Saturday, 13th March 2010
Relocation to South Africa - Finance and Insurance
Introduction
This is going to be the most interesting part of your relocation. The way that South Africans deal with money can be fun - always use a credit card and carry as little cash on you as possible.Banks
Choosing the right bank is vital. Thankfully the banking system in South Africa is excellent and you should not have any problems.Before you go to a bank to open an account the following documents will be useful:
- 3 months of statements from your last bank in which ever country you were in
- A reference letter from your bank describing the facilities you had with them
- A letter of appointment or a letter from an agent stating that you are seeking employment
- Utility bills from both back home and if you have within South Africa
- Passport
They also charge a fee on writing out cheques (Anything from R10 to R25 per cheque depending on the amount on the cheque). Once you have the account you should try to get a nominal overdraft to start establishing your credit rating. After six months you should be applying for a greater limit on both your credit card and your overdraft to further increase your rating.
Taxation
There are 3 types of taxes in the SA:- Value Added Tax(VAT)
- Income tax
- Local Rates
VAT: This is currently 14% and all prices displayed in shops will be tax inclusive. There are exemptions to VAT like staple foods but the rest is all taxable.Income Tax: You will have to have a Tax Number before you begin work - however the company your work for can sort that out.
Only people earning over R60,000 a year have to fill in a tax return but anyone who wishes to fill one in can do so. All you need to do is to contact your tax office and request the forms. Contact the South African Revenue Services for more information (they are actually very helpful)
Rates: No matter where you live in South Africa you will have to pay for rates. Your rates are usually part of the rental amount so that the landlord will have to pay it.
Home, car and medical insurance
South African Insurance is expensive relative to peoples income. However, our advice is that you cannot do without it.Do not try and get away with not insuring your home or your cars as the crime rate is high. For a typical home you will pay around R800 - R1,000 a month for household insurance. Your car insurance will be more expensive (R3,000 - R8,000!) depending on the car you drive. We recommend that you get a free quote for your motor or home insurance from OUTsurance insurance brokers.
Medical aid (medical insurance) is another must as public hospitals can be a nightmare. The cost of medical aid is expensive when comparing it with other countries and expect to pay between R1,200 and R2,000 a month on medical aid. For more health care related information see our health care section.
Cheques, Cash and Credit Cards
Fraud in South Africa is rife. Therefore many shops will not accept cheques! The best is to use debit cards or credit cards.The other thing is DO NOT send cheques via the postal system. Rather pay the amount directly into their bank account (like rent, electricity etc). You can pay accounts like the phone at the post office or major supermarkets or have a direct debit set up on your account.
Be wary about direct debits as you cannot stop them - the company that you are paying is the only party that can cancel the direct debit which can present a problem.
If you have to pay by direct debit then our advice is to set it up on one of your credit card as you will save transaction cost (typically R25 a transaction).
