Even a Rolling Stone gathers tax moss

Most people associate the Rolling Stones with sex, drugs and rock 'n' roll. Add tax evasion to the list, particularly the old sport of changing tax residence.

Forty years ago, the band spent a marvellously decadent summer as tax exiles in the south of France, where they wrote most of the legendary album Exile on Main Street.

The problem the Rolling Stones experienced (apart from the drugs squad, that is) was they got lonely and bored in tax exile. So they moved to the US.

Post-Marikana, some South Africans say that if they won the Lotto, they would emigrate. And post-De Doorns, the Western Cape is fast falling off the list of preferred destinations.

Not even a Lotto jackpot would secure a comfortable retirement in France. So we look elsewhere. Australia and New Zealand have policies of “no pets and pensioners”, and their tax authorities are more aggressive than their bowlers.

Mauritius is only four online casino nederlandsegokken hours” flight away. And so long as you buy a property, the immigration authorities are not very picky. Tax is virtually nil, and there is no exchange control.

But Mauritius, after a week of rum and sun, is as lonely as London. No problem: you can still come back to South Africa to visit friends and family. And this is where problems have crept in. There has to be a “distinct break” in lifestyle.

In a recent UK tax case, Lynette Dawn Yates v HMRC [2012] UKFTT 568 (TTC), it was made clear that in order to change tax residence, there has to be a degree of loosening of family and social ties.

In short, one cannot simply acquire a house in another country and commute to your old home at will.

The above is not to say that there has to be a complete severance of family and social ties. Other factors are examined. Where do you vote? Where are your personal belongings and bank accounts? Where is your post delivered?

Becoming a tax exile is not as simple as jumping on a plane. On departure, SARS will want some CGT and exchange-control formalities. And then, when you get to your preferred destination, you will probably find the local tax inspectors waiting to get their pound of flesh.

Perhaps, like polo, this is a sport reserved for the extremely wealthy or those who have nothing to squabble over.

Originally published in the Sunday Times: Money & Careers Tax Talk column.

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