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| FOREIGN
INVESTMENT - IMMIGRATION MATTERS |
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South Africa has
proved to be a very popular investment not only
for South Africans but also for many foreigners.
A particular focus has been the tourism and hospitality
industry.
Permission
All foreigners who wish to stay in South Africa
require permission to do so by the Department
of Home Affairs. In case of a business such as
running a boutique hotel, guesthouse, B&B
or a restaurant a business permit is normally
the best option. |
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Progressive
Immigration Act of 2002
The Immigration Act of 2002 stipulates the
requirements for all permits, which came
into law in April 2003, after much public
debate and participation. It is a very progressive
and open minded piece of legislation, inviting
investment as well as much needed skills
and experience into South Africa.
Difficulty in practice
Unfortunately, the practical experience
of benefiting from this Act differs as Government
offices and officials often lack the capacity,
infrastructure, experience and understanding
of a complex immigration application.
Goose Chase
An easy way out is to send the applicant
around in circles or even to refuse to take
the application. Furthermore, the interpretation
of the law differs very often from one Home
Affairs branch to another. The process in
South African embassies tends to differ
again; at times they are even using other
forms.
Advice from Professionals
Therefore it is highly advisable to employ
a well qualified and experienced firm to
assist. IBN Consulting & Immigration
prides itself in a 100% success rate over
the last 12 years.
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| Permit
Options |
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There are
also a number of simple
work permit for seasonal
workers for either up
to six month or a year,
which are very popular
in the hospitality industry.
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Young graduates
from leading European
hotels schools can bring
a fresh wind into your
team. |
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For larger
establishments a corporate
permit offers great flexibility.
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We will inform our readers during
the next newsletters in greater detail
about various forms of permits available.
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AMENDED
TAX LAWS OFFERS RELIEF TO SOME
The 2009 Taxation Laws Amendment
Act came into operation on 30 September
2009. |
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| One of the provisions
of this Act relates to
the attractive possibility
to transfer a domestic
residence that is held
in an entity (such as
a company, close corporation
or trust) free from any
tax liability. |
In the following paragraphs,
we will briefly look at the
legislature’s motivation
for these new provisions as
well as to their application.
SARS’ Concerns
Prior to 2001, many individuals
used entities as vehicles in
which to purchase their residential
homes.
This was popular due to various
tax advantages involved in holding
the property outside of the
individual’s personal
estate.
However, since the introduction
of CGT in 2001 and other subsequent
changes to tax laws with regard
to the sale of shares in a company
holding immovable property,
the continued benefits of holding
a residential property in a
company faded substantially.
In 2002, SARS introduced a first
window period for the transfer
of properties out of entities.
This period has now long lapsed
but SARS remained concerned
about the many properties still
held in entities.
Huge Future Annual Fees
This and the knowledge of the
huge annual fees that will soon
become payable by companies
in terms of the new Companies
Act, moved the legislature to
promulgate a new window period
for the transfer of residential
homes out of entities.
WHAT
DO THE NEW PROVISIONS
STIPULATE?
There are a number of
ongoing regulatory, legal
and tax filings that are
specific to SA such as:
| (i)
|
With
regard to companies
or close corporations,
the sections will
apply to a transaction
where: |
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| - |
An individual
person (alone
or with a
spouse) holds
all the interest
in the company
or close corporation
that owns
a residential
home; and
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| - |
The
individual
(alone or
with a spouse)
ordinarily
resided in
the home and
used it for
normal domestic
purposes since
11 February
2009; and |
| - |
The
individual
transfers
ownership
in the property
into his/her
name or into
the name of
both spouses
jointly before
31 December
2011. |
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| (ii)
|
In
the case of trusts,
it will apply to a transaction
where:- |
| |
| - |
The property is
held in a trust;
and |
| - |
The
individual (alone
or with a spouse)
initially used their
own funds to pay
the purchase price
of the property,
or donated the property
to the trust or
serviced the mortgage
loan repayments,
if the property
is bonded; and |
| - |
The
individual (alone
or with a spouse)
ordinarily resided
in the home and
used it for normal
domestic purposes
since 11 February
2009; and |
| - |
The
individual (alone
or with a spouse)
transfers ownership
in the property
into his name (or
to both spouses
jointly) before
31 December 2011.
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|
A transfer in
terms of the above will
be free from liability
for transfer duty, CGT
and STC (in the case of
companies.
The only transactional
costs will be conveyancing
fees in respect of the
transfer, as well as bond
cancellation and new bond
fees (where applicable). |
Make Use of Window Period
These tax savings are welcome
and it is expected that many
owners will make use of this
option in the window period
that ends 31 December 2011.
However, there may be estate
planning or other instances
where it may well remain in
the individual’s best
interest to keep his/her immovable
property in an entity.
It is therefore important
to consult with an attorney
or tax advisor before making
a decision to transfer out of
the entity.
Source from STBB |
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