South African expats and South Africans working abroad temporarily are often unsure whether they need to submit a tax return in South Africa.
Any person earning a South African sourced income, such as rental income, must file a tax return. To be absolved from filing a tax return, you need to either request an exemption from SA tax or submit a request not to be treated as a South African tax resident. Neither tax exemption regarding a tax treaty nor unilateral tax exemption absolves you from filing a tax return.
South Africans living abroad may be obliged to continue filing tax returns in South Africa even though they are tax residents in another country. Expats working abroad and wishing to claim the so-called 183/60-day exemption must file a tax return in South Africa to claim the exemption.
It is important to understand that the 183/60-day rule exempts remuneration ONLY, i.e. although your salary may be SARS tax exempted, your interest income, rental income, dividend income, pensions, living annuities and capital gains will remain SARS taxable.
Despite meeting the 183/60-day test, SARS has the right to tax all “other income” such as passive income, directors fees and lump sums; the only exception will be a tax treaty rule coming into play. Tax treaty rules, as well as tiebreaker treaty rules dealing with tax residency determination, very seldom refer to the number of days spent in one or other treaty country.
Most expats living in the UK for more than 183 days, or even as little as 90 days, could be exclusively tax resident in the UK and may claim tax exemption in SA because of a treaty position. This treaty status may extend the SARS exemptions to interest, pensions and other income, yet one has to file a tax return and obtain a tax residency certificate (issued by HMRC in the UK or the ATO in Australia) before you can claim a full tax exemption from SARS. This “full” tax exemption might not extend to all SA sourced income and gains; proceeds from immovable property (rental and gains on SA “land”) will always be taxed by SARS. In certain instances, your new home country will also be entitled to tax you, provided they allow you a credit for the SARS taxes paid.
The following are important dates in the 2020 tax season for individuals:
- 1 September to 16 November 2020: Taxpayers who file online
- 1 September 2020 to 31 January 2021: Provisional taxpayers who file electronically.
Most South African tax residents who earn foreign income and may claim the 183/60 tax exemption should file annual tax returns as provisional taxpayers. They must also file provisional tax returns at the end of August and at the end of February every year. A few exceptions apply. If you are in doubt, you would be well advised to consult a tax consultant.
You are welcome to contact Fanus Jonck at firstname.lastname@example.org for tax advice.