Do South African Expats need to file a South African Tax Return?
16 November 2015
Posted by: Author: Breytenbachs
Author: Breytenbachs (The South African)
South African expats and South Africans working abroad on a temporary basis are often unsure about whether they need to submit a tax return in South Africa.
The important rule to keep in mind is that any person earning a South African sourced income such as rental income has to file a tax return. Also, keep in mind that you need to request either an exemption from SA tax or, alternatively, 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.
If you are employed in South Africa, earn only remuneration that is less than R350,000 and the necessary PAYE was deducted, you may be exempt from annual tax filing. If, however, you are employed by a foreign company or if your SA employer did not deduct PAYE (because of the 183/60 day rule), you may NOT avail to this tax filing exemption.
South Africans living abroad may be obliged to continue tax filing in South Africa, despite or even purely, because they are now a tax resident in another country. Expats working abroad and claiming the so-called 183/60 day exemption is always obliged to file a tax return in South Africa.
Recent articles suggesting that one is not tax resident once you have been out of SA for 330 days is incorrect. The 183/60 day exemption does not speak to tax residency and can also not be used to claim non-resident tax status. A recent News24 / Die Beeld article having suggested tax residency status is changed because of days outside South Africa, has been severely criticised by learned authors, and we understand, was commented by The SA Institute of Tax Professionals (SAIT).
Persons enjoying the 183/60 days exemption are obliged to claim this exemption and are therefore obliged to submit a tax return. It is also important to understand that the 183/60 day rule exempts remuneration ONLY, i.e. your salary may be SARS tax exempted, yet your interest income, rental income, dividend income, pensions, living annuities and capital gains will normally remain to be SARS taxable.
Despite meeting the 183/60 or the 330 days test, SARS has the right to tax all "other income” such passive income, directors fees, lump sums, etc. and the only exception will be in the case of tax treaty rule coming into play. Tax treaty rules as well as the tie breaker treaty rules dealing with tax residency determination very seldom, if ever, refers to a number of days spent in one or other treaty country.
Most SA expats residing in say the UK, USA, Australia or most of our tax treaty countries, will not qualify for the 183/60 day unilateral exemption. Only tax residents of South Africa (i.e.typically SA expats in say the United Arab Emirates or Saudi) may qualify for the unilateral 183/60 day exemption.
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, 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 in SA may not extend to certain SA sourced income and gains i.e. 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 dates are important tax filing dates in the current 2015 Tax Season for Individuals:
- 27 November 2015 – Non-provisional submissions at a SARS branch
Non-provisional E-filing submissions
- 29 January 2016 – Provisional Taxpayer E-filing submissions.
Most South African tax residents earning foreign income or able to claim the 183/60 tax exemption, should be filing tax returns as a provisional taxpayer. Not only are you obliged to file annual tax returns, but you are also probably obliged to file a provisional tax return end August and end February of every year. A few exceptions applies, and if your are in doubt, you are well advised to consult with one of taxperts!
The article first appeared on thesouthafrican.com.