Global transparency
The 31 August deadline coincides with the implementation of the Common Reporting Standards (CRS), which both South Africa and the UAE have subscribed to, along with approximately 100 other countries, and will hugely improve global tax transparency.
Once the investments have been disclosed, they will become visible to Sars, with the on-going obligation to pay any tax due on the remaining investments.
This makes investment choice extremely important for expats who will need to consider the best way of managing their investments more effectively going forwards.
Minimising the burden
Paying income tax and tax on gains to Sars on an arising basis means any active management by the investor could lead to more onerous tax reporting and investment decisions will need to be balanced with tax considerations.
However, there is a way for investors to continue to actively manage their investments whilst minimising any tax reporting burden and ensuring assets become more efficient to manage.
By restructuring the assets into appropriately structured single premium offshore bonds, the investor gains much greater control over the timing and nature of any events that are chargeable to tax.
All taxes are deferred within an appropriate offshore bond (except for any withholding taxes that cannot be reclaimed on income or dividends received), and only on a planned encashment would a tax situation arise.
They are also more tax effective as any growth is taxed as a capital gain rather than investment and savings income, meaning it attracts a lower effective rate of tax.
