<\/p>\n
You can also listen to this podcast on iono.fm here.<\/p>\n
DUDUZILE RAMELA: We look now at what happens when the money you have been patiently waiting for materialises. Managing the process of repatriating offshore share award funds need not be cumbersome. You fully earned them.<\/p>\n
Harry Scherzer is CEO of Future Forex. He joins us now for more. Thank you very much, Harry, for your time this morning. So your offshore share award has vested. In the event you sell your shares, where do the proceeds actually sit?<\/p>\n
HARRY SCHERZER: Hello, Dudu. Great to chat to you this morning. It\u2019s actually a little complicated, because when you sell your offshore shares, the company will have a dedicated account where the proceeds sit, and that will be with, for example, Fidelity.<\/p>\n
But the problem is that as soon as you sell those shares, the South African government, in theory, wants you to return those funds to South Africa within 30 days. And so, if you do keep it offshore for more than 30 days, yes, it\u2019s likely that the government would know about it, and Sars [South African Revenue Service] would know about it.<\/p>\n
But, strictly speaking, you are supposed to bring it back.<\/p>\n
Read:
Going global: How offshore life plans simplify your estate and reduce tax
Sars already knows more about offshore income than expats think<\/p>\n
DUDUZILE RAMELA: Ah, okay. I was going to ask, when you say \u2018in theory you return them in 30 days\u2019, in practice what happens?<\/p>\n
HARRY SCHERZER: In practice, a lot of people either don\u2019t know this, and therefore keep it abroad without realising they\u2019re doing anything wrong. And some people optionally don\u2019t tell Sars about their offshore earnings.<\/p>\n
But if we\u2019re doing this by the book, the thing to do is, as soon as that happens, if you want to stay out of trouble you\u2019re going to then return it within 30 days to South Africa.<\/p>\n
And what\u2019s important to know is that if the exchange rate isn\u2019t favouring you at that time, there is actually a way to do that by bringing it into South Africa but letting it sit in what\u2019s called an FCA account, which is a foreign currency account \u2013 and it can sit in dollars, in euros, in pounds, but within the South African borders. And that\u2019s something that the government is okay with.<\/p>\n
So you don\u2019t necessarily need to convert to rands immediately, but you do need to actually move the funds.<\/p>\n
Read:
Investing beyond borders: What every investor should know
Navigating offshore investments: Understanding your direct and indirect options
Offshore cash in a bank account: What is the risk, and can I do better?<\/p>\n
DUDUZILE RAMELA: Okay. Let\u2019s continue with that theme of helping us to comply and helping us to stay legal. What documents prove where the money comes from?<\/p>\n
HARRY SCHERZER: This is where it can be a little bit complex because on top of that you\u2019re going to need to pay tax on the funds.<\/p>\n
The South African government, even though the shares might be offshore, the South African government is going to want its piece of the pie if you\u2019re a tax resident in South Africa. And that\u2019s income tax. So one of the things you\u2019ll need is an IRP5 to basically show what those funds were worth, and you\u2019ll pay income tax on that.<\/p>\n
Along with that you\u2019re going to need other documents in order to bring the funds in and submit the correct balance of payments code \u2013 which is called the BoP code.<\/p>\n
You can see how there\u2019s actually quite a lot that goes into this, and where people go wrong is they think they should just sort of chat to their bank and bring the money in. But it can often cause delays or even have funds returned because things aren\u2019t done the right way by the underlying person.<\/p>\n
So for that reason we do suggesting using a specialist. Future Forex is one specialist, but there\u2019re many such specialists that can actually help you with bringing funds into the country. Typically, they\u2019ll not only be cheaper, but also more helpful than the bank in doing so.<\/p>\n
Read:
Moving funds to and from South Africa? Here\u2019s a simpler and more cost-effective solution
Earning a sizeable income in foreign currency? Here\u2019s a more efficient, cost-effective way to receive it in SA
Why your investments must be in global markets<\/p>\n
DUDUZILE RAMELA: Fair enough. Where the currency is concerned \u2013 maybe it\u2019s in British pounds, it\u2019s in dollars, et cetera \u2013 who converts the currency and at what cost?<\/p>\n
HARRY SCHERZER: This is where it gets quite expensive if you get this wrong, because the mainstream banks will convert the funds for you and they\u2019ll tell you that the cost is, I don\u2019t know, somewhere between sort of R350 and R1\u00a0000 \u2013 which isn\u2019t a huge amount of money. But what they don\u2019t tell you is that where they\u2019re really making their money is off the rate they give you.<\/p>\n
So, let\u2019s assume they\u2019re taking a rate, which is 2% or 3% worse than the rates on Google, the actual exchange rate. You\u2019ll end up getting fewer rands because of this. And if you\u2019ve got a million rand worth of shares, that can be R20\/30\u00a0000 less due to those fees.<\/p>\n
These are not fees that are transparent. It\u2019s not like the bank\u2019s going to say to you, \u2018Hey, this will cost you 20\u00a0grand or R30\u00a0grand.\u2019 They\u2019ll say it costs you R500 \u2013 but that\u2019s only one layer of fees. The much more significant layer of fees is actually based on the margin, the spread.<\/p>\n
So what it\u2019s important to do is to really, really ensure that the rate you\u2019re getting is close to the rate on Google \u2013 and significantly close \u2013and doing a little bit of a comparison.<\/p>\n
Read:
It\u2019s now far simpler and cheaper to move funds internationally
Your bank\u2019s forex fees are much higher than they seem: here\u2019s the alternative
Investec\u2019s multi-currency move
Why your finance department may be your most expensive mistake<\/p>\n
But if you want to do the sort of easy way, not do a comparison between providers, typically speaking, as I said, the mainstream banks will be the ones that will charge the most because they\u2019re the most convenient and they know that they\u2019ve got a captive audience.<\/p>\n
The most competitive providers will be external forex providers, like Future Forex and others. Those are typically the ones who have to win business from the banks and therefore have to be more competitive \u2013 and be more helpful in doing so.<\/p>\n
So, if I\u2019m bringing money into the country in any capacity, certainly for shares, it wouldn\u2019t make sense to use the bank I\u2019ve just used my whole life. I\u2019d far sooner work with another provider who\u2019s going to fight for me to get the best rate they can.<\/p>\n
DUDUZILE RAMELA: Got you. So, you just got to apply yourself, be patient, because one, it\u2019s Sars, two, it\u2019s these hidden rates. It\u2019ll pay off, I guess, eventually if you do it yourself and you just be patient and go with, as you say, service providers that would be more transparent.<\/p>\n
Thank you very much, Harry, for your time this morning. Harry Scherzer is CEO of Future Forex.<\/p>\n
#RSUs #share #options #vest<\/p>\n","protected":false},"excerpt":{"rendered":"
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