Up to recently you could declare your non-tax residency in your tax return (submitted via eFiling) or by requesting a certificate of residence from the South African Revenue Service (“SARS”) by completing a specific form (RAV01). In both instances, the person must be registered for income tax purposes with SARS.
In light of the above, we often come across the following scenarios*:
• You (or your client) left South Africa prior to 2001 and / or you did not (have to) register a tax profile on eFiling;
• Your son or daughter left South Africa after school to take a gap year or study abroad without having to register on eFiling ,and has since taken on permanent employment and triggered tax residency elsewhere.
The administrative burden to register an eFiling profile to place your non-tax residency status on record from abroad is cumbersome and often very complex. In some instances, SARS may request you to attend a branch to update specific information (e.g. bank details) leading to additional frustration. All this to place your non-tax residency on record with SARS and to obtain certainty that SARS is made aware that you are not tax resident in South Africa.
The good news? SARS has recently introduced an alternative method to place your non-tax residency on record. This method does not replace the other available options, but it is especially useful in certain circumstances.
How does it work?
SARS issued a declaration form to be completed by the non-tax resident. It should be emailed to them with specific documents and requirements accompanying the declaration form.
This entails, amongst others, a motivation as to why you are not a tax resident in South Africa based on our domestic tax laws, as well as a certificate of residency from the country that you live in. The latter requirement is debatable from a South African tax residency requirement perspective.
Once SARS has received the declaration form and supporting documents, they will consider the submission and respond with their outcome. Should they agree with the non-tax residency status, SARS will issue formal communication to this effect which you should keep on record for future reference purposes.
When is it useful to use the new alternative method?
The alternative method is useful when you:
• have left South Africa prior to the eFiling regime being implemented and as such, you do not have an eFiling profile;
• are not required to account for deemed “exit tax” / capital gains tax in terms of section 9H of the Income Tax Act 58 of 1962;
• are the client’s tax representative, but do not have access to their eFiling profile;
• need certainty of your (non-)tax residency status in South Africa.
The alternative method is also available to you even if you an eFiling profile, but it is easier to place your tax residency status on record with SARS via this method than on eFiling (e.g. prior to completing a tax return).
When should I register for eFiling instead?
It is strongly advisable to register an eFiling profile in the following instances if:
• you have left South Africa when you have had to declare taxes in South Africa prior to leaving;
• if you had to account for deemed “exit tax” as set out above; or
• you still receive South African sourced income, e.g. rental income, interest, dividends and royalties and have not declared it before.
It is advisable, if any of these scenarios apply to you and you have not declared it to SARS, to contact us to regulate your tax affairs with SARS. Please contact Suzanne Smit at suzanne@fidelisvox.co.za if you have any questions.
For purposes of the article, we assume in the specific scenarios that the person is a non-tax resident based on the domestic tax laws in South Africa. This article only deals with tax residency and placing non-tax residency on record. It does not cover exchange control considerations and / or processes.
In light of the above, we often come across the following scenarios*:
• You (or your client) left South Africa prior to 2001 and / or you did not (have to) register a tax profile on eFiling;
• Your son or daughter left South Africa after school to take a gap year or study abroad without having to register on eFiling ,and has since taken on permanent employment and triggered tax residency elsewhere.
The administrative burden to register an eFiling profile to place your non-tax residency status on record from abroad is cumbersome and often very complex. In some instances, SARS may request you to attend a branch to update specific information (e.g. bank details) leading to additional frustration. All this to place your non-tax residency on record with SARS and to obtain certainty that SARS is made aware that you are not tax resident in South Africa.
The good news? SARS has recently introduced an alternative method to place your non-tax residency on record. This method does not replace the other available options, but it is especially useful in certain circumstances.
How does it work?
SARS issued a declaration form to be completed by the non-tax resident. It should be emailed to them with specific documents and requirements accompanying the declaration form.
This entails, amongst others, a motivation as to why you are not a tax resident in South Africa based on our domestic tax laws, as well as a certificate of residency from the country that you live in. The latter requirement is debatable from a South African tax residency requirement perspective.
Once SARS has received the declaration form and supporting documents, they will consider the submission and respond with their outcome. Should they agree with the non-tax residency status, SARS will issue formal communication to this effect which you should keep on record for future reference purposes.
When is it useful to use the new alternative method?
The alternative method is useful when you:
• have left South Africa prior to the eFiling regime being implemented and as such, you do not have an eFiling profile;
• are not required to account for deemed “exit tax” / capital gains tax in terms of section 9H of the Income Tax Act 58 of 1962;
• are the client’s tax representative, but do not have access to their eFiling profile;
• need certainty of your (non-)tax residency status in South Africa.
The alternative method is also available to you even if you an eFiling profile, but it is easier to place your tax residency status on record with SARS via this method than on eFiling (e.g. prior to completing a tax return).
When should I register for eFiling instead?
It is strongly advisable to register an eFiling profile in the following instances if:
• you have left South Africa when you have had to declare taxes in South Africa prior to leaving;
• if you had to account for deemed “exit tax” as set out above; or
• you still receive South African sourced income, e.g. rental income, interest, dividends and royalties and have not declared it before.
It is advisable, if any of these scenarios apply to you and you have not declared it to SARS, to contact us to regulate your tax affairs with SARS. Please contact Suzanne Smit at suzanne@fidelisvox.co.za if you have any questions.
For purposes of the article, we assume in the specific scenarios that the person is a non-tax resident based on the domestic tax laws in South Africa. This article only deals with tax residency and placing non-tax residency on record. It does not cover exchange control considerations and / or processes.