South African expats can find it confusing to work out whether they are South African residents. This has become particularly pertinent in 2020 following changes to the so-called expat tax which have removed the exemption from tax on foreign income for South Africans living abroad.
The South African Revenue Service (SARS) assesses liability for tax on the following criteria:
- Ordinary Residence
A common definition is as follows: ‘his ordinary residence would be the country to which he would naturally and as a matter of course return from his wanderings’
SARS themselves admit that ‘It is not possible to lay down hard and fast rules’ so every case is assessed on its own merit taking into account many factors including where a person lives and does business, where their family live, nationality, location of personal belongings etc.
You can find further information from SARS on ordinary residence here.
- Physical Presence Test
The ‘physical presence’ test determines if someone is tax resident in South Africa by checking the number of days they spend in the country. It consists of three parts and for an individual to be regarded as non-resident they must be under the date limits for each part:
You will find further information on this test on the SARS website.
If you are a South African expat trying to prove non-resident status and avoid being taxed on your worldwide income and gains in South Africa it is important that you log the times and dates that you enter and leave South Africa in order to keep an accurate record of when you were physically present.
All South Africans living and working abroad, should spend some time assessing their residency and tax situation so that they can explore tax mitigation strategies if required. If you would like some assistance with this, please get in touch with us here at Infinity so that we can connect you with an expert.
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