed change, law firm ENSAfrica said that the changes primarily deal with formal emigration with the draft bill suggesting a much stricter process from 1 March 2021 onward.

“Members of preservation funds and retirement annuity funds may withdraw from such funds if they formally emigrate from South Africa for exchange control purposes and their emigration is approved by the South African Reserve Bank,” said ENSAfrica.

However, it was announced in the 2020 Budget Review that the concept of emigration for exchange control purposes will be phased out.

“As a result, the requirement of formal emigration will be removed and a new requirement for the withdrawal of lump-sum benefits from these retirement funds is proposed, effective from 1 March 2021 – namely, that the person is not a resident (i.e. for tax purposes) for an uninterrupted period of three years or longer.

“It appears that this requirement is intended to apply to three consecutive tax years, although the amendment refers simply to years.”

Changes 

Jean du Toit, head of Tax Technical at Tax Consulting SA, said that under the current rules taxpayers can withdraw their retirement funds prior to their retirement date, upon emigration for exchange control purposes.

This emigration process must be recognised by the South African Reserve Bank in a process known as ‘financial emigration’, he said.

Du Toit said that under the new bill, reference to the emigration process is substituted with a new test that requires a person to prove they have been non-resident for tax purposes for an unbroken period of at least three years.

“This new test will apply from 1 March 2021. How this must be proved other than ‘financial emigration’ remains unclear at this stage.

“Practically, after the effective date, your retirement benefits will be locked in South Africa for at least three years. The proposed amendment signals a big policy shift from a fiscal perspective, but this is one piece to a bigger puzzle that should have those who seek to emigrate on high alert.”

Based on daily interaction with employers, executives and expatriates, Du Toit said that the following groups of people should give this change careful consideration:

  • Does it remain prudent for South African executives to keep taking a tax break and maximising their South African approved retirement savings?
  • Where you have large retirement savings, the opportunity will soon be over to make best possible investment decisions – soon some will go towards cheaper access to finance.
  • South Africans looking to leave in the next couple of years will benefit from at least expediting their process on retirement savings, being they are locked in for 3 years.
  • South Africans who have already left, but who have not yet done financial emigration, should consider doing this within the next 6 months before the window closes.
  • Those who have already financially emigrated, but left investments behind, should reconsider their position.
  • South Africans with children or other foreign beneficiaries, should relook at their investments and to align with this new landscape

www.samigration.com


Nightmare Facing South Africans Abroad with Passport Renewals

South Africans abroad are facing a passport renewal nightmare.

SAPeople editor Jenni Baxter sat down with Adrian Roos MP (DA Shadow Deputy Minister of Home Affairs) and Justin Adams (DA Abroad UK and Europe Chairperson) to discuss the critical situation SA citizens abroad are facing in obtaining their South African passports from Home Affairs and the SA embassies.To assist South Africans abroad the DA, DA Abroad and SAPeople are petitioning the Minister of Home Affairs

Some of the points raised in the discussion include:

  • This is a long-standing issue. For years (since at least 2014), many South African passport renewals abroad have been taking six months… but now this has become the norm, and some renewals are taking around 12 months! The Covid-19 Pandemic has exacerbated this, and Embassies are struggling with a backlog.
  • This is a crisis heading for a catastrophe. Many South Africans abroad are desperate – unsure when they’ll ever get their passports, and facing subsequent problems abroad regarding their healthcare and right to live and work in their new countries.
  • Accessing embassy staff is near impossible for many South Africans abroad – phone calls and emails go unanswered for weeks on end, and direct visits to Embassies that should be open are futile as they turn out to be closed. In the UK, the SA High Commission’s website has been down for over a month. Many desperate expats have turned to SAPeople and the DA Abroad for help.
  • The current process includes a manual application with photos and fingerprints which are then sent in a diplomatic bag to Dirco in SA (along with other documents). Dirco sorts the bag and sends the passport applications to Home Affairs where they handle the manual applications, before sending them back to Dirco, back into a diplomatic bag (perhaps waiting for it to fill) and back to the country abroad. Instead of taking a max of two months which could make sense, it’s taking an extra four months at least!
  • According to Home Affairs the diplomatic bag is sent monthly, but it appears more like they wait until the bag is full.
  • A woman in South America has been stuck since 2018, sending her photos six times! And each time it is only when it finally gets to Home Affairs in Pretoria that an issue with the photos is detected.
  • In SA, for locals, applications have sped up with a turn-around of two weeks. Applications are conducted manually or digitally (in larger offices). Citizens are able to submit electronic applications where their photos are taken digitally and automatically encrypted and sent to the printer.
  • If the larger embassies and commissions abroad could adopt the same digital system as the larger offices in SA, it would save a LOT of time, chopping out the need for any diplomatic bag to be sent to SA. It would dramatically improve matters with only the physical document needing to be sent back.
  • Home Affairs says it doesn’t have the budget, but since March a new tax on some South Africans working abroad is asking them for up to 45% of their foreign income. It appears South Africans abroad are good enough to pay tax, but not good enough to get a decent service from the government.
  • Comparing the situation for South Africans to other foreigners living abroad, many foreign expats wait only two weeks to a month for their country’s passport. India – which is also in the BRICS set of countries – recently announced a two-day turn around, and said if there are any problems, it may take up to two weeks!
  • Communication has not been great with Home Affairs saying Embassies are open, when they’re closed. It’s difficult for many South Africans who don’t live close to their Embassy to travel, only to discover it’s closed. Accessibility needs to be improved – officials need to answer phones and emails.
  • The system appears chaotic at the moment. People have been known to wait eight months and then go into the Embassy and pretend they received notification that their passport was ready – and sure enough, they are handed their passport. Months later they receive a notification that their passport is ready (despite them already having it in their hands for a few months)… which raises many questions!
  • While some embassy staff are very sweet and as helpful as they can be, some are frustrated and South Africans abroad have reported being treated badly by rude staff. Home Affairs’ motto is “we care” but the way South Africans abroad are being treated seems to say something different.
  • South Africans abroad have a right to be treated with respect, and to be helped. A passport is a document that you are constitutionally entitled to and it is the government’s responsibility to ensure you have that right and to help you.
  • There appears to be no understanding at Home Affairs in SA of what a nightmare South Africans abroad are going through. One retort from the office was that “they can just travel back to SA”, but not everyone can just afford a flight back to SA (over £500 from the UK) and travelling to SA is not the only reason a citizen needs a passport.
  • Some desperate expats, who can afford it, are being driven to fly home to renew their passports in SA. The legality of this is unknown.
  • Some South Africans who have had a bad experience with trying to renew their passports are giving up. This will have huge implications on SA. Each South African abroad is a walking advertising board – we’d rather they were saying something positive, and spending their dollars/pounds on holidays and properties back home. (In Australia alone there are over 680,000 South Africans!) There are also foreign investors and potential tourists who are also giving up on SA because of the lack of service at some missions abroad.
  • The solutions seem so simple. It feels like there isn’t a “political will” to look at this challenge (which is why it’s imperative that we get 20,000 people to sign the petition!)
  • The Petition aims to firstly: ask for the Minister to ensure that South Africans living and working abroad have an emergency extension to their passport, just to cover the 6 to 12 months average wait for renewals. This has been successfully done in other countries like Kuwait.
  • The Petition aims to secondly: ask that Home Affairs co-ordinate with Dirco to ensure all the facilities are fully open for business and Covid-safety compliant so that South Africans can get access to renew their passport which is a constitutional right, and for which Home Affairs is responsible.
  • In the longer term, the Petition would like Home Affairs and Dirco to liaise to reduce the unacceptable current turn-around times at many of the embassies and consulates abroad, with solutions like an electronic application process and courier services that applicants pay for, as occurs with other countries.
  • The SA government could be breaking the law, since there is an international law that states a country cannot leave its citizens stateless.
  • If you are absolutely desperate, the DA is able to assist through the Parliamentary process. Write to assist@da.org.za – although this is not a long-term solution.
  • If you are affected, or know someone who is affected, please sign. And please get the whole family and all your friends to sign. Anyone can sign. We have to get 20,000 signatures to take this to Parliament to get a portfolio committee to spark a debate and formally drive this urgent issue so that it can be resolved. We have listened to desperate South Africans’ cries for help, and this is the best way to get the solutions they need.
www.samigration.com


Huge number of refugee documents set to expire soon


Ground up  21 September 2020

Concerns are growing about the number of refugees’ and asylum seekers’ documents expiring at the end of October. The Department of Home Affairs has not said how it intends dealing with the disruption caused by Covid-19, insofar as this paperwork is concerned.

The Scalabrini Centre in Cape Town has written to home affairs asking for the department’s plan regarding documents held by refugees that are on the point of expiring.

“We have not seen the plan. We are hopeful that the department will make it public,” said Sally Gandar, head of advocacy and legal advisor at Scalabrini Centre.

Scalabrini hopes the plan will include longer renewal periods for asylum documentation. It also wants an online renewal system and for people to be allowed to renew their documentation at the refugee reception office nearest to where they live.

Gandar said, “The minister indicated in a parliamentary reply that on 1 January 2020, there were 188,296 active asylum files on home affairs systems, and in a further parliamentary reply that there were 80,758 refugees with active Section 24 certificates recorded on the National Immigration Information System (NIIS). 

“All of these people are affected by the current situation, though in varying ways.” (Section 24 certificates allow asylum seekers to stay in the country for two years.)

Gandar confirmed that home affairs provided for an automatic renewal of documentation for refugees during lockdown. “The directions gazetted by home affairs on 10 June provided for a deemed extension of all documentation issued in terms of the Refugees Act (this includes asylum seeker documents and refugee documents) until 31 July.

“Home affairs gazetted further directions on 31 July which provided for a deemed extension of all documentation until 31 October 2020. These directions are presently in force,” she said.

“The directions state that after the deemed extension date, asylum and refugee document holders will have a month in which to renew their documentation. 

“The impact will likely be that the refugee reception offices across the country will need to expect and plan for high numbers of people coming to renew their documentation within that time frame.”

Despite home affairs’ announcements, refugees and asylum seekers have been struggling to access services during lockdown. They have faced difficulties with banks blocking their accounts, hospitals refusing to treat them and schools refusing to enrol their children. They have also encountered difficulties while applying for unemployment insurance.

A refugee from Eastern Congo, who arrived in Cape Town in 2006 and has two children born in South Africa, said that his asylum document expired during lockdown. He also lost his job during this period. He said he went to the labour department in Bellville to apply for UIF, but was told that his document was not valid. He is struggling to pay school fees, buy groceries and pay rent.

“Nobody would like to employ me with an expired document. Not having proper documents also affects my children’s future. I am struggling to register my Grade 7 child for high school,” he said.

Questions were sent to home affairs spokesperson Siyabulela Qoza and media manager David Hlabane, but no response has been received.

www.samigration.com






The real problem with government workers in South Africa: Ramaphosa

A streamlined, efficient and well-integrated civil service is the hallmark of a capable state, but South Africa has fallen in a number of areas, says President Cyril Ramaphosa.

Writing in his weekly open letter to the public, Ramaphosa said that the government’s key priority is to build a ‘capable state’.

“If we are to build a more capable state we have to seriously and urgently address the shortcomings in the organisation and the capacity of the public service,” he said.

Ramaphosa said that the view that the public service is bloated is misplaced. “Public servants include officials and administrators, but they also include doctors, nurses, policemen and women and teachers who play an invaluable role in keeping the wheels of our country turning.

“The real issue is whether – given its size, cost and needs of our country – the public service is performing as it should. The experience of our people is that in several areas, the state is falling short of expectations,” he said

The president said that there are some fundamental problems in the public service that the government is now working to fix. These include:

  • The ‘political-administrative’ interface, where lines of accountability at the most senior levels of the state have become blurred. Political office bearers such as Ministers, MECs and Mayors often veer towards getting involved in administrative matters that should be the responsibility of professional public servants.
  • Public service managers must be given the space, the means and the resources to manage.
  • Senior appointments are sometimes made on political considerations rather than expertise. This severely limits the capacity and effective functioning of the state.
  • As much as the ranks of our civil service comprise individuals committed to driving government’s programme of action, it has also over the years been associated with patronage. This is manifested through the appointment of people into senior positions based on considerations other than their capability to execute the tasks of the office they are appointed to.

Increased training

Ramaphosa said that the building of ‘a capable, ethical and developmental state’ is now among government’s foremost priorities.

“We want the public service to be oriented towards efficiency, performance and developmental outcomes.” The president said that the civil service should also attract high-calibre and qualified candidates.

“As one of the ways of achieving this, the National Development Plan (NDP) proposes a formal graduate recruitment scheme for the public service. Our people want the best and the brightest in society to serve them.

“The civil service must be seen as a career destination of choice by those who want to make a difference in the life of their country, and not merely as a comfortable 9-to-5 desk job or a place to earn a salary with minimal effort.

“Should some still harbour this view they should take advantage of opportunities to exit the public service to make way for those who are up to the task.”

Wage dispute

Ramaphosa’s comments come as government and public sectors workers gear up for a legal battle around an ongoing wage dispute.

The case focuses on whether the government has to pay almost R4o billion in salary increases to public sector workers. Business Day reports that the government wants the court to declare that doing so will be unlawful.

The increases the state agreed to pay as part of a multi-term wage agreement signed in 2018 were supposed to take effect on 1 April, but the government said it does not have the money to pay.

The issues are expected to come to a head in the coming weeks as workers gear up for the start of strike season in South Africa.

The Congress of South African Trade Unions (Cosatu) says it will begin mobilising for major strike action in the first week of October. The trade federation plans to go on a general strike on 7 October, with the protest focusing on corruption and perceived inaction by the government.

Public wages are set through bargaining with unions and agreements stay in force for three years. The current agreement is in place until March 2021.

However, in February the government asked to review the last leg of a three-year pay agreement because it said it couldn’t afford it.

The coronavirus pandemic has further exacerbated the country’s financial problems with unions and government now set for a showdown.

National Treasury plans on cutting R160 billion from the public sector wage bill over the next three years – a position that has been met with opposition from public sector trade unions

www.samigration.com


Former president Kgalema Motlanthe criticises SA's treatment of undocumented immigrants

News24 -  23 September 2020

 

 Former president Kgalema Motlanthe has bemoaned South Africa's treatment of undocumented immigrants.

Motlanthe said George Bizos had no citizenship and remained stateless for 31 years after the South African government denied him citizenship.

He said there is a rush to send the oppressed back to their troubled homes, rendering them stateless beings floating between borders.

Former president Kgalema Motlanthe has bemoaned South Africa's treatment of undocumented immigrants, saying the country largely excludes migrants from society.

While honouring the memory of renowned human rights lawyer, advocate George Bizos SC, the former president alluded to his dissatisfaction with how immigrants were treated by the government and South African society.

Motlanthe was speaking at Bizos' memorial service, organised by the ANC.

Bizos died at the age of 92 from natural causes on 9 September.

He said: South Africa's undocumented migrants, economic refugees and asylum seekers look for hope and opportunity in South Africa. Yet they have been largely excluded from our society. There is a rush to send the oppressed back to their troubled homes, rendering them stateless beings floating between borders.

Motlanthe said South Africa's treatment of immigrants exposed fault lines in society.

"Population movement[s] are in constant motion and the ghost of the past now set the stage for the conflict of the present. Our response to migrants and refugees have exposed enduring and dangerous fault lines in our societies. Migration remains central to politics, economy, society and formation of culture on [the] African continent.

"This raises fundamental questions to our response as a nation, the politics of identity and the ideals of humanity. What started in the hope for a better future, these treacherous journeys to build a new life are often met with racism, segregation, xenophobia, discrimination and further violence. The critical question is, 'Are we treating these migrants differently to how Uncle George was treated?'" the former president said.

For more than a decade, South Africa has wrestled with the identity of being xenophobic, with many foreign nationals killed, attacked or blamed for the ailing economy.

In February, City Press reported that Home Affairs Minister Aaron Motsoaledi said its processes for undocumented immigrants were inadequate and this was exacerbated by budget cuts, shoddy systems and overburdened state machinery.

Last year, home affairs spent close to R42 million to fly undocumented immigrants to their countries.

Motlanthe said South Africa's approach to foreign nationals was denying

the country a bounty of legal minds such as Bizos. "However, given the opportunity to register into education, to apply their minds, skills and creativity, become professionals in their own right, would we not find a bounty of advocates, specialists, contributors and builders such as Uncle George?" he said.

Bizos – famously known as former president Nelson Mandela's treason trial lawyer and confidant – fled Nazi-torn Greece, his country of origin, at the tender age of 13. The family immigrated to South Africa.

Motlanthe said Bizos, who he affectionately called 'Uncle George', had no citizenship and remained stateless for 31 years after the South African government refused him citizenship on the grounds that he was not fit and proper.

Owing to his undiminished and relentless spirit, this challenge did not stop Bizos from being a loyal contributor and builder of South Africa, Motlanthe said.

www.samigtration.com