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SIMON BROWN: I’m chatting with Brandon Naidoo, Liberty lead specialist for retail investment proposition management. Brandon, I appreciate the time today.
The world has been shrinking for a very long time, probably for centuries, but the last three years really have accelerated this, and this opens all sorts of opportunities for people to effectively do virtual emigration which, if I understand correctly, would be ‘stay local but earn global’.
BRANDON NAIDOO: Thanks for having me, Simon. Hi to your listeners. So yes, Simon, the last three years with the pandemic have really sort of sped up this notion and this trend of virtual emigration and, as you say, it’s all in the name. So it’s the employer-employee relationship existing across borders, and the pandemic technology infrastructure improving has really pushed us towards the world of Teams and Zoom, etc, where the trend of working in one country for an employer in another country is set to continue.
SIMON BROWN: If I’d mentioned this to my boss four years ago, I would’ve got laughed out of the room. But I think you make the point there that the pandemic really showed us that we can do it and kind of got us comfortable with doing it – which has really been what has revolutionised it in the last couple of years.
BRANDON NAIDOO: Absolutely. To be honest, if we take the pandemic out of the scenario I think the trend exists, but on a much lower level than where we are right now. So you’re right, it’s been properly accelerated by the pandemic. Let’s remember, being in South Africa we probably have a few advantages that other places in the world don’t have, a proficiency in English being one of them. I think that’s well sought out across the world and having a time zone that aligns quite nicely with Europe is pretty sought after. And then having the hard skills to go out and do these jobs is probably the cherry on the top.
SIMON BROWN: Are there any legal implications around virtual emigration? Scratching my head, I want to say no, but maybe there is something lurking somewhere.
BRANDON NAIDOO: Unfortunately there are. I think labour law is the one that tends to come up quite often because what you have here is you’ve got this employee-employer relationship, but your employer is sitting in one country with its own legislation, and you’ve got your employee sitting in another country with different legislation. Generally what happens is you tend to follow the legislation of where the employee is based, but that could contradict [that of] the employer. So it can get a little iffy on the labour-law side, and people try to overcome this by setting up a corporation rather than operating as the employee, and have like an outsourced agreement to a business, which can work.
But, as you well know, people see this as an opportunity. So now there are a few legal firms out there that actually take care of the compliance requirements associated with virtual emigration.
SIMON BROWN: Okay, I’ll take your point on that. The biggie, however, is going to be tax and to a degree forex, and that’s always going to be complex. But there are proposed changes to the [Income] Tax Act coming, which could have even further implications here.
BRANDON NAIDOO: You are correct. You are a South African resident still, so your worldwide tax, your worldwide receipts and accruals will be taxable. I think Phala Phala taught us all that when you earn funds in a foreign country, that needs to be converted to rands within a 30-day period.
But yes, we keep our ear close to the ground for changes in legislation and I think that’s an important point you talk about, because what it says to me is you probably need some help if you’re going to go the virtual emigration route, and you probably need some help from a planner, from a tax advisor, from someone who sort of partners with you through this journey, just so they can keep you aware and abreast of any changes in legislation or otherwise.
SIMON BROWN: I take your point on that, and it’s particularly complex as it is just when we are earning and spending in zar. And then where to spend, because my thought was okay, now I’m earning foreign currency but, to your point, I’m going to bring it back into South Africa. I can externalise it again and I suppose my investment world remains largely as if I wasn’t virtually emigrated.
BRANDON NAIDOO: Absolutely. So because of what you’ve just explained now, the fact that I need to convert it back to rand is almost as if I’m starting from scratch again. And then the choice between investing locally and investing abroad – that lies with me. So I need to look at my overall goals and objectives, my overall asset allocation, have a look between onshore and offshore. If I’m externalising under a million, I’ve got my SDA [single discretionary allowance] that applies. So all of those questions come back. It’s as if you’re starting from scratch.
SIMON BROWN: The key thing from chatting with you now quickly is that while this seems like all I’ve got to do is fire up my Zoom and I’m off to the races, this really is something where you’re going to need professional help across everything – setting up the legal framework, getting tax and forex, and then of course just good old fashioned financial advisors.
BRANDON NAIDOO: Absolutely. I think partnering with a network or an ecosystem will help you and will help this entire process work much better for you. Have a look online. Do a bit of desktop research, if you want to call it that. There are some good sites out there like a Remote.co, where you can literally find anything and everything to do with remote work. It tells you what skills are sought out there in the world and gives you an idea of where you can gain those skills. I think it’s a good place for people to start.
SIMON BROWN: I think it’s a great opportunity as well. Brandon Naidoo, Liberty lead specialist for retail investment proposition management, I appreciate the insights.
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