While the Panama Papers came and went, they certainly did one thing: they informed citizens who don’t dabble in such affairs on the legality of having money in offshore accounts.

Every country has its own laws around investing money into an offshore portfolio – but do you know about South Africa’s laws?

During Pravin Gordhan’s 2016 Budget Speech, he announced another exchange control and tax amnesty for errant South African taxpayers.

This included South Africans with illicit offshore portfolios – but you’re not likely to get another amnesty, warns Tony Barrett, FNB Financial Advisory Wealth Manager:

The bank, one of SA’s big four, notes it’s acceptable to have an offshore portfolio, although South Africans can only invest up to R10 million outside South Africa on an annual basis, on the proviso that tax clearance has been given by the South African Revenue Service.

Until now, a lack of co-operation between different countries has created some grey areas, but increased global vigilance and the launch of the Organisation for Economic Co-operation and Development’s (OECD’s) new Automatic Exchange of Information portal will increase the necessity for compliance.

Under the OECD programme, data will be collected in 2016 and the first exchange of information between co-operating countries will take place in 2017. As a result, with this automatic exchange of information on the horizon, the current amnesty is likely to be the last one offered, says Barrett.

If you have offshore funds, you may be looking for some advice on how to proceed in the upcoming year, for if you want the funds to remain offshore there will be a 10% penalty on funds that are in breach of exchange control regulations. However:

If the funds are remitted back to South Africa, only a 5-percent penalty is payable. These penalties must be paid from the offshore funds and where there is a lack of available offshore cash, such as for property holdings, the penalty can be paid from rand-based sources, but an extra 2 percent additional penalty is added.

There are, of course, tax implications on top of that. 50% of taxes owing will be due and payable for the last five years. This is the point on which some clients “may need professional tax opinion as there has been no detail given as to how this 50 percent would be computed.”

Interest would be charged on outstanding taxes, but no penalties would be levied. It is presumed that applicants would need to re-open previous assessments on their SARS E-filing profile and resubmit tax returns for these periods.

With the amnesty application period running for six months from October 1, Barrett believes South Africans have a generous opportunity to regularise their affairs.

We know first-hand that there’s no better help than the guys over at Galbraith Rushby, who will give you all the advice on proceeding with your offshore investments.

[source: iol]