In fact, it’s a complete pain in the backside!

 

STEVEN JONES

 

WHEN FORMER Finance Minister Tito Mboweni announced in his February Budget speech that the current emigration process and its attendant compliance procedures was to be simplified with effect from 1 March 2021, I was delirious with delight!

I didn’t stand to benefit from the change in the emigration process itself, unfortunately, as mine had already been completed in 2018.  Under the old rules, I had to make a number of declarations to the South African Reserve Bank (SARB) concerning my financial situation, providing extensive details of the amounts that I was seeking to transfer to my new home in the UK, as well as the source of such funds.

While my entire asset base in South Africa consisted of a paid-up retirement annuity and my member’s interest in what is a significantly downscaled accounting and tax practice, the application process was sufficiently complex to warrant my bank charging me R6 000 to dot all the I’s and cross all the T’s on what was an impressive volume of documents.

To be fair, the SARB didn’t quite ask me for a stool sample, but I wouldn’t have been too surprised if such a request had in fact materialised.  In fact, I was so fed up with the whole thing by the time the process was concluded, I would have probably obliged!  However, my woes were not over.

Transferring funds from an “Emigrant’s Blocked Funds” was quite the process under the old rules.  For each transaction I had to complete a Balance of Payment form which was then scanned through to my South African bank.

If I wanted to transfer any salary income, I had to submit a motivation on my CC’s letterhead outlining the services I provide and justifying why the payment should be made.  However, if I wanted to transfer any part of the balance of my member’s loan account (which had been declared to the SARB at the time of my formal emigration), this was a bit more straightforward provided that the annual amounts totalled less than the R1 million discretionary allowance—in which case, no tax clearance certificate was required from SARS.

So, when Mr Mboweni made his announcement, I had this naïve delusion that I would no longer have to jump through all of these hoops, and that transferring funds from SA to the UK would become as simple as doing it in the opposite direction.  Silly me…

 

The new, ‘simplified’ process

Imagine my shock, then, when I put through my first transfer request to my South African bank post-1 March 2021 – to be informed that I needed to apply for a Tax Compliance Confirmation (TCC) from SARS in order to transfer a whopping R14 000 across to the UK.

I was incredulous as I asked, “What happened to the R1 million annual discretionary allowance?”  Apparently, with the SARB having transferred its responsibilities to SARS, this allowance now only applies to SA residents, and non-residents need to request a TCC for every funds transfer outside of SA.

Given that I had no desire to wait out SARS’ customary 21 working day turnaround time, I asked my bank to transfer the funds as salary, seeing as they had an up-to-date letter on file.  No problem, and about £675.00 landed in my UK bank account about three days later.

Then about two months ago, some funds had built up in my CC’s account from a few clients whom I had invoiced for various work performed, and seeing as I’m busy doing some work on the house here in the UK, I put through a request to transfer around R90 000 to my UK account.

Knowing the palaver that I went through last time, I requested that this amount be once again put through as salary.  Having just completed and submitted my 2021 tax return to SARS, I was quite comfortable that everything had been declared and that all was above board.

“Sorry … no can do”, was the response from my bank.  Turns out that I now need to obtain written permission from the SARB to transfer my salary to my UK bank account (Grrrr…).  It has to go through my bank, of course, and the cost of the application would be R1 500.  But because it’s an ‘exported service’, I won’t have to have VAT added on top.  Oh, yay …

Now knowing that the SARB took well over six weeks to provide the coveted approval letter for my original emigration application, I decided to take my chances with SARS and apply for a TCC instead.  How hard can it be?  Log onto e-filing, go to the relevant screen, select ‘Foreign Investment Allowance’ (as instructed by my bank), fill in the details, amount, etc. as well as declaring the source of the funds (part-repayment of member’s loan account), click ‘Submit’, and wait.

A day later, SARS requested supporting documentation—a bank statement showing the funds available for transfer, a Statement of Assets and Liabilities covering the three years immediately preceding my emigration, and my SARB MP336(b) approval.  Upload files, click submit … and wait some more.

I then got a query from SARS.  Having noted my MP336(b) form, the official questioned whether the TCC application was for a current emigration process.  I responded in writing that my emigration process had already been completed in 2018, and that I was transferring part of my remaining CC loan account balance.

Two days later SARS contacted me again, this time raising an issue with the bank statement that I had submitted.  While the account balance showed that there were sufficient funds to cover the amount that I was seeking to transfer (for which I’d requested the TCC), the available balance was showing as ‘nil’.

I quickly bashed out another letter, explaining that the funds would only be made available to me once I had received the TCC from SARS and my bank had completed the various checks required by the SARB under the Exchange Control Regulations, and pinged it across to SARS.

A further three days later, I received a notification from SARS that my TCC application had been declined.  Case closed; no explanation provided.

I then spent a frustrating three hours trying to get through to the SARS Contact Centre – to no avail.  You follow the process of putting in your ID number, income tax number, and (in my case) your SARS tax practitioner number, and then you go into a queue.  However, if you don’t get to the front of the queue and have your call answered within 30 minutes, the system cuts you off, and you have to start all over again.  I never did get through to SARS, but the repeated attempts cost me £60.00 (R1 200.00) on my telephone bill!

In sheer frustration, I contacted my bank and instructed them to proceed with the application to the SARB, which they duly did.  After about two weeks, we received a response to the effect that since the source of the funds was my CC’s account, the application (which was originally submitted in my own name) had to be re-submitted in the name of my CC.

Naturally, since my CC’s bank account is held with a different bank to the one which previously held my personal accounts (and mow holds my Emigrant’s Blocked Funds account), I had to start the whole process again through my CC’s bank.  To cut a long story short, it took another three weeks to get the revised application through, but I eventually received my approval letter from the SARB.

In the meantime, it turns out that when I had originally submitted the TCC application to SARS, I was meant to state ‘Remaining Blocked Funds’ as the source of funds to be transferred.  Amazing what you find when you spend four hours trawling through the SARS website!  I also took the liberty of specifically requesting a manual statement from my bank, showing the funds as ‘available’ (even though, in reality, they are not ‘available’ until such time as the bank has completed all the aforementioned SARB checks).

Of course, now that I had ticked the boxes exactly how SARS wanted them, I received an e-mail about three weeks later indicating that my TCC PIN had been issued!

Now despite not having met Mr Mboweni personally, I have it on reasonably good authority that he is an intelligent man who was highly respected in his role as Finance Minister, both locally and internationally.  Having listened to a number of his speeches, he comes across as an incredibly articulate man with an excellent command of the English language.

However, Mr Mboweni and I clearly have a very different understanding of the meaning of the word, ‘simpler’!

 

Steven Jones is a registered SARS tax practitioner, a practicing member of the South African Institute of Professional Accountants, and the editor of Tax Breaks and Personal Finance.