Returning to South Africa does not affect you being able to have foreign savings. However, as a tax resident, any interest income earned from these savings would need to be declared to SARS.
GENERAL EXPAT TAX QUESTIONS
WOULD I RECEIVE A TAX CLEARANCE CERTIFICATE IF MY DEEMED CGT DISPOSAL IS BEING CALCULATED?
Obtaining an Emigration Tax Clearance Status (“ETCS”) will not automatically be provided for upon calculating your deemed CGT or “exit charge”. Other factors would need to be considered to ensure that SARS would be able to produce the ETCS.
WHAT EXACTLY IS TAX RESIDENCE?
Tax residence determines where you regarded as a resident for tax purposes, i.e., where you should be paying taxes. In South Africa, there are two tests used to determine tax residency:
Ordinarily Resident Test: this test looks at the taxpayer’s subjective intention together with objective factors to support this subjective intention. Should you not qualify under this test, then the next test is considered.
Physical Presence Test: this test considers the average time spent physically present in South Africa within a specified period.
As tax resident you will be taxed on your worldwide income and assets which include all foreign and local income and assets.
AM I STILL ELIGIBLE FOR TAX IF I AM NOT A REGISTERED NON-RESIDENT AND I AM OUT OF SOUTH AFRICA FOR 330 CONSECUTIVE DAYS AND ONLY VISIT FOR 30 DAYS IN A TAX YEAR?
Being outside of the country for 330 consecutive days only has an effect of your tax residency status where you became a tax resident by way of the physical presence test. As such, we would first need to ascertain whether you are ordinarily resident or not and thereafter evaluate whether the 330 consecutive days in which you are outside of the country have a bearing on your tax residency status. Here again, non-tax residency must be formally declared to SARS and is not automatically applied even where you are theoretically no longer regarded a tax resident in terms of the residency tests.
DO I STILL HAVE TO PAY TAX ON RENTAL INCOME ON AN INVESTMENT PROPERTY IF I AM A NON-TAX RESIDENT?
Yes, South African sourced income will still need to be declared to SARS even where you are a non-tax resident.
DOES FOREIGN INCOME INCLUDE MONEY PAID FROM ABROAD INTO A SOUTH AFRICAN BANK ACCOUNT?
If the money being transferred into the South African bank account falls within the definition of gross income or is regarded as a special inclusion, then it would be regarded as foreign income.
WHAT HAPPENS IF I WORK IN BAHRAIN BUT I AM EMPLOYED BY A COMPANY IN DUBAI?
The location of the employer does not play a significant role in determining where your tax residency falls. However, further investigations would need to be made on your circumstances to properly advise.
IF I HAVE NOT LIVED IN SA FOR MORE THAN 15 YEARS AND DO NOT SPEND MORE THAN 30 DAYS PER ANNUM IN THE COUNTRY, HOW WILL THIS EFFECT MY TAX POSITION?
Determining your Tax Residency is dependent on two tests, the Physical Presence Test, and the Ordinarily Resident Test – thus even if you don’t spend any time in SA, you can still be considered a tax resident under the latter of the two tests, which focuses on what your intention is.
The Ordinarily Resident Test is the test used to determine your tax residency taking into consideration your intention and surrounding circumstances. Our teams can assist in ascertaining your tax residency status.
Non-tax residency must be formally declared to SARS and is not automatically applied even where you are theoretically no longer regarded a tax resident in terms of the residency tests.
IF I HAVE FIXED PROPERTY IN SOUTH AFRICA, WOULD IT BE A GOOD IDEA TO TRANSFER IT TO A COMPANY?
This would be dependent on what your intention is in doing so. We would need to further investigate your circumstances to sufficiently advise. It must be noted, however, that where a company holds an interest in a company, any income generated because of that property will be taxed at a rate of 28%. This would be beneficial in the instance where your individual taxable income is taxed at a rate higher than 28%. On the other hand, having a company hold an interest in a primary residence, for example, may result in higher CGT implications upon sale of the primary residence and the primary residence exclusion cannot be claimed by a company.
WHAT TAXES NEED TO BE PAID ON ANY RENTAL EARNINGS FROM SOUTH AFRICA?
The tax rate on rental income is not determined independently but it would be dependent on the total taxable income.