Conveyancing is the name given to the specialized process of transferring immovable property from one person to another. A Conveyancer is an admitted attorney who has passed a specialized exam and been admitted in the High court. In a nutshell, conveyancing encompasses all property related work, including the registration of transfer of immovable property (such as vacant land, flats, commercial or residential property), bonds over immovable property as well as subdivisions and consolidations of property in the deeds office.
It is always the sellers’ right to appoint a Conveyancer, only when the seller and purchaser agree otherwise may this rule change.
Once the Conveyancer has received this instruction, their tasks include making the seller and purchaser fully aware of all the important dates, ensuring the purchaser has paid their deposit and checking that bond approvals have been granted on time. Once all the necessary information and documentation has been gathered, all the documents signed and receipts and clearances received, the Conveyancer will then lodge the transaction for registration at the deeds office. From lodgment, the examination process takes roughly six to nine working days before they come up for registration. The Conveyancer will continue with registration if all monies for the purchase price have been paid or secured by a guarantee or bond and all costs have been paid.
The ‘Agreement of sale’ or ‘Offer to purchase’ normally sets out where the deposit must be paid normally to the Conveyancer and into their trust accounts. The Conveyancer will invest it on your behalf, and the interest earned will be paid to you on registration of transfer.
The seller or purchaser may sign a special power of attorney authorizing another person to sign all documents on their behalf. This is handy if you have bought or sold property and you are not in the country. Due to South African law, any documents signed outside the borders of the country have to be signed according to strict procedures i.e. before a Notary Public or member of the South African Consulate or both (depending on which country you are in).
This is basically a declaration regarding whether you are married or not, and if you are married, whether you are married in or out of community of property, according to Moslem rites or according to the laws of any other country. The Conveyancer needs to know this as the documents will be drawn up according to this status.
This document is submitted to the receiver of revenue when transfer duty is paid. It confirms that the purchase price stated in the Agreement of sale is the correct one. This declaration also needs to state your income tax number, and if you are not registered for income tax, your annual income from all sources.
FICA (The financial Intelligence Centre Act) requires individuals to provide the following documentation in order for the attorney’s to transfer a property into your name.
Upon signature and payment of your deposit you will need to make a bond application through the appointed bond originator. Contractually you have 30 days in which to do so. If you do not wish to make use of the appointed bond originator, the developer is unable to absorb the costs of transfer, i.e. conveyancing attorneys, bond attorneys and transfer duty (if your purchase is over R500,000). The appointed bond originator will require copies of your ID, three months bank statements and proof of income in order to make the application on your behalf to a financial institution. When your bond is approved, your bank will forward the bond registration instructions to the Conveyancer. The documents will then be drawn up in accordance with the transfer documentation and banks instructions. You will have to sign all of these documents, including the Mortgage loan agreement, which sets out the interest rate, installments and terms, the mortgage bond which gets registered at the deeds office as well as affidavits and the debit order authority.
The Conveyancer attending to the transfer and bond registration will handle all the transactions.
Once the deeds are lodged, they are examined by a junior and senior examiner. The chief deeds controller then makes the final decision whether to pass or reject them. If the deeds get passed, they must be handed in for registration to take place the next working day. Deeds may be rejected for various reasons, such as a discrepancy regarding the spelling of names, ID numbers, Erf descriptions etc. If it is something that can be easily remedied, the Conveyancer will re-lodge the deeds after amending them.
You will be provided with 30 days written notice of occupation. This “Occupation Letter” will include all details regarding the handover of your unit
The Financial Intelligence Centre Act (hereinafter referred to as "FICA") was passed by Parliament in December 2001 and is being promulgated in a phased approach. FICA effectively establishes a partnership between the private and the public sector to assist in the identification of proceeds of unlawful activities thereby combating money laundering activities. In terms of FICA, the Money Laundering Advisory Council and Financial Intelligence Centre (hereinafter referred to as "FIC") were established.
All accountable institutions including estate agents, attorneys, banks, insurance companies.
Money laundering is the process of manipulating the proceeds of crime in order to conceal the nature of its true source. Money that started out dirty will end up clean and any act in connection with any proceeds of crime, whether it is in the form of money or property or any other form can constitute a laundering offence.
FICA imposes the following four categories of duties on estate agents:-
1. The duty to establish and verify the identity of clients, commonly referred to as the "know-your-client-requirement" An estate agent may not establish a business relationship with a client unless the estate agent has taken the prescribed steps to establish and verify the identity of the client.
2. The duty to report suspicious transactions to FICA
3. Submitting of report
A report has to be submitted as soon as possible, but not later than 15 working days after the suspicion arose.
4. Internal Administrative Duties
Tipping off is a serious offence and you might be prosecuted. As a result, no tipping off is allowed.
Penalties for non-compliance Imprisonment for a period not exceeding 15 years or to a fine not exceeding ten million rand.
General guidelines to consider
Suspicion arises in our opinion if:
Hints on reporting
Continue with the transaction and continue to provide the same level of service that you usually would. Treat all clients with courtesy even if they refuse to answer your questions. Do not tip off and proceed to report the suspicious transaction in the prescribed manner. The above should be seen as very brief comments on FICA and our interpretation thereof For further information contact us or SARS.
Normally property is bought through a Real Estate Agent, realtor or broker. Should you consider purchasing a property privately, it is recommended to involve a reputable estate agent or conveyancer to assist you. The South African government allows foreigners (individuals who reside outside the countries borders) to purchase property in South Africa, subject to Reserve Bank approval, either as: Natural persons Legal entity (C.C / Company / Trust) (Legal entity may take up to 30 days to be registered) Foreigners / Nonresidents may utilize local mortgage bond finance on the basis of 50% cash being brought into the country via Reserve bank approval. On finding a suitable property, a nonresident can submit a written offer to the owner of the property to purchase the property, subject to a maximum of 50 % bond from a local bank (an "authorized dealer") and subject to Reserve Bank approval, which may take up to 14 days, for written confirmation.
The mortgage bond finance approval from a bank is based on :
All offers to purchase property in S.A. must be made in writing to be valid. (Any advise required must be sought prior to committing an offer in writing) Once the seller has accepted an offer (in writing) a contract comes into being, even if it contains any suspensive conditions e.g. Subject to the approval of mortgage bond finance and approval by the Reserve Bank. Normally all conditions are linked to a definitive time scale. Purchasers are then bound to the contract, unless the purchase price is below R250 000, when the purchaser has a "cooling-off" period in which they may withdraw their offer. (Please discuss this with an agent) South Africa has a sophisticated, dependable banking system with healthy competition amongst the individual banks on products and rates. Funds are secure and the transfer of funds to registered banks are guaranteed. Once funds are received and guarantees are called for by conveyancing attorney these maybe released to the attorney pending registration of transfer (ownership) Ownership can be partial or wholly-owned by foreigners, with the following property ownership: Freehold – most common (Residential dwellings) Sectional title (Multi unit dwellings) Leasehold Share block Extra costs included, are over and above the purchase price: Transfs charges a er duty – government tax. Transfer fees – Conveyancer's fees. Bond registration fees – bank nd legal fees for registering a bond. The above fees are based on a tariff recommended tariff. Normally these fees are approximately 7% of the purchase price.
Except in cases where the seller is registered as a VAT (Value Added Tax) vendor, trading in property, VAT is applicable, included in the final selling price, and payable by the seller. Property may be rented out/leased to others, in which case rental incomes less maintenance costs are taxable. Property may be sold or exposed of, in the normal manner and foreigners are allowed to repatriate these finds back to their own countries without penalty. South Africa is a very beautiful and diverse country spread over a fairly vast area, ranging in different climates, vegetation, rural, urban, coastal, inland, mountainous, flat, busy, quiet aspects …. there is a place for everyone. We hope we can help you find your "little piece of paradise" in our country. Once a decision has been to purchase a property in South Africa, one should adhere to the following guidelines: Check exchange rates of your currency with the South African rand. Consider you affordability and financing options. Decide on "where" you’d like to own property: A Gauteng (Johannesburg) the financial "capital" of South Africa. The beautiful coastline – Kwazulu Natal / Cape Conduct "Some market research" Speak to people you may know, reputable agents, business contracts etc. about your ideas of purchasing. Consider your motivation / reasons of wanting to purchase. Ask as many questions as possible.
Obtain information on South Africa and the various regions – utilize the web, contact the embassy etc. As is worldwide every area has up market, middle and lower market areas. Prices range from relatively "cheap to expensive", certain areas are "more secure/exclusive" etc. Individual properties range from "freestanding" freehold, to high-density sectional title. All properties are subject to monthly council charges or levies. Generally the property market price ranges are: Lower (up to R300 000) Middle (R300 000 to R600 000) Middle/upper (R600 000 – R1000 000) Up market (R1000 000+) In the exclusive areas prices can easily range from R2 500 000 to R10 000 000. In cluster/sectional title complexes – the fewer the number of units the more exclusive. Key factors with pricing include: Locality within an area "views" "curb" appeal Security Activities, schooling etc. The South African public transport system is generally considered to be fairly poor, with individual vehicle ownership being a high priority, road traffic and distances, should be carefully considered. Local business is relatively decentralized to nodes surrounding the entire Johannesburg CBS to access to – and transport are important factors. Once you feel satisfied with your investigations – you can get down to the business of finding a property.
“Helping Homes Find Families and Families Find Homes.”
The three factors to consider in selling your home are location, condition and price…and they’re all related.
Your home’s location and setting, influences its value. A home inside a quiet subdivision sells for more than the identical home on a busy street. Remote areas typically, sell for less than closed in areas. Views, streams and trees usually enhance value. You obviously have no control over location.
New homes enjoy a marketing edge over re-sale homes because they are shiny and clean. Builders enhance their appeal by offering model homes (clean, bright, decorated in current colours and amenities) for buyers to examine. You have nearly complete control over condition and you can increase value and decrease marketing time by being in the best possible condition.
If IBM stock is trading between 104 and 108, it does no good to insist on 112. Likewise, your home must be priced within the appropriate range. You must actually “sell” your property twice: to a buyer and then to a bank valuator. The buyer is more subjective and compares the amenities you offer to what other sellers in the same price range are offering. The appraiser is more objective and compares age, size and cost-identifiable features in your home against other properties that have sold.
The following checklist sets a good example – without getting you involved in major renovations or full scale redecorating projects. Since first impressions are formed from the street, the list starts outside your home:
Once they enter your home, prospective buyers are most interested in checking items that will help them assess its overall condition. That’s why it’s very important to remember jobs like these:
Here are a few pointers to remember when you know that prospective buyers are going to call:
Don’t let the radio or TV compete with the salesperson’s voice.
As a matter of fact if you follow the checklist, you won’t feel it is necessary!
Accepting an offer
Accepting an offer to purchase is the first step in a legal contract and should contain very clearly everything you can or intend to do, and exactly what you expect to receive…this is where we can be of assistance. We will ensure the offer accurately reflects your intentions, all details are correct, correctly identified property, mortgage information properly stated.We have a standard offer form, which contains pre-printed standard clauses as well as the inserted information. Once you understand the offer and are certain it states everything you wanted stated…then it can be signed. Once signed you have taken the first step to selling a home, once a contract has been signed it is a binding agreement and subject to the laws governing
When the Agreement is being presented – be specific! Make sure that you understand all clauses and addendums added to the contract. Avoid misunderstandings. If you wish substitutions or/and any unusual extras include them in detail. Being clear and specific at the outset can save time and possible complications later.
Explaining 72-hour clause
A 72-hour clause is added to a deed of sale when there are suspensive conditions these can be:
a) 100% bond plus costs – this means that the buyer wishes to include the costs in the purchase price. Bank approval has to be gained first should the bank not approve the costs the client either has to pay cash for the costs or the sale becomes null and void.
b) Successful sale of property – the deed of sale is subject to the successful sale of the buyer’s property.
c) Should there be a 72-hour clause on an offer that has been accepted by the seller, the seller is entitled to accept other offers on the property. Should any of other offers (that is any offer received after the initial offer) become final (bond approval is received) the previous purchaser (the first offer) is given 72 hours to meet all suspensive conditions
Any other addendums should be given in writing and not done verbally. Addendums can cover a wide range of clauses. The most common addendum being the one that refers to fixtures and fittings or any work or repairs that needs to be done.
What to expect from buyers
Sellers please be patient:
Buyers will check that lights work, toilets flush, cupboard doors are aligned, they are not being nosy or rude. There is a voetstoots clause in the deed of sale which means as is. The buyer has the right to check what he is purchasing and to request that certain items be repaired before sale is final, this is not always the case but it can happen. Buyers coming through the property may make up their mind on the first visit as to whether they will make an offer to purchase or not. The old saying “First impressions are normally the most lasting” is very true here. Sometimes a buyer will come back with different family members to view the property.
Help to make the transition an easy and pleasant experience
When listing your house with an agent please make known all defects and what you are prepared to fix and what you are not going to do. If you have plans for an extension or any additions please keep them handy as the purchaser may want to view what you had in mind.
Handy Moving Checklist
Just a reminder of some items that you should take care of before you move out of your house and into you new home.
5 Star Marketing
Building through a developer
You may have seen advertisements by companies who are building a complete new residential area. The property developers arrange fir the roads, electricity, water and other services and divide the land into building stands. They can offer you a stand and a choice of building plans. Sometimes the developer will agree to change the plans to suit your exact needs. You will also be able to decide what fittings or finishes you like best such as tiles, carpeting, and light fittings. The developer will also offer all the finance you need to buy the stand and build your new home. Before you decide to buy from a property developer check on their previous developments. Are they (developments) attractive and well built? Have the homeowners had any problems with their homes or with the development?
LOOK AROUND AND ASK AROUND BEFORE YOU SIGN ANYTHING
Information Guide to Conveyancing 1. What is conveyancing? Conveyancing describes the legal procedure whereby ownership of immovable property is changed (i.e. ownership is “conveyed” from the existing owner to the purchaser)
2. Conveyancer’s actions on receipt of the deed of sale 1. It is self-explanatory that the Conveyancer in performing his duty will be guided by thecontents of the Agreement concluded between the buyer and the seller as recorded in the Deed of Sale. The Conveyancer is therefore, is compelled to “Bake the Cake” in accordance with the “Recipe” prepared for us in advance! 2. On receipt of the Deed of Sale, the Conveyancer will immediately conduct a Deeds Office Search. This search will reveal the following:
A) The full Deeds Office description of the property being sold
B) The full details of the current registered owner C) The full details of any bonds held over the property D) The full details of any interdicts recorded against the property.
3. Existing Bond on the property
1. The Conveyancer will simultaneously with the above, address a letter to the current bondholder advising the bondholder of the fact that the property has been sold and calling upon the bondholder to forward the Deed to the Conveyancer. He will simultaneously ask the bondholder to advise the Conveyancer of the amount required to pay off the existing bond on the registration of transfer and request the bondholder to instruct his own attorneys to prepare an appropriate Consent to Cancellation of the existing bond. This latter form will be prepared by the bondholder’s attorneys, signed by the bondholder and returned to his attorneys for purpose of subsequent lodgement at the Deeds Office. As most financial institutions are unable to trace the file in which the Title Deed and Bond are retained without an account number, it is important that the particulars if the bond account number be reflected in the information section of the Deed of Sale.
2. The Conveyancing Attorney will in due course receive a response to his letter to the existing bondholder. This letter should have enclosed the Title Deed and would have stated the amount required by the bondholder on cancellation of the bond. Should the purchase price be sufficient the Conveyancing Attorney will address a letter to the attorneys representing the bondholder promising payment of the amount required on date of registration at the Deeds Office.
3. The role of the Municipality The Conveyancer will simultaneously write to the Municipality Authority having jurisdiction over the area in which the property is situated and will request from them the following information / documentation.
1. A valuation certificate in which the Municipal Valuation of the property is stated, thisdocument is required for the purposes of obtaining a Transfer Duty Receipt from the Receiver of Revenue.
2. The amount, which the Municipal Authority requires payment of as a prerequisite to theissuing of a rates clearance certificate – in terms of the law, no transfer of any property may be registered in the Deeds Office unless the relevant Municipal Authority has provided permission. This permission is termed “Rates Clearance.” It is important to note that in obtaining a Rates Clearance, one is compelled (regardless of any arrangements which the seller might otherwise have had with the municipal authority) to pay the full amount of rates payable on the property to the end of the current rates year. Municipal Authorities furthermore demand various other categories of payment in advance e.g. water and service charges. Part of the amount payable to the Municipal Authority will be for the account of the seller and part for the account of the purchaser.
4.Preparation of preliminary documents On receipt of the Deeds Office particulars and subject to all suspensive conditions having been fulfilled, the Conveyancing Attorney will proceed to prepare his “preliminary documentation.” These documents comprises the following:
1. Power of Attorney - in which the seller authorises the Conveyancing Attorney to act on his behalf and to appear at the Deeds Office for purposes of registering the transfer of ownership at the end of the day. This document will have to be signed by the seller personally, or by somebody authorised in terms of a written Power of Attorney to sign such a document on behalf of the seller. It is therefore self-explanatory that if the seller is going to be away during the relevant period the transfer will be delayed unless adequate arrangements are made before his departure.
2. Declarations by the purchaser and seller to the Receiver of Revenue. As you are no doubt aware, transfer duty is payable to the Receiver of Revenue arising from sales of Immovable property. This transfer duty is a percentage of the purchase price. The Receiver of Revenue is therefore quite anxious to ensure that he is fully advised of the actual purchase price and that such purchase price furthermore amounts to a fair and market related price. The declarations that the buyer and seller will therefore have to sign serve to confirm all of the above facts. Should the purchase and the seller therefore have reached some “private agreement” in terms of which the purchase price as stated in the Deed of Sale is not a proper reflection of the actual purchase price then these declarations will serve to frustrate the endeavours of the parties as stated above.
3. Affidavits to be signed by the purchaser and the seller confirming their correct names, identity numbers, marital status and solvency.
Signature and Costs
When these documents are ready the parties will be contacted by the Conveyancing Attorney with a view to arranging an appointment for the signature of the documents. On signature of the documents, the Conveyancing Attorney will ask the purchaser to settle the transfer costs. The account which the Conveyancer will present will comprise four segments being the following:
1. Tax year
The South African tax year runs from 1 March to 28/29 February.
2. Tax Rates
Income is taxed in South Africa in accordance with progressive tax rates, i.e. higher income is taxed at higher rates.
3. Registration requirements for individual income tax
All taxpayers who earn income exceeding R60 000 per annum are required to be registered as taxpayers with the South African Revenue Service (“SARS”). This process does not happen automatically on entering the country. Individuals who earn in excess of R10 000 in investment income are required to register as provisional taxpayers. In addition to these stipulated instances, SARS reserves the right to classify any taxpayer as a provisional taxpayer.
4. Tax returns and payment of taxes
Tax returns are prepared annually and are typically due in the middle of July. Provisional taxpayers may be required to submit up to three provisional tax returns during the course of the year (August and February with an optional third return being due at the end of September). In most instances employees’ tax (commonly referred to as PAYE) is withheld from earnings by employers on a monthly basis. An assessment will be issued by SARS to each taxpayer who submitted a tax return. This serves as proof of taxes paid.
5. Basis of taxation
The South African tax system is residence based. South African tax residents are subject to tax in South Africa on their worldwide income while non-residents are liable to tax in South Africa only in respect of income from South African sources. Tax residence Tax residence is established either through being considered ordinarily resident in South Africa or through physical presence in South Africa over a period of six tax years. Although “ordinarily resident” is not defined in the Act, it is held to be the country that you consider to be your real home, the country you will return to at the end of your “wanderings”. An individual will trigger tax residence through physical presence during the sixth tax year of being physically present in South Africa if such individual was present in South Africa for more than 91 days during the current year of assessment and each of the 5 preceding years of assessment and present for a period exceeding 915 days in aggregate during the previous 5 years of assessment.
For ordinarily resident taxpayers, tax residence can be broken through a change in intention as substantiated by facts, typically on emigration from South Africa or at such time that an individual decides that he/she no loner considers South Africa to be his/her real home. Individuals who established tax residence through physical presence will break tax residence through physical absence for a continuous period of 330 full days.
6. Capital Gains Tax
Tax residents are subject to Capital Gains Tax (“CGT”) in South Africa on the disposal of their worldwide assets. Non-residents are subject to CGT in South Africa only on the disposal of fixed property, held directly or indirectly, located in South Africa. On breaking tax residence, CGT will be payable on the deemed disposal of a tax resident’s worldwide assets (excluding South African fixed property), i.e. the growth in value from the date of establishing tax residence to the date of breaking tax residence will be regarded as a “capital gain” and CGT will be payable. Rate of CGT 25% of the gain is included in the individual’s taxable income and taxed at the applicable marginal tax rate. An annual exclusion of R16 000 is currently applicable to the aggregate gain or loss in any particular year.
7. SA tax on earnings for services rendered in and outside SA
As indicated above, non-resident for South Africa tax purposes are taxable in South Africa on income from a South African source or deemed to be from a South African source. In terms of the principles laid down by the courts, any income earned in exchange for services rendered in South Africa, will be taxable in South Africa as the source is in South Africa. Concerning other services that would be rendered outside South Africa, one needs to look at where the wits, skills and labour of the person providing the services are exercised. Should the wits, skills and labour be exercised in South Africa, the source of the income earned would be in South Africa.
8. Fringe benefit tax Rental paid by your employer
The provision of housing to an employee is generally considered to be a taxable fringe benefit, subject to certain conditions. In terms of the Act, the value of the benefit is the greater of the benefit determined in accordance with a remuneration based formula (generally applied where the use of a company owned house is provided), and the total amount of the rentals payable for such accommodation by the employer, or associated institution in relation to the employer, and any other expenditure defrayed by the employer in respect of such accommodation. Where a cash housing allowance is granted to an employee, such allowance will be taxable as cash remuneration. In the case of employer-provided accommodation, relief may be available in terms of Paragraph 9(7) of the Seventh Schedule in terms of which no taxable value shall be placed on any employer-provided accommodation while an employee is absent from his usual place of residence for the purposes of performing the duties of his employment. The length of time for which the benefit may continue to be provided tax-free is limited to two years. The interpretation of sub-paragraph has been a contentious issue as the Act does not specifically define the phrase “away from his usual place of residence”.
It is however important that each individual expatriate employee’s particular circumstances be evaluated in order to determine whether Paragraph 9(7) of the Seventh Schedule can be applied.
Use of motor vehicle provided by your employer
Generally, when an employee is granted the use of company vehicle, that vehicle is essentially for the exclusive use of the employee and is used for both personal and business purposes. The provision of a company motor vehicle constitutes a taxable benefit in the hands of the employee, which is taxed at a rate of 2.5% of the determined value of the vehicle (excluding VAT) per month. Where an employee is granted the use of a second vehicle, the monthly taxable benefit is calculated at a rate of 4% of the determined value of the vehicle with the lower value, and 2.5% is applied to the determined value of the vehicle with the higher value. The determined value is the original cost of the vehicle to the employer if this was obtained under a bona fide agreement of sale. Where the vehicle is held by the employer under a lease, the determined value of the vehicle is the retail market value of the vehicle at the time the employer first obtained the right of use of the vehicle. In any other case, the determined value of the vehicle is the market value of such vehicle at the time that the employer first obtained the vehicle or the right of use thereof.
Medical contributions paid on behalf of your employer
In terms of paragraph 12A(c) of the Seventh Schedule, the cash equivalent of the value of the taxable benefit made to the employer during the year of assessment indirectly of directly, to a medical aid scheme registered under the Medical Schemes Act no 131 of 1998, for the benefit of an employee or his dependents that exceeds R 1140 in respect of the employee and one dependent plus R 345 for every additional dependant. Please note that medical insurance as per South African legislation does not qualify as a potential tax deduction from ones taxable income. Only medical aid schemes as defined by our legislation may be eligible as a deduction. Medical contributions made as well as expenses both in and out of South Africa not recovered by you from your medical scheme will be deductible from your taxable income, to the extent that they exceed 7.5 percent of your taxable income in South African.
Pension fund and retirement annuity contributions
If you contribute to a local pension or retirement annuity fund while in SA, you will be able to deduct the prescribed amount from your SA salary. For a pension fund, and amount of 7.5% can be deducted from your pensionable salary, and for a retirement annuity fund, and the greater of 15% or R 3 500 can be deducted from your nonpensionable salary. No deductions can be claimed in South African for any contributions made to foreign funds. However, where the employer is liable to contribute to the foreign fund, the contribution by the employer would not attract tax in SA.
9. Death of an employee while working in South Africa
Upon death of a non-resident in SA an estate duty amounting to 20% will be payable on any immovable property held in South Africa at the time of death. There are various lump sums and implications that also need to be addressed if you were to contribute to a South African pension or retirement-annuity fund while you were in South Africa. Different treatments will arise depending on what type of policy it held.
10. Social Security
SA does not currently have a social security system in place. SA individuals generally opt to take out private policies with regards to any pension, retirement annuity or provident fund scheme, or their current employer supplies one to them. Each is treated differently for tax purposes. SA is in the process of implementing a Social Security system but this is likely only to be implemented in the next few years.
11. Exchange control restrictions
Individuals considered resident for exchange control purposes are restricted in the amount of funds they are allowed to invest offshore. It should be noted that the concept of 'resident' as used for exchange control purposes differs from the concept of 'resident'for tax and immigration purposes.
12. Immigration considerations
Subject to the Immigration Amendment Act 2004, no person shall enter or depart from the Republic at a place other then a port of entry and such person shall be in possession of a valid entry permit or visa. A visitor’s permit does not entitle a person to work in South Africa. However, under certain limited circumstances, as set out in Section 11(2) of the Immigration Amendment Act 2004, a person in possession of a valid visitor’s permit may work in South Africa for a period not exceeding three months. Work permits may be applied for either from abroad or from within South Africa, providing that the foreigner is in South Africa at the time of application and provided that the application is lodged with Home Affairs at least 30 days before the existing permit is due to expire. When applying from abroad, the individual must remain abroad until the permit is issued. Similarly, in order to apply from South Africa, the individual must be present in South Africa when submitting the application for a work permit. Family members accompanying the work permit applicant will also be required to apply for the relevant temporary residence permits. Again, these applications may be lodged either in South Africa or abroad and application may be made as a family unit.
The information contained in the above article is based on current South African legislation as at 10 April 2008 and has kindly been provided by Mariette Cruywagen at Cliffe Dekker Inc. The information should be used for general guidance only and is not a substitute for professional service when considering the tax effect of specific instances. Cliffe Dekker accepts no responsibility for any actions taken or not taken on the basis of the information provided herein. The information is issued in accordance with the provisions of the Income Tax Act no 58 of 1962 ("the Act") and based on our interpretation of current tax law and is limited to fiscal considerations only. Tax law is, of course, subject to change by future legislative amendments and court decisions. Cliffe Dekker Inc accepts no liability for any legislative amendments in future that may influence the correctness of the summary. You are cautioned to keep abreast of such developments and are welcome to consult us for this purpose.
Individuals needing further information regarding tax implications are welcome to contact
Cliffe Dekker at +2721481 6328