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You can read the transcript of the May edition of the monthly Intergate Immigration podcast below.
Intergate Immigration Service – Podcast May 2012 Edition
Hi I am Claus Lauter from Intergate Immigration, thanks for joining me on our monthly podcast.
This month we turn our attention to retirement in South Africa.
I am not going to spend any time convincing you that South Africa is a superb retirement destination, hopefully if you are watching this you already know that. If not then the best thing to do is come and see for yourself.
What i do want to focus on today is the criteria for obtaining temporary and permanent residency in South Africa as a retiree.
Firstly lets discuss age and whether the legislation is retiree friendly.
As you may be aware many countries (Canada, Australia and the UK among them) are not keen on attracting retirees. Due to their age and social services provision they tend to be seen as a burden on the state.
Pleasingly South Africa sees things differently.
In some ways this is due to the lack of social services and the need for the retiree to make their own provisions for things like medical care. But also because South Africa realises the spending power of retirees and the benefits this brings.
It is said that each retiree creates 5 -7 direct or indirect jobs, a huge plus in a country with 25% plus unemployment.
So age is no barrier when it comes to retirement in South Africa and there is no upper or lower age limit when applying for the permit.
So it follows that when applying for a retirement permit, the most important criteria is therefore a financial one. South Africa does want to see proof that you can support yourself and have sufficient funds.
Lets start with temporary residency residency. Temporary residency, of up to 4 years at a time, can be achieved by demonstrating either income and / or capital. The required level is R20,000 per month per applicant.
As an example you need to show R20,000 per month income for the next 4 years – lets assume you have a pension of R10,000 per month. This would leave you a shortfall of R10,000 per month.
You would need to show accessible savings that would cover the R10, 000 shortfall for the next 4 years. In other words 48 (being the number of months) times R10,000 – a total of R480,000.
So for temporary you can either prove income of R20,000 per month, or capital of R960,000 (48 being the number of months times R20,000) or indeed a combination of both.
You should note that this amount is per applicant and not per couple.
For permanent residency there is a little of an anomaly. Once again we are looking for an income figure of R20,000 per month per applicant.
Because in this instant we are seeking permanent residency the income needs to be a lifetime income – for example a pension. In this case capital cannot be used. Yes even if you are worth R50 million rand you are not able to secure a permanent residency under a retirement permit. Does it make sense, no, but that is the interpretation of the rules.
For the applicant who has cash and no or little income another option could be the financial independent permit. This is an asset based permit whereby R7.5 million rand is needed as a net worth by the applicant. The only unfortunate thing about this particular permit is the large Department of Home Affairs fee at R75,000.
In addition to the above financial requirements, applicants for a retired permit still need to meet the normal standards of fit and proper.
Now lets chat about some of the great advantage of retirement to south africa that you may not be aware of, and I don’t mean the sunny skies, golden beaches or great restaurants. Its a much more boring subject, but important one money and tax!
Firstly there is no requirement for you to bring or keep any money in South Africa. Also unlike many destinations there no need for you to buy real estate government bonds or in fact transfer any of your wealth to South Africa that you do not wish to.
Secondly – for many pensioners capital gains tax plays an increasing role in their tax affairs as their income falls away, South Africa has an extremely low capital gains tax rate of only 10%, and only after the annual limit has been breached. It is a great tax planing tool.
Thirdly – and for many pensioners (such as UK ones) the best one. South Africa does not tax on foreign pensions – that’s right no tax is due!. Now this varies from country to country so consult with an accountant but sticking with the example a UK national emigrates to South Africa, as long as the pension he receives is not a public sector pension the UK will no longer tax the pensioner.
Confused – well in laymans terms no tax in the UK and no tax in South Africa – therefore a tax free pension – very nice!
Thanks for joining me and as usual if you have any queries feel free to e-mail us on email@example.com or visit our website on www.intergate-immigration.com. Whilst you are there why not subscribe to our newsletters and social media groups.
We look forward to seeing you online and we will be back next month when we will be giving you the low down on partners permits.