Tax relief on South African pension and annuity income
If you’re a South African emigrant and you draw a pension or annuity from South Africa you could save a substantial amount on tax.
The Double Taxation Agreement and tax exemption
As a tax resident of your new country you will typically be taxed on your worldwide income, but you may already have been taxed in South Africa on this ’foreign sourced’ income – even though you are not a tax resident there anymore. Essentially this means that you could be liable to pay tax on the same income in South Africa and your new country of residence.
Luckily South Africa and certain countries have a Double Taxation Agreement (DTA) in place to assist South Africans living abroad. The purpose of this agreement is to eliminate double taxation, which means you may be eligible for tax relief.
In order to qualify for the tax relief in South Africa, you will need to submit a special application to SARS. The administrative process can be challenging, which is where cashkows.com is ready to assist.
Most periodic pensions/annuities are taxed in full in South Africa, however you will need to include the gross income in your tax return in your new country of residence. If there’s a DTA in place between your country of residence and South Africa, the DTA could state that your periodic pension/annuity is only taxable in your new country of residence.
The RST01 – directive to insurer to stop further tax deductions
In addition, an RST01 (Application by Non-Resident for a Directive for Relief from South African Tax for Pension and Annuities in terms of a DTA) application should be submitted to SARS. SARS will then issue a directive, which will instruct the relevant insurance company not to deduct any further income tax from your periodic pension/annuity income. This application has to be renewed annually.
This relief will also typically – depending on your circumstances – provide you with a tax saving due to the difference in marginal tax rates between the two countries.
cashkows.com can process your tax relief
Applying for tax relief can be a lengthy and confusing process. Following the wrong procedures could also make you guilty of non-compliance, which could see you face hefty fines and surrender large portions of your income to authorities in South Africa or abroad.
cashkows.com can take this administrative burden off your hands. Our services are compliant, efficient, and ensures the greatest value for South African emigrants abroad.
In addition to being fully compliant with revenue authorities in South Africa and abroad, we will ensure that you receive the optimal benefits due to you under foreign tax treaties and that the admin process is expedient.
So if you, or your elderly relatives or friends living abroad are struggling with their RST01 or RST02 applications, we can assist you with this process and ensure that you don’t surrender unnecessary funds to the tax man on either side of the pond.
I recently had a great experience with CashKows and the transfer of my SA retirement annuities to Ireland. CashKows also offered to submit a closing tax return to SARS.Mike Louw