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Returning to SA after 8 years and still earning pounds and not rand. When am I tax resident in SA?

Posted 11 April 2016 under Tax Questions



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Henry says:
5 April 2016 at 7:26

I'm South African born and worked and lived in the UK for 8 years before moving back about a year ago. I have dual citizenship and I am still paid and taxed by a UK company and earn no income in South Africa. When will I be considered a tax resident in South Africa?

I went to see a tax consultant who didn't really give me much info except 'don't worry', that while I'm not earning South African income I wouldn't be taxed here. I also have shares in a UK company that I'm periodically selling and moving the money into South Africa primarily to put some money together to possibly buy a property to live in. I'm a bit concerned that I might be taxed on capital gains of the shares and not sure how my tax status will change if I purchase a property here. Do you have any help or resources I can look at? Would you recommend hiring a tax consultant? If at all possible I would like to avoid becoming a tax resident in South Africa as the SA tax is a lot more than the UK tax, even with dual tax relief.

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TaxTimTaxTim says:
6 April 2016 at 23:40

Do you intend staying in South Africa permanently? Given the length of time you have been back in SA and that you are originally a tax resident and citizen you will be seen to be a tax resident in SA again and then taxed on your worldwide income including the UK income earned from this job. However the taxes you are paying in the UK would be used to offset any taxes owed in SA - you will never have to pay double tax. The same with the shares sold in the UK.


Henry says:
8 April 2016 at 7:53

Yes I plan to stay in South Africa permanently. Does that mean I became a tax resident as soon as I moved back and will be taxed for income since then?

I have read some articles that indicate that any continuous 12 month period that I'm out of the country for more than 183 days (60 continuously) is not taxable by SARS. For my case I have calculate that, even though I moved back on 1 June 2015, I will only be taxed on income since 29 Nov 2015.

SA and UK have double taxation agreements, so I guess since I have been taxed by UK already I will only pay the outstanding tax to SARS.

The shares in question was issued as share options and purchased and sold before the 29 Nov 2015 date calculated above. I guess that means I will not be taxed on the Capital Gains for them.

Also if I sell the shares now, since becoming a tax resident, how are they taxed, as Capitol Gains tax or regular income?


TaxTimTaxTim says:
11 April 2016 at 7:36

Yes, unfortunately it will mean that you do become a tax resident immediatly in the next tax year. The 12 month/60 day rule applies to residents if you work outside of SA for periods as per employment. When you become a resident again you will only be taxed from that date and not be taxed on income earned for previous periods. For that 12month/60day rule you will never not be taxed on income earned whilst in South Africa, it exempts income when one is outside of SA.

That is correct, only outstanding taxes beyond what you paid in the UK will be paid in SA. If the shares were sold before you became an SA resident again then you will not pay CGT in SA on them however if you sell them now then you will be subject to CGT in SA.


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