Page 6 - KZN Business Sense 3.6

KZN

KwaZulu-Natal
Business Chambers Council
THE IMPORTANCE OF FINANCIAL EMIGRATION

e stated views of respectively innocent enough, but we have process with the South African Also, there is a deemed disposal
Claudia Aires -
Head of National Treasury and SARS, in seen this trigger an automatic Reserve Bank (SARB) to change for capital gains tax purpose on
Financial Parliament, were very clear based verication or audit process. your tax status from ‘resident’ to certain property when you
Emigration on researched numbers of Where the question is marked ‘non-resident’ for exchange emigrate, but aer that you are
expatriate tax submissions. e false, this is a criminal oense, control purposes. exempt from capital gains tax and
numbers show that many South thus creating an even more serious estate duty in South Africa. is
African passport holders and problem. “is is a SARB legal deemed disposal for capital
permanent residents have simply requirement as well as a South gains tax is very oen also
le, without formalising their ese questions are still limited African Revenue Service (SARS) misunderstood, as this only
aairs with SARS or the South now, but they will no doubt be requirement to conrm applies to certain assets and not
African Reserve Bank. expanded in future tax lings, as non-residency”, as explained by to xed property.
correct proling of taxpayers oen Jerry Botha who represented the
is has prompted not only a directly informs SARS audit South Africa Expatriate Tax You do not have to give up
law change, which should be decision. Group in Parliament during passport or sell your assets.
promulgated in January 2018, but September 2017 on this law
SARS World-Wide Tax also a stated SARS tax audit focus International banking reported change. e nancial emigration
on those expatriates who have le
to SARS from 2018 onwards
process has no bearing on your
T here are many South and simply decided to ignore their SARS has committed itself to e reason most people citizenship, passport, or ability to
nancially emigrate is because it
own property or assets in South
Africans working or living
complete its implementation of
taxes. Some have not considered it
abroad, only returning to
Cooperation and Development’s
South Africa for holidays or to even necessary to submit tax the Organisation for Economic gives legal certainty on their Africa. is misconception appears
to be caused by either misunder-
non-residency status for tax and
returns in South Africa, others
visit family. is reects a modern submitted zero tax returns to (OECD) Common Reporting exchange control purposes, as well standing of the process, or by
way of life, where the South SARS, some even indicated that Standard (CRS) by end of as holding certain nancial unscrupulous advisors wanting to
African expertise and work ethic they are unemployed on their tax December 2017. planning benets such as the one punt services ranging from selling
are sought aer by international returns; whilst earning expatriate of the few ways of cashing out foreign residency visas, cashing
employers; yet South Africa salaries. is means there will no longer your retirement annuity. out of policies or making money
remains the home. be oshore hidden money, as the on forex services.
Targeting starting with tax world has followed the United When one emigrates nancially
is has all changed with the return changes States’ lead in forcing disclosure by they cease to be a South African A professional services rm of attorneys,
shock announcement by National Whilst many expatriates hope, nancial institutions of any tax resident and will not be liable CA(SA)’s, Master Tax Practitioners®,
Certied Financial Planners® and with own
Treasury and SARS, that the tax incorrectly, that SARS will drag account owned or otherwise to pay any South African tax on FSB license and emigration attorneys.
exemption on South African their feet, the 2016/17 South connected to South African their worldwide income. ey will, claudia@nancialemigration.co.za
expatriates is set to change. African tax return already residents or citizens. however, be required to declare www.nancialemigration.co.za
included targeted questions any South African sourced income
SARS concerned about dealing with expatriate tax status. e solution that may be taxable, such as rental
expatriate non-compliance e questions may appear Financial emigration is a formal income.
IS YOUR COMMERCIAL PROPERTY LEASE UP FOR REVIEW?
T he monthly rental of renewal rental from falling below the search for a ‘market
business premises is oen
rental’ benchmark derived
the rent under review – is a
one of the largest expenses
facing a business. However, due to practice that undermines the from similar premises and
under similar lease terms
purpose of the review terms.
the nature of commercial leases, Tenants who have fallen foul of in prevailing market
which usually run for lengthy this provision have only them- conditions.
periods of time, it is essential for selves to blame.
commercial tenants to understand e following factors
all the factors that could aect e review provision commonly need to be considered:
their future obligations as outlined prescribes three processes. Firstly, • What rent would the
in their contract. that the renewal rental and premises fetch on the
escalation be agreed between the open market?
One of the factors that is oen parties. Secondly, that failing • The same terms and
not understood by tenants is that agreement, the parties agree either conditions as the present
of the rent review clause. In to separately nominate their own lease, including a rent
commercial property leases, this expert with provision for the review clause
clause is a common practice experts to agree, or failing • That the tenant has
amongst landlords and tenants agreement, between the experts, fullled all his lease
worldwide. then thirdly, a third-party expert obligations
or arbitrator is introduced to • Any effect of
Essentially, the purpose of a rent review and rule on the experts’ improvements or works
review clause is to protect the opinions, the outcome being carried out on the
value of the landlord’s property binding on the lease parties. premises by the tenant.
and to reect the changing value
of the property during the term of It is the expert’s job to properly Tenants need to be wary
the lease. e intention is for both research, interrogate and analyse of review clauses that refer
parties to secure a long lease and recently negotiated leases on to the determination of an
at the same time ensure rentals are similar terms and for similar ‘open market rental and
re-aligned to market levels at premises (showing similar quality, escalation’ in a ‘closed’
agreed intervals. In South Africa’s size and location attributes). market environment such
inationary environment, these Where these are scarce, then as a Port precinct where
are typically set at ve yearly substantiated adjustments should there is a single landlord
intervals. be made from the source data and with 100% control over the
aligned to the premises under supply of property. In such
Many of the commercial leases review. e parties and their cases, specic review
granted are initially on favourable appointed expert/s are responsible criteria need to be agreed
terms for tenants, simply to get the for ensuring that the full lease upon which are fair and
space let. A problem that small terms under review form the equitable to both parties.
business owners oen encounters specication for the review.
is that the rent review provides for Landlords also need to be In conclusion, poorly conducted T: 031 303 8722
‘market rental value’ that results in While the lease provisions are wary of draing ‘User’ clauses rent reviews can lead to nancial arbee.arbee@za.knightfrank.com
a possibly unaordable rent hike. clear —problems may arise when into leases which conne tenants loss, stalemate in agreeing new www.KnightFrank.com
the experts are called in. e to a specic activity and can rents, and even termination of the
In addition, the incidence of parties aected need to be sure negatively impact on rental lease.
‘ratchet’ clauses – preventing the that the expert has been diligent in collection.

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