
If you’re a South African living abroad, this one’s for you. The South African Revenue Service (SARS) has made some changes that mean you must check, verify, confirm and double-check your non-resident tax status with SARS before submitting your 2024 tax return. Failure to do so could lead to serious consequences such as surprise tax audits, unexpected taxes, penalties, and even issues with your South African bank account or international money transfers. So, it’s crucial to avoid the long arm of the revenue authority and ensure your tax affairs are in order!
Who is a tax resident in South Africa?
A South African tax resident is an individual who meets all the legal requirements of tax residency. This means individuals who meet the requirements of the ordinarily resident or the physically present tests used by SARS. So, how do you become a non-resident for tax purposes in South Africa? For this to happen, you must cease your tax residency with SARS through the official process – tax emigration.
Why is it essential to become a non-resident for tax purposes in South Africa?
Until you have completed the process of tax emigration, SARS has the authority to continue treating you as if you are a tax resident because, technically, you still are. It means you can be taxed on your foreign income in South Africa, which might lead to an awkward double taxation situation.
Read more: The dangers of not completing tax emigration after you leave South Africa.
Proof of non-residency: what will SARS accept?
Many expats are shocked when they receive a letter from SARS asking for proof to back up their assertion that they no longer meet tax residency requirements. This can happen if you declare that you are a non-resident on your SARS eFiling profile but need the correct paperwork to back it up.
If you’re an expat who left South Africa before March 2021 and have an “Emigration Confirmation Letter” from the South African Reserve Bank, that’s not enough anymore. SARS wants more proof. So, if you want to file your taxes as a non-resident, you’ll need to dig up some extra documents.
SARS shifts goalposts on how to become a tax non-resident of South Africa
SARS is known for changing the rules on expats. It’s their thing. The latest change is that you urgently need to re-verify your non-resident status on eFiling. This extra step is essential to make sure you file your taxes correctly. If you don’t do it, SARS will think you’re still a South African resident, and you could get hit with automatic assessments, unexpected taxes and penalties.
It can be frustrating, especially if you’ve already done everything right previously. But it’s essential to keep up with these changes and make sure your status is correct. Staying updated on tax regulations will not only keep you informed but also prepared for any changes that may affect your tax residency status.
Don’t assume you’re in the clear: double-check your South African tax residency status today. By doing so, you can reassure yourself that your tax affairs are in order and that you are in control of your tax residency status.
SARS has surprised many South Africans living abroad by changing their tax status back to “resident.” Even if you thought you were all set, you might need to go back and fix this. If you get a request from SARS to verify your tax residency, pay attention to it. It is important. You must update your status to indicate when you stopped being a South African resident.
Once you do this and send in the correct paperwork, SARS will officially change your status to “non-resident” and issue you a letter confirming this, known as a SARS Non-Resident Tax Status Confirmation Letter. This letter is important if you want to file your taxes as a non-resident in the future or if you need to make international money transfers out of South Africa.
Read more: SARS Alert: financial emigration doesn’t automatically make you a tax non-resident.
What if I emigrated from South Africa a number of years ago and did not inform SARS?
Suppose you previously ceased exchange control residency through the South African Reserve Bank under the old regime. In that case, you must apply for the SARS Non-Resident Tax Status Confirmation Letter. If you receive a verification request from SARS, please treat it as a warning and an opportunity to prevent potential tax risk and non-compliance.
Read more:
- Top tips for staying under the radar with SARS.
- Steps to take if your SARS tax compliance status shows as “non-compliant”.
FinGlobal: tax emigration specialists for South Africans abroad
Need help with your tax residency status? FinGlobal can assist! We’re ready to help you clarify your tax status with SARS, no matter your circumstances. Whether you need assistance becoming a tax non-resident of South Africa, a non-resident tax clearance certificate, or your SARS Non-Resident Tax Status Confirmation Letter, FinGlobal can handle it all for you seamlessly and conveniently.
Please contact us today to learn more about our trusted, reliable cross-border financial services.