The time has come to spill the beans and save yourself from criminal prosecution and civil liabilities for any grey money you may have.
Parliament has enacted the legislation, members of the amnesty unit have been appointed and financial advisers are now free to advise clients on the amnesty - all just in time for the start of the exchange control and tax amnesty for illegal offshore funds on Monday, June 1.
Despite Finance Minister Trevor Manuel's announcement on Thursday that the amnesty process was "well on track", there appeared to be a bit of a last-minute scramble to get every thing in order.
The amnesty, which was first announced by Manuel in his Budget in February, was originally scheduled to start in May. It was delayed until June when concerns about the legislation were raised in parliament's finance portfolio committee. The law finally made it through all the legislative hurdles to be enacted this week.
Members and the chairman of the amnesty unit were only named on Thursday and the draft application form, which has to be approved by the unit, was still being finalised late yesterday afternoon.
One of the members of the unit, Daphne Ferreira, said minor changes would be made to the draft and the approved version would be made available electronically by Monday morning on the amnesty unit's website www.amnestyunit.gov.za
The unit has not decided whether or not to make printed copies of the application available. This will depend on demand, she says.
Manuel announced that the amnesty unit would be chaired by Advocate Mbuyiseli Madlanga. Madlanga is a practising senior counsel, a former Transkei High Court judge and a former acting judge of the Constitutional Court.
The other eight members of the unit are: Jannie Rossouw, the deputy general manager of the South African Reserve Bank (SARB); Mike Kirsten, a senior manager at the SARB; Charles Nevhutanda, a manager at the SARB; Kevin Stone, a senior control officer at the SARB; Daphne Ferreira, the manager of the VIP Section at the South African Revenue Service (SARS); Cora van Zyl, a manager at SARS; Eureka Ramphal, an administrator for operations at SARS; and Victor Nyamate, an auditor at SARS.
The unit will be based at the National Treasury in Pretoria. Ferreira said the unit could be contacted by telephone at (012) 315 5420, on fax number (012) 315 5530, by emailing [email protected], or by mail at Private Bag X124, Pretoria, 0001.
Manuel said that an exemption from the Financial Intelligence Centre Act (FICA) for financial advisers had been gazetted on Monday. Potential amnesty applicants can now approach their advisers without fear that their adviser will be obliged to report them for having grey money to the Financial Intelligence Centre.
The Exchange Control Amnesty and Amendment of Taxation Laws Act also provides for "the issuance of speedy guidance through regulations to address unintended consequences", Manuel said.
Why you should apply
Meanwhile, the need for those with illegal offshore funds to apply for the amnesty was again stressed at a recent meeting of the Fairbairn Capital/Personal Finance Investors Club in Cape Town.
The amnesty is almost equivalent to a "get out of jail free" card used in the game of Monopoly, Jim Dawson, the manager of legal affairs, compliance and training at Old Mutual International, told the club.
Successive changes to tax legislation in South Africa mean those who have taken or left money offshore may now find they are guilty of far more than just the original illegal export of capital or the failure to declare assets held outside the country for exchange control purposes, he says.
Income from foreign banks has been taxable for more than a decade.
In 1997, the government introduced tax on any other interest or "non-business" income - for example, rental - derived from offshore assets.
In 2000, income tax legislation was again amended to introduce tax on foreign dividends.
From the point of view of tax on offshore assets, 2001 marked "the big bang", Dawson says.
From January 1 that year, South Africa moved from a source-based to a residence-based system of taxation, and residents of this country are now liable for tax on income earned anywhere in the world.
In October of the same year, the government introduced capital gains tax (CGT). This means you could be liable for CGT on any offshore assets disposed of since then.
Finally last year, the Income Tax Act was again amended, Dawson says, making it mandatory for anyone who has funds in a foreign currency or who owns assets outside of South Africa to disclose these in any tax return filed after January 1, 2003.
This, Dawson says, has created a menu of offences that people with offshore assets could have committed.
What may have started off as a small oversight - for example, using your travel allowance to take money offshore and then, in the excitement of the holiday, forgetting to bring back what you didn't spend - may now be a lot bigger, he says.
And until now it has been impossible for taxpayers to comply with each new tax amendment without the risk of disclosing one or more previous exchange control or tax offences, Dawson says.
In addition, changes to the tax laws have enhanced SARS's armoury and things could turn quite nasty for anyone who is attempting to evade tax, Dawson says.
With effect from the beginning of this year, if SARS suspects you have an undisclosed offshore asset, it may estimate the value of the asset or funds, deem an income earned from that asset at the "official rate" and levy the applicable tax.
Tougher penalties
The penalties for tax offences have also been increased dramatically, Dawson says. The penalty for failing to disclose income for tax purposes has been increased five-fold from imprisonment of up to one year to imprisonment of up to five years. Any act committed with the intent to evade tax, make false statements, false accounting or fraud could earn you up to two years in jail.
Exchange control offences are now punishable with up to five years in jail and/or a fine of R250 000 or the value of the asset in respect of which offence was committed.
Dawson says with such penalties in place, it is unlikely that those found guilty will be able to get off with just community service. In addition to changes to the tax laws, the government has introduced a number of measures to stamp out money-laundering. The latest piece of legislation is FICA, which was passed in 2001, although certain chapters of it have yet to become effective.
FICA lists 19 types of "accountable institutions", which, in terms of the Act, are obliged to report any suspicious transactions and also any transactions over a certain limit - which is still to be set.
Accountable institutions include attorneys, banks, unit trust management companies, long- and short-term insurers, accountants, stockbrokers, trust companies, estate agents, moneylenders, forex dealers, casinos and totaliser boards.
This makes it very difficult for you to transact with your illegal offshore funds without raising suspicion, and it is important to consider this when you decide whether or not to take up the amnesty.
Dawson says the amnesty offers you the opportunity to clean up your act and is very generous. You will not only be freed from criminal prosecution but also from civil liabilities.
The cost to you is either five or 10 percent of any unauthorised amount you have offshore. This means that if you have less than the current R750 000 limit offshore, you won't pay any levy. You also won't pay the levy on other legally-held foreign assets.
In addition, if you earned your illegal offshore funds in South Africa and failed to pay income tax on them before exporting them, you can also obtain amnesty for these unpaid taxes by paying two percent of the amount in question.
Dawson concludes by quoting Professor Matthew Lester, a professor of tax studies at Rhodes University: "If you want to get real about the offshore amnesty, there are two choices: take the offer or emigrate. South Africa is just not the place to live if one is running the risk of criminal conviction."