From tax residency to expat tax – what you need to know if you're leaving SA

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*This content material is provided by Sable Worldwide

In case you are planning to work or settle exterior of South Africa or have already executed so, this information from Sable Worldwide’s South African Tax Director, William Louw, will guarantee you’ll be able to navigate the tax system – at dwelling and overseas.

In a world the place people might maintain belongings in a number of international locations, these with ties to South Africa must know whether or not or not they’re tax residents in South Africa. Holding or breaking your tax residency will decide what tax you pay, when and the place.

What’s the distinction between South African expats and tax non-residents?

The South African tax system is residency-based. Your tax residency is decided by a number of components, together with the place you spend most of your time and your ties to SA. You will be bodily positioned exterior the nation and nonetheless be thought-about a South African tax resident.

South African tax non-residents are people who:South African expats are people who:Have severed ties with SARSAre tax residents quickly overseas who haven’t but severed tax ties with South AfricaNo longer meet the necessities for tax residencyMeet the necessities for tax residencyHave accomplished the formal procedures required to vary their standing to tax non-residentHave not accomplished the formal procedures required to vary their standing to tax non-resident (“tax emigration”)Will now not be taxed on their worldwide earnings (will solely be taxed on earnings earned in South Africa)Are required to declare their worldwide earnings which incorporates overseas employment earnings and pay any relevant tax (“expat tax”)

What’s expat tax?

South African tax residents dwelling and dealing overseas are solely exempt from paying SA tax on overseas employment earnings as much as R1.25 million*. Something over and above this quantity shall be taxed in SA, referred to as “expat tax”.

To qualify for this exemption, you should:

Have spent greater than 183 days exterior South Africa in any 12-month interval (of which 60 days should have been spent repeatedly exterior South Africa)
Be an worker incomes a wage

Employment earnings earned from duties carried out in South Africa and earnings that exceed the exemption are taxed in accordance with the traditional tax tips.

*Contains allowances, bonuses and fringe advantages, amongst others.

How am I affected by South African change management?

South African residents who’ve lived overseas however haven’t formally tax emigrated are nonetheless thought-about residents in South Africa for change management functions and are entitled to maneuver R1 million out of South Africa per calendar yr with out tax clearance. This is called your single discretionary allowance – or SDA.

To ship greater than R1 million overseas, you want an AIT (Approval for Worldwide Switch) from SARS. This certificates is legitimate for 12 months and permits you to switch as much as R10 million utilizing your South African overseas funding allowance.

Upon getting formally tax emigrated, your discretionary allowance shall be unavailable except you come back as a South African tax resident. You have to apply for an AIT to maneuver funds in another country.

When ought to I inform SARS that I’m leaving South Africa?

In case you have not but left and are planning to go away the nation, it’s in your greatest curiosity to assemble proof of your intention to settle out of the country, as you’ll need to show to SARS that your final objective is to go away South Africa completely. You can’t show this in your departure day, however it is best to achieve this earlier than your subsequent tax return. This fashion, you’ll be able to test whether or not you may make the opposite nation your residence earlier than informing SARS.

The non-residence letter from SARS proves that SARS agrees that you’re now not a tax resident in South Africa. To use for the non-residence letter, you should full the related kinds, present supporting paperwork, and declare all of your belongings and liabilities. Our tax practitioners at Sable Worldwide concentrate on cross-border instances and may make sure that you submit all of the required documentation and that the appliance course of goes easily.

How do I do know if my South African tax quantity is energetic?

In case you have resided exterior South Africa for over 10 years, your tax quantity is normally inactive. To find out in case your South African tax quantity remains to be energetic, you’ll be able to comply with these easy steps:

Use the SARS eFiling platform – Log in to your account and go to the “Taxpayer Particulars” part. Right here it is best to be capable to discover details about the standing of your tax quantity. You will be positive your tax quantity is legitimate whether it is energetic.
Seek the advice of your tax certificates – Your tax quantity is normally proven on any certificates you obtain, equivalent to an IRP5. In case your tax quantity is proven, it signifies that your tax quantity is energetic.
Evaluation communication from SARS – In case you have not too long ago acquired a communication from SARS, equivalent to a tax return affirmation or a tax discover, test in case your tax quantity is talked about in these paperwork. That is an indicator of its energetic standing.

To be on the protected facet, preserve proof of your tax residency in your new nation in case SARS requires proof at a later date.

What if I don’t know my tax quantity?

When you lose your tax quantity after you have got left the nation, you could possibly end up in a tough state of affairs. SARS can solely ship you your tax quantity if you happen to can entry your e-mail handle and South African cellphone quantity.

Be aware: When you lose entry to those communication strategies and have no idea your tax quantity, you’ll haven’t any strategy to correspond with SARS, as they’ve made it inconceivable to retrieve this data. As such, you’ll probably be unable to maneuver funds out of South Africa.

We suggest that you just change your particulars with SARS earlier than you allow the nation and supply a South African contact quantity which you can nonetheless entry after you allow. Think about using the cellphone variety of a relative within the nation till SARS finds an answer to this downside and makes it simpler for expat SA taxpayers. Moreover, guarantee that your e-mail handle is up to date and is one which you’ll nonetheless have entry to after you allow.