What determines my tax residency in South Africa
On 1 March 2001 South Africa change its tax system. It went from a source-based to a residence-based tax system. The result of this is that tax residents are taxed on their worldwide income (excluding some exemptions). Non residents are subject to tax on income from South African sources.
Who is tax resident in South Africa?
If you reside in South Africa or spend a significant amount of time there, you are classified as a tax resident. This is established via what is known as the 'ordinary residence test' or the 'physical presence test'.
There is no statutory definition of ‘ordinarily resident’. According to South African courts, a taxpayer is typically considered a resident in the country where they have a permanent home they would be considered to return to. This is the place they would naturally return to after traveling.
What if you are not ordinarily resident in South Africa?
If not ordinarily resident in South Africa, an individual is considered a South African tax resident if the individual is physically present in South Africa for more than 91 days, in aggregate, in the relevant tax year and each of the preceding five tax years, and also for more than 915 days, in aggregate, in the preceding five tax years.
If a person, who has become a South African resident in terms of this physical presence test, spends a continuous period of at least 330 days outside South Africa, then the individual ceases to be a resident from the date of the beginning of the absence from South Africa.
On ceasing to be tax resident in South Africa, an individual’s qualifying worldwide assets are deemed to be disposed of on the day before their date of departure from South Africa. Any growth in value on the assets could trigger a capital gains tax liability. There are additional tax filing rules for the year when a person stops being a South African tax resident.
How do you cease to be tax resident?
The determination of whether an individual ceases to be a tax resident in South Africa is based on the manner in which such individual has been a tax resident in South Africa.
If the taxpayer has been an ordinarily tax resident, it is a factual enquiry on whether or not that person’s subjective intention to cease to be ordinarily resident in South Africa and no longer make South Africa his or her real home, is supported by various objective factors. If a person has ceased to be an ordinarily tax resident, it will be from the day such person ceased his or her residence.
Factors that will be taken into account to determine whether a taxpayer has ceased to be a tax resident of South Africa:
- The type of visa on which you have gone to the foreign country.
- Proof of permanent residence in the foreign country (if applicable).
- A certificate of tax residence from the foreign revenue authority or a letter from the authority that indicates that you are regarded as a tax resident in that country (if available).
- Details of any property that you may still have available in South Africa. Indicate the purpose for which such property is being used.
- Details of any business interest (e.g. investment and employment) that you may still have in South Africa.
- Details of your family. Indicate whether any family members are in South Africa and the reasons therefor.
- Details of your social interests (e.g. gym contract, recreational clubs and societies) and location of your personal belongings.
- Details of any return visits to South Africa, their frequency and the reason for undertaking such visits.
An individual, who is resident by virtue of the physical presence test, ceases to be a resident when that person is physically outside the Republic for a continuous period of at least 330 full days. The individual will be deemed to have ceased to be a resident from the day such person left South Africa.
An individual who has become a tax resident of another country through the application of a double tax agreement will also cease to be a resident for tax purposes in South Africa.
What are the consequences if I have ceased to be a tax resident?
A deemed disposal for capital gains tax purposes takes place at the time when an individual breaks his or her tax residence. The individual will be deemed to have disposed of his or her worldwide assets, excluding immovable property situated in South Africa.
Once a person has ceased to be a tax resident in South Africa, such person is no longer taxed in South Africa on his or her worldwide income, but only on South African sourced income.
How do I declare to SARS that I have ceased to be a tax resident in South Africa?
If a taxpayer ceased to be a tax resident of South Africa, the taxpayer should inform SARS of the date on which the taxpayer ceased to be a tax resident.
A case will be created whereby the taxpayer will receive a letter from SARS to submit supporting documents.
What is the purpose of such declaration?
The declaration informs SARS about your new tax residency in South Africa. It also explains how this change will impact your taxes and future assessments. If you cease to be a tax resident in a particular year, you may be required to pay capital gains tax. This applies if you possessed specific assets and they were located in a particular place during that time.
When must a declaration be made?
When an individual ceases to be a tax resident, SARS must be informed.
Who must make such declaration?
The person who pays taxes must tell SARS or their authorized representative, who will then tell SARS.
What documentation should be provided?
A declaration for must be completed and be submitted with the relevant supporting documentation.
When will a declaration be declined?
A declaration will be declined if one of the following conditions apply:
- If the taxpayer does not meet the criteria for ceased to be tax resident.
- If the taxpayer cannot provide us with the relevant materials or the correct relevant materials as requested.
If you previously declared that you ceased to be a tax resident, how do you request confirmation?
If you previously informed SARS that you have ceased to be a tax resident of South Africa, and would like to request confirmation of your status, you can submit a request to SARS.
You are resident if you are, measured over six tax years, more than 91 days in of each of these years in South Africa; and. In the first five of these six years, you are more than 915 days in South Africa.
Frequently asked questions
What makes you a resident of South Africa
An ordinary resident in South Africa is someone who regularly returns to the country after traveling elsewhere. That person's usual or principal residence, or his or her real home, describes it.
What is proof of residence for SARS
SARS accepts utility bills as proof of address for companies and individuals. This includes rates and taxes, water, electricity, or gas bills. Educational institution account. Co-op statement (for farmers).
What is the 183 day rule in South Africa
The 183 days rule includes all calendar days, which means we're not just counting work days. Weekends, public holidays, annual leave days, sick leave days and rest periods spent outside of South Africa (as long as you're employed at the time) all count toward meeting the 183-day condition.
How do I know if I am a tax resident of South Africa
According to South African courts, a taxpayer is typically considered a resident in the country where they have a stable home. This is the place they would naturally return to after traveling.
How do I prove residency in SA
Utility bill, e.g. municipal water and lights account or property managing agent statement. Bank statement from another bank on an official bank document or form. Municipal councilor's letter.
Can you buy a house in SA if you are not a tax resident
Non-residents can own property in South Africa, except for illegal aliens who are not allowed to own immovable property.
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