The AIT process applies to both South African tax residents exercising their Foreign Investment Allowance for above R1 million transfers, as well as for financial emigration, which is now one combined SARS process. This was described by SARS in their 24 April 2023 Media Release as to “facilitate the consolidation … into a single application”.

There should be no surprises as this change has been promised since the 2020 Budget Review, and SARS has delivered with an impressive and well thought through technical design. The landscape for anyone taking money abroad, even your children one day as an inheritance; is now one of compliance first

Registered Financial Advisors initial views on the new process  

Tax Consulting South Africa and the Financial Planning Institute of South Africa (“FPI”) held an urgent webinar on 10 May 2023, unpacking all these changes, with a step-by-step walkthrough of the new process.

During the session, presented by Jerry Botha, the Managing Partner at Tax Consulting South Africa, FPI members were polled on the new process

• 12% of members believed that a tax practitioner must assist with the new process; and
• 70% of members noted that most people will not be able to complete the AIT process without assistance from both a financial planner and a tax practitioner.

Overall, the majority (88% of members) noted that the AIT process is significantly different than the original process and requires more effort to complete. Taxpayers are well advised that whilst SARS has made the process easier to apply, there is a much more strengthened and technology compliance enabled backend, which is an easy spot for the experienced advisor.

Harder for taxpayers unwilling to comply

The FPI survey results align with what we are encountering daily as one of South Africa’s largest 6 tax providers.

The AIT process comprises both quantitative and qualitative disclosures, and effectively requires a self-audit before submission. We have found the process to be effective for compliant taxpayers, but daunting for those who have not given their past tax disclosures and financial planning the required attention. It is also very complex for higher net worth persons and those with diverse or high value financial interests; where a risk mitigated disclosure approach should be followed.

Tax practitioners, accountants and financial planners are advised to be aware that any submission of false statement on behalf of their clients is considered a criminal offence, regardless of negligence. This would certainly apply to the AIT process. There are automatic further verification requests by SARS, and this means no section should be completed, where the supporting voucher or response to the SARS audit question is not yet ready.

The SARS media statement on 3 May 2023 regarding the new process rings true: “whilst for compliant taxpayers this makes it easy, it will be harder for taxpayers who are unwilling to comply.”

Call for industry wide training

The challenges that the new process brings, coupled with the increased compliance risk for both taxpayers and tax professionals alike, indicate a clear need for more technical sessions and information sharing among professionals.

Tax Consulting South Africa has been requested by various SARS recognised professional bodies such as the South African Institute of Tax, the FPI and SAIPA, to hold member specialist training on the process. The training sessions, taking place at end of May and beginning June 2023, provide an excellent opportunity for industry professionals to actively engage with and learn from their peers. There is also a Mauritius session confirmed for the 29^th of May 2023

It will foster a deeper understanding of these changes and provide professionals with a working knowledge and insight into the new form, to allow assistance with clients or stakeholders in this new process.