The short answer
When the visa expires, the member can apply to withdraw their provident funds. Claiming UIF might be trickier, unless the courts find a solution.
The long answer
SARS issued a Tax Directive on 27 July 2022 regarding withdrawing provident or pension fund benefits if “emigrating” in terms of an expired visa (as such a benefit would be taxed):
“In terms of paragraph (b)(x)(dd) of the definition of annuity fund in section 1(1) of the Act, a member who discontinues his/her contributions to a retirement annuity fund, and his/her emigration is recognised by SARB for the purposes of exchange control, can withdraw his/her retirement annuity fund benefit prior to his/her retirement or at the expiry of the visa that was issued in terms of paragraph (b) or (i) of the definition of ‘visa’ in section 1 of the Immigration Act, No 13 of 2002.
“WITHDRAWAL DUE TO EXPIRY OF VISA (LEAVING SOUTH AFRICA)
With effect from 1 March 2016 the definition of ‘retirement annuity fund’ was amended to allow a member who discontinues his/her contributions prior to his/her retirement date to be entitled to the payment of a lump sum benefit at the expiry of the visa that was issued in terms of paragraph (b) or (i) of the definition of ‘visa’ in section 1 of the Immigration Act, No 13 of 2002.
“The retirement annuity fund administrators, trustees or insurer must complete a manual Form C, preservation fund administrators or trustees must complete a manual Form B and attach the following supporting documents for submission to SARS:
A copy of the Certificate of residence obtained from the relevant Tax Authority of the country in which the member resides or is employed;
A copy of the passport indicating an exit from South Africa;
A copy of the Visa indicating the expiry date and the applicable paragraph in the definition of ‘Visa’ in section 1 of the Immigration Act in terms of which the visa was issued or a ‘Visa / Permit Compliance and Cancellation of Visa’ letter from Home Affairs that is issued or obtained in terms of paragraph (c)(ii)(bb)(A) of the definition of ‘pension preservation fund’ / ‘provident preservation fund’ in section 1(1) of the Act will be treated the same as the expiry of a work visa. Please attach the copy to the directive application.
Only on the expiry of the visa can the member apply for the withdrawal. If the visa has not yet expired the application cannot be processed.”
In terms of UIF, as per the 18 December 2017 amendments to the Unemployment Insurance Act 2002, foreign nationals working on contract and their employers are obliged to make UIF contributions.
But Maruping, an official of the UIF, said in 2020: “What is true, however, is that payments to workers of foreign nationality have taken longer because of multi-layered processes that are used to capture their information.
“Generally, UIF uses the ID number to capture information and process payment. In this particular case, passport numbers are used and these have to be verified through interaction with sister institutions like the Department of Home Affairs, and at times with the South African Revenue Services.
“Clearly, with such processes involved, it is likely that there would be some delays but the Minister has instructed the UIF to ensure that these delays are minimised or shortened tremendously. It is also important that these workers are legally in the country, properly documented and are declared by their employers.”
The labourguide.co.za says: “If you have been contributing to the Fund for four years or more, then you can claim for up to 238 days. If you have been contributing for a shorter period, then you can claim 1 day for every 6 days that you worked while you were contributing to the Fund. If you take maternity leave, you can only claim up to 121 days. The Fund pays a percentage of the wage/salary that you earned while you were contributing to the fund. The highest amount that can be paid is 58% of what you earned per day.”
But what might be tricky for the ZEP holders is that to claim UIF unemployment benefits, you have to sign the unemployment register at a Labour Centre and be told when to come back and sign again, and you have to sign every four weeks to show you are still unemployed and needing UIF. You can’t claim UIF if you resigned, only if you were dismissed, retrenched or the contract expired. (I assume that with the ZEP holders, the expiry of the ZEP means the contract has expired.)
I am assuming that the three court cases being brought against Motsoaledi’s decision to end the ZEP by the Helen Suzman Foundation, the Zimbabwean Exemption Permit Holders Association (Zepha), and the Zimbabwe Immigration Federation, will still be taking place, even though the ZEP has been extended for a further six months. It may be that the courts will come to the rescue and shed some light on these matters. Let’s hope so.
Wishing you the best,
Answered on Sept. 19, 2022, 4:17 p.m.
Please note. We are not lawyers or financial advisors. We do our best to make the answers accurate, but we cannot accept any legal liability if there are errors.