Be it the call of South Africa’s pleasant weather, a desire to raise a family close to parents, or retiring to the high-life, many thousands of South African expats elect to return home every year. No matter the reasons for repatriation, the South African Revenue Service (SARS) wants to know the finer details of when and why.
Richan Schwellnus
Tax Attorney
Nicolas Botha
Tax Team Compliance & Processing Manager
Many South African expats who emigrated in the past, were unaware that simply boarding a plane does not automatically absolve them from tax obligations in South Africa, even after decades abroad. Upon their return, an unwelcome surprise in the form of SARS tax queries may welcome them home.
Whether or not the formal financial emigration procedures were historically followed by returning expats, they need to prepare themselves for SARS to query their historic departure and consequent return home. Compliant repatriation necessitates a thorough and thoughtful residency recommencement process be utilised.
SARS Repatriation Queries
In recent months various socio-economic and migration indicators have suggested an uptick in the trend of returning South African expats, with SARS also taking notice. Many of these expats are finding themselves the subject of questions regarding their repatriation from the revenue authority.
In our practice we have further noted a vagueness in the structure and wording of such SARS queries posed to expats. Whether intentional or not, these questions are arguably aimed at creating a sense of comfort or confusion for returning expats, which could lead to unintentional and incorrect disclosures to the tax man –
Expats who do not respond carefully to the tax man with information available, may find SARS digging even deeper into the reasons for their return, as well as their current tax affairs.
Maintaining Tax Compliance
As is all too common, many expats simply neglect their tax affairs after their emigration, in the mistaken belief that SARS loses interest once they relocate abroad. Upon their return to South Africa, these expats will find the tax man paying close attention to them. Failure to satisfy SARS’ legal compliance requirements can culminate in unpleasant and unexpected tax liabilities.
As a starting point, expats preparing for a return home should ensure that their historic tax affairs are up-to-date and compliant. Whether expats remained South African tax residents whilst abroad, or ceased their tax residency, checking to make sure their departure was correctly disclosed to SARS is critical.
This step is especially crucial for those taxpayers who cut ties with the South African fiscus on a permanent basis. As the cessation of tax residency in South Africa is a formal process, a consequence of returning may bring into question the disclosure to SARS of their intention to remain abroad permanently.
Residency Recommencement: Ensuring a Compliant Repatriation
For those expats seeking a seamless return and integration back into the South African fiscal system, partnering with specialist tax advisors will ensure adherence to several important compliance checks.
More specifically, those expats who have acquired offshore investments have a golden opportunity to engage in strategic tax planning to protect their assets in the long run, prior to their return.
By enlisting the professional assistance of a multidisciplinary tax team, prudent expats can simplify their return home, and effectively navigate the subtle nuances and technicalities involved. From mitigating SARS audit risks to protecting hard-earned assets, utilising experienced tax advisors will translate into a stress-free residency recommencement.
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