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How do I know if I am a tax resident of South Africa?

Posted 15 March 2012 under Tax Questions


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A burning question people often ask tax professionals is whether or not they are a tax resident in a certain country. The question is important because it distinguishes between tax residents and tax non-residents – both paying tax in South Africa.

    • Tax non-residents are people who do not ordinarily reside in South Africa but do business here and thus pay tax to the SA government ONLY on what they earned from South African sources.

    • Tax residents - also called ordinary residents because they consider South Africa their home - pax tax to the SA government on income earned from ALL sources, local and international.


For the majority, where the below applies, you are considered an ordinary resident and thus declared a tax resident too in South Africa if:

    • you were born in South Africa

    • you have never worked extensively outside of South Africa

    • you have never spent longer than a short holiday out of South Africa

    • you consider South Africa your home

    • you never formally declared South Africa not to be your home, through emigration or other verifiable action


It is important to note that you can be considered a tax resident just by your physical presence, without being an ordinary resident of a country. In this case you would have been present for at least 91 days/year, and at least 915 days in total, after a period of 5 years spent in the country. Tax residency due to physical presence can be broken by leaving the relevant country for a stretch of 330 full days.

Tip – when moving to South Africa or returning after a really long time away, don’t make the mistake of buying a burial plot. This move will automatically make you an ordinary resident and thus a tax resident too, permanently!

 

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Steve says:
21 June 2012 at 13:34

We have been offerred a salaried job in Qatar to teach.
We were both born here. We own no property and will be selling our furniture etc.
What do we need to pay tax on in SA and is there a way of not having to pay tax in SA on the money not earned in SA?


TaxTimTaxTim says:
21 June 2012 at 14:06

Hi Steve,

Fantastic question!

Firstly, any tax you will have to pay in South Africa will be on the income you have earned up until the day you leave SA. Are you and your partner working at the moment?

When you leave SA and begin teaching in Qatar, as long as you are out of the country for longer than 183 days and of those days 60 of them must be in a row, then you won't have to pay tax on that income earned. You will still need to submit a tax return, but you won't be taxed on that amount in SA. You will merely submit a nil return each year. Good news, you won't be taxed here!

If you decide to formally emigrate from South Africa, i.e. giving up your South African citizenship, then you won't need to file a return at all. This is quite a step though, so consider this carefully.

I hope this answers the question?

Regards,
Tim

Remember you can use www.taxtim.com to help you complete and file your returns, simply and easy.


Byron says:
25 June 2012 at 9:17

Good morning

I left South Africa last November to work in Mauritius. I had recently finished studying, and have no assets or property there. By 28 February I had not thus spent 183 days outside the country, so will I be liable for the 2012 year in South Africa? And as I will be here for 2 years, I am assuming for the current and following tax year I will not be liable?

Thanks


TaxTimTaxTim says:
25 June 2012 at 16:02

Hi Byron,

Thanks for the question. There seem to be a lot of South African's working abroad who are having this issue.

Firstly to tackle your 2012 tax year. Have you registered as a taxpayer? If yes then what will happen is you will need to complete a return, but any income you earned in Mauritius and therefore may have been taxed on, this tax will be allowed to be offset against your South African tax payable. You will be able to include this in your 2012 return. There are spaces for this, www.taxtim.com caters for this as well. The good news is you won't be paying tax twice on the same amount.

If you haven't registered and have never worked in SA then you don't need to worry about it.

Going forward you will need to complete a nil return as you will no longer be a tax resident of South Africa, but haven't officially emigrated. This is as easy as simply ticking one box and submitting. This will be a new feature going forward on TaxTim.

I hope this answers your question?

Regards,
Tim


Byron says:
26 June 2012 at 10:20

Thank you yes that does answer the question perfectly!

One more question to follow on that, what exchange rate will I need to use to convert my salary and tax paid back to Rands? Will it be the average for the year, or the closing rate?

Thanks


TaxTimTaxTim says:
26 June 2012 at 18:46

Hi Byron,

I'm glad I could help out! You must convert the income at the average exchange rate, see http://www.sars.gov.za/home.asp?pid=54666 to do this.

Regards,
Tim


Bruce says:
26 July 2012 at 13:12

Hi Tim

Perhaps you can assist.
I am working for a company in SA. I had to leave for a project in another country. In total I will be out of the country for longer then 6 months, and also with more then 61 days consecutive.

I am still paid by my company in SA, and paying tax in SA.

My question is, do I qualify for any tax benefits?

Best Regards
Bruce


TaxTimTaxTim says:
26 July 2012 at 14:03

Hi Bruce,

Great question!

Section 10(1)(o) of the Income Tax act allows taxpayers in your situation to have their income exempt from tax. The requirements are that you out of the country for more than 183 days and that 60 of those days were consecutive. So if this is applicable then you will not be liable for tax on the income earned. This is a provision for South African tax residents who, during that particular tax year, in theory are not tax residents for that year.

When you complete your tax return there is a space which asks for this.

I hope this helps?

Regards,
Tim


Bruce says:
26 July 2012 at 14:27

Hi Tim

Yes thank you it is helping me understand.
As in one year, do you mean any 365 day period, or does it have to be for example, from January to December?
Do you get to claim back the income tax for only the months you were out of the country, or for that whole 365 day period?
If you received your bonus during the period you were out of the country, can you claim the tax back on that as well?

(Sorry for so many questions, lol)

Best Regard
Bruce


TaxTimTaxTim says:
26 July 2012 at 16:42

Hi Bruce,

One year refers to the tax year so from the beginning of March to the end of February in the next year. So for the 2013 tax season it would be 1 March 2012 - 28 February 2013. The bonus would be based on your entire year of work, unless there is some provision in your contract which stipulates it for the period you were out of the country, so this may need to be split apportioned. You will always be liable for the tax on the income you earned while physically working in South Africa.

Are you a salaried employee or independent contractor?

Regards,
Tim


Bruce says:
26 July 2012 at 19:09

Hi Tim

I am a normal salaried employee.
What happens if the period travelling is from September 2011 to September 2012, since this falls under 2 different tax years?

Best Regards
Bruce


TaxTimTaxTim says:
26 July 2012 at 20:13

Hi Bruce,

Provided the time you were out of South Africa in a particular year of assessment (tax year) fits into the requirements. The act speaks of a period of 183 days within any 12 month period. So the period of September 2011 - September 2012 falls within the time frame. Therefore the salary related to the periods you were out of SA will be exempt in both the 2012 and 2013 tax years.

Regards,
Tim


Bruce says:
27 July 2012 at 3:20

Hi Tim

Thank you again for the responses, I am really understanding much more now.
Will TaxTim be able to help me in completing these tax returns?

Best Regards
Bruce


TaxTimTaxTim says:
27 July 2012 at 7:38

Hi Bruce,

Only a pleasure, I'm glad I could assist.

www.taxtim.com can most definitely help, there are questions on the dialogue which will help you fill all this out and specifically asks for income earned under section 10(1)(o). Just register on the site and go through the quick and easy process.

Regards,
Tim


Bruce says:
27 July 2012 at 11:19

Hi Tim

Sure, I will do so.
But, how do I claim for the months that fall under last years financial year since the 2011 tax year is already completed?

The TaxTim is web-based I believe, however if I need additional assistance, is there such real time support?

Best Regards
Bruce


TaxTimTaxTim says:
27 July 2012 at 18:28

Hi Bruce,

The 2011 tax year closed on the 28th of February 2011 so the income earned will fall into the 2012 tax year ending 29th February 2012 and the 2013 year ending 28th February 2013. If you need any additional support, both the blog and helpdesk are available.

We strive to provide our users with the best possible service at all times.

Regards,
Tim


Terence says:
25 August 2012 at 16:28

Hi Tim,

I am not a SA citizen, but would like to know if I am considered a Tax Resident under the physical presence test.

For the last 5 years I have been in SA for a total of 915 days (exactly) - but there was one year, (two years ago) that I was in SA for only 86 days. All the other years I was in SA for more than 91 days a year - My question is this, does that one year where I was there for only 85 days make me a non-tax resident? Or am I now considered a tax resident because I was there for 915 days in the past 5 years?


TaxTimTaxTim says:
26 August 2012 at 0:06

Hi Terence,

Under the Physical Presence Test the first requirement is that you are present in SA for the 91 days in the year you are being assessed. The second test is being present in SA for at least 91 days in the previous 5 years of assessments which, because you weren't, makes you a non-resident for tax purposes. The whole process will start again from the next year that you were present for 91 days.

I hope that's the answer you were looking for:)

Regards,
Tim


Regardt says:
9 September 2012 at 11:18

Good Day Tim

im hoping that you could assist.
Ive been living and working in Saudi Arabia for the better part of 5 and half years and have a question in relation to tax declarations for you.

im definitely outside of South Africa for more than 183 days a year and periods of work in consecutive days are more than 60 days at a time (i do however visit South Africa a few times a year - my wife lives there - we ARE married outside community of property).

My situation is as follows... in previous years my dad used to complete my tax returns for me (before 2007 when i was still living and working in SA and also the years after i have left SA up until 2011). All returns was done via e-filing, but i have decided to take over my own affairs from this year onward. I keep on reading all over the internet that you have to declare your foreign income even if you are outside South Africa for more than 183 days and the 60 consecutive day rule, etc etc. Is this true? and if yes how do i go about this?
What do i fill out in this e-filing form? what do i tick and what not, seeing that what you select on page 1 of the form automates the ITR12 form that you need tom complete

When it comes to interest earned on money in a bank account in South Africa.. when im out for more than 183 days a year, do i have to declare anything? is there a threshold amount that governs this?

My last question relates to investments on the JSE... i have as recently as 2 weeks ago invested a large amount of money with Nedbank through Momentum Wealth on the JSE. Do i have to make any declarations in relation to this?

your assistance is appreciated

regards
Regardt


TaxTimTaxTim says:
11 September 2012 at 22:13

Hi Regardt,

Thank you for the question! There are a lot of expats who are in similar situations. We are going to provide a special page for expats soon so look out for that!

When you come back to South Africa, how long to you spend in SA? Is it longer than 30 days per year? The reason I ask is to see whether or not you are a tax resident of South Africa anymore? Assuming you still are tax resident then yes you have to declare all your foreign income although in your case it will all be exempt. If you are earning interest in SA you would need to declare this under local interest, if the amount is less than R22 800 then you won't pay tax on it, but it needs to be declared.

On page 1 of the return on eFiling you would click on Foreign Service Income and/or Amounts considered non-taxable. In the Amounts Considered Non-Taxable section there is a block for amounts as per s10(1)(o), that is where you would include all the income you earned from employment overseas. You will also be asked to complete a section for residency where you complete all the days you have spent in SA throughout the last two years. All this should result in a zero tax liability, but please check the calculator to ensure this.

No declarations are needed for investments unless you have sold any and or received dividends and interest. You will receive an IT3b and IT3c each year which details all of this and you will need to include in your tax return.

I hope this helps a bit!

Regards,
Tim


Glenn says:
17 September 2012 at 18:40

Hi there,
I've been doing some calculations and it looks like I'll be out of SA for a total of 183 full days, not including departure and arrival dates this tax year. The provision for "more than 183 full days" doesn't specify whether it is "184 full days or more" or whether the departure and arrival days, though not full days, would put me over the requirement. Can you help?


TaxTimTaxTim says:
18 September 2012 at 0:46

Hi Glenn,

Thank you for the question!

The Income Tax Act refers to full days which means that only 24 hour periods count for this particular section of the act. s10(1)(o)(ii) refers to:

"(aa)
for a period or periods exceeding 183 full days in aggregate during any period of 12 months; and
(bb)
for a continuous period exceeding 60 full days during that period of 12 months,"

This would imply that at least 183 days need to be spent outside of South Africa as well as 60 days continuously. Remember that this refers to a calender year and not a year of assessment. For example if you left the UK at 4pm and arrived in South Africa the next day at 1am then the departure day would count towards the 183 day requirement.

I hope that helps?

Regards,
Tim


Glenn says:
18 September 2012 at 8:07

Thanks - that makes it a little clearer. But you mention calendar year vs tax year...

In your reply to Bruce above you say that the provision applies to a tax year, but here you mention a calendar year. The clause says "any period of 12 months" That'll make a difference to me. For the calendar year 2012 I will not be out of SA long enough, but for the tax year 1 March 2012 to 28 February 2013 I will be! The 60 consecutive days wouldn't be a problem in either case. How do I clear that one up?


TaxTimTaxTim says:
18 September 2012 at 10:55

Hi Glenn,

Apologies, let me clarify the issue of the tax year vs the calender year. The act speaks of a calender year determining whether or not the provisions of this section apply to the taxpayer. Once you have established whether you have been out of SA for longer than 183 days and for at least 60 days of the calender year then this income that becomes exempt applies to the income earned within the tax year of assessment. What dates have and will you be out of SA in 2011, 2012 and 2013?

Regards,
Tim


Glenn says:
18 September 2012 at 17:52

Thanks again...
I will be out of SA on the following dates:
7 Aug (departure) to 26 October 2012 (arrival)
16 November 2012 (departure) to 24 March 2013 (arrival)


TaxTimTaxTim says:
19 September 2012 at 13:05

Hi Glenn,

So you will be out of SA for 175 days for those periods, are those the only dates you will be out or have been out in a 12 month period?

Regards,
Tim


Glenn says:
19 September 2012 at 17:38

Not sure how you got to that total. Maybe you missed a 31-day month?

I get:
Aug: 24 days (or is it 25?)
Sept: 30 days
Oct: 25 days (or is it 26?)
Nov: 14 days (or is it 15?)
Dec: 31 days
Jan: 31 days
Feb: 28 days
Mar: 23 days (or is it 24?)

Totals: 2012 Calendar Year: 124 days
2012-2013 Tax Year: 183 days (or is it 186?)
2013 Calendar Year: 82 days (or is it 83?)
The 12-month period from August 2012 to July 2013: 206 days (or more?)

So my question remains - Does the 12-month period apply to the tax year 2012-2013, and will I satisfy the requirement of being out of the country for more than 183 full days for my next tax return?


TaxTimTaxTim says:
19 September 2012 at 18:34

Hi Glenn,

My sincerest apologies for leaving out September. The 12 month period applies to any time when you can count 183 days out of SA within a 12 month period. So in your case, it would be from August 2012 - July 2013 being the 12 month period and you are out for 206 days. Therefore for the 2013 tax return you would apportion the income from the employer between August 2012 - February 2013 and then for the 2014 year of assessment for the remainder of the income in March and those amounts would be exempt.

The test is for any period of 12 months and thereafter if that is satisfied then the amount of time spent out of the country in each particular year of assessment determines the actual exemption.

I hope that is the answer you are looking for?

Regards,
Tim


Glenn says:
21 September 2012 at 13:51

Thanks - that makes it clear, and it's also the answer I was hoping for!!


George says:
19 November 2012 at 17:30

Hi Tim,

I'm a UK national working for an SA company on a local contract since Jan 2011, with an expectation of being in SA for less than 3 years. I rent an apartment in SA and have bought a car but have no permanaent property in SA. I maintain a home in the UK. I have roughly spent around 220 days a year in SA for the last two years (in the second year, spent 80 days outside of SA). Am I deemed an ordinary resident?

I regularly work outside of SA for between 20-35% of the year (in various countries). Am I able to claim an aportionment of the tax paid on my salary and bonus for this period. E.g claim 20-35% of my PAYE tax back?

Thanks!


TaxTimTaxTim says:
19 November 2012 at 18:08

Hi George,

Thanks for the question and quite timely as well given that we are busy preparing a set of easy to answer dialogues with this very topic in mind!

The short answer to your question is no you are not a tax resident of South Africa as you do not meet the criterion prescribed by the South African tax code. If you want reasons why I can provide if necessary?

What this means is any income you earned from the SA company whilst you were outside of South Africa is not subject to PAYE and you should be entitled to a refund of this amount. It is commonly accepted that service/work is taxed in the country in which is was performed and given that you are a non-tax resident of South Africa you should not be taxed here, regardless of who pays you the amount.

If you have already filed your return and would like to dispute the assessment you would need to file a notice of objection detailing your reasons with a letter from your employer stating you spend time out of the country as part of your job and also providing copies of your passport with the number of days you have spent outside of SA. This would all need to be submitted to SARS.

If you need any further information, please let me know.

Regards,
Tim


Vlam says:
20 November 2012 at 9:18

Hi Tim,

I have been employed by my company from the 1st March 2012, i heard if i earn less than R120 000 annually i don't have to apply for tax? How true is this? I have no clue how the taxing works or how i apply, i have never done it before.


TaxTimTaxTim says:
20 November 2012 at 11:27

Hi Vlam,

If you earn less than R120 000 and you have no extra income or you have nothing to deduct such as medical aid, retirement annuity fund contributions or made any donations then you don't need to file a return. So basically if you have just earned a straight salary with nothing extra then you submitting a return isn't necessary.

Regards,
Tim


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Is it me you're looking for?
I'll help you do your Tax Return with Confidence
Quickly, Easily
And Correctly
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