South Africans who have migrated to Australia can now withdraw their entire retirement annuity benefit as a lump sum irrespective of their age. Previously retirement annuities were only accessible on retirement and then only 1/3 of the total fund could be taken as a lump sum (see South Africa vs Australia).
There are potential tax consequences in both South Africa and Australia when you withdraw a lump sum from your South African retirement annuity fund and transfer it to Australia.
The tax in Australia on the lump sum from the retirement annuity fund will depend on a number of factors including:
- When the transfer is received in Australia (before or after 6 months of residency)
- The growth in the fund subsequent to becoming a tax resident
- Whether the member makes an election regarding “applicable fund earnings”
- The size of the transfer in relation to contribution caps, and
- The age of the member in the financial year the transfer is received
The tax in South Africa is calculated by the South African Revenue Services (SARS) according to the following table:
|Taxable Amount||Rate of Tax|
|Not Exceeding R25,000||0%|
|Exceeding R25,001 but not
|18% of taxable income exceeding R25,000|
|Exceeding R660,001 but not exceeding R990,000||R114,300 plus 27% of taxable income exceeding R660,000|
|Exceeding R990,001 and above||R203,400 plus 36% of taxable income exceeding R990,000|
However any contributions made to the fund which were not allowed as a deduction for income tax purposes will be deducted from the taxable amount and will therefore be tax free.
In order to make this withdrawal your emigration must be recognised by the South African Reserve Bank (SARB) for purposes of Exchange Control. The SARB allows emigrants the following foreign exchange control allowances:
Foreign capital allowance
- R8 million per annum for a family unit
- R4 million per annum for single persons
- R1 million per annum per adult person and $200,000 per child under 18
What is the value of my retirement annuity?
If you would like more information about your South African retirement annuities and pension funds, please click here.