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If you earn the average salary in South Africa, you are already considered among the top 12% of income earners nationwide. In order to join the top 1% of the wealthiest South Africans, though, you need to make almost six times more.

To put a figure behind that, the average formally-employed non-agricultural worker earns R25 304 per month in this country, per Stats SA’s latest data. So to be a top 1% earner, you’d need to make around R151 541, which is 5,98 times more than the average income earner in the formal sector.

BusinessTech cites Knight Frank’s Wealth Sizing Model to better understand the global significance of being among the top 1% of South Africa’s wealthiest individuals, comparing us to 25 other countries and what it takes to be considered a 1% earner in their jurisdictions.

The “Top 1%” became a notable term during the global financial crisis, but the wealth needed to join their ranks varies considerably from country to country, said the report.

The report says you need to earn R2,06 million ($109 000) a year to join the top 1% of the wealthiest South Africans, which is just a little more than what Stats SA notes for top earners.

How does this fare, globally?

Monaco’s entry point – the wealthiest nation in the comparison – of $12.4 million (R234.05 million) is over 113 more than South Africa’s.

Switzerland and Australia have the next highest entry points after Monaco, requiring a net worth of $6.6 million (R124.6 million) and $5.5 million (R103.8 million), respectively.

In the United States, $5.1 million (R97.7 million) will get you over the threshold to fall into the country’s wealthiest 1% of people.

Okay. Unachievable much:

To put the wealth of these top countries into perspective, a recent study conducted by Picodi.com analysts estimated that South Africans earning the average salary in the country would have to work for at least 68 years to become a dollar millionaire ($1 million).

This means the average South African would have to work for 843 years to be accepted into Monaco’s top 1%, 449 years to be in Switzerland’s top 1%, and 374 years to be among the USA’s wealthiest 1%.

No man, get lost.

In any case, it’s not all sunshine and rainbows being among the top 1% of the wealthiest Saffas. That’s because the South African Revenue Service (SARS) is constantly after you.

The South African government hasn’t yet introduced a wealth tax, but SARS still focuses heavily on wealthy taxpayers with complex financial structures and trusts. Since establishing the High Wealth Individual (HWI) Segment in 2021 to focus on the tax affairs of the rich, the revenue service has also strengthened its investigative capabilities and has emerged victorious in several high-profile cases.

In September 2022, SARS warned that it was increasing its focus on trusts following its analysis of tax compliance by trusts and beneficiaries – and this focus is now paying dividends, given National Treasury’s boasting this week of better-than-expected tax revenues.

This concentration on wealthy individuals in South Africa, along with poor service delivery, load shedding and high crime rates, is forcing all our moneyed folks to move elsewhere.

Not that SARS really cares, as it is becoming increasingly more difficult for Saffas who live and work abroad to convince the revenue service that they are non-residents for tax purposes.

It’s a complete headache complying with that process, honestly, and you’d be well-advised to consider enlisting the help of tax professionals at our local tax firm Galbraith & Rushby to guide you through the requirements.

Tax season has already kicked off, so you might need to jump on that ASAP.

[source:businesstech]