GENERAL EXPAT TAX QUESTIONS

What will happen to my foreign savings should I return to South Africa due to the current or future economic state?

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.

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.

Would I receive a tax clearance certificate if my CGT disposal is being calculated?

Obtaining an Emigration Tax Clearance Certificate (“ETCC”) will not automatically be provided for upon calculating your CGT or “exit charge”. Other factors would need to be taken into account to ensure that SARS would be able to produce the ETCC.

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 taxpayers 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 takes into account the average time spent physically present in South Africa within a specified period.

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.

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.

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.

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.

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 a interest in a company, any income generated as a result of that property will be taxed at a rate of 22%. This would be beneficial in the instance where your individual taxable income is taxed at a rate higher than 22%. 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.

Is the 2.5% forex charge for money transfers taxable?

The forex charge itself may not be taxable, however, the money being transferred which results in the charge may be taxable.

Which bank accounts are auditable by SARS?

In terms of the Tax Administration Act obliges all financial institutions to report taxpayer information electronically to SARS. In addition, South Africa is a signatory to the Common Reporting Standards (“CRS”) as well as the Foreign Account Tax Compliance Act (“FACTA”), therefore local and foreign financial institutions being required to required to report on financial data relating to foreign and national accounts.

Should I die while I am abroad, and my family wants to return to South Africa, will they be considered non-tax residents?

Whether or not they ceased their tax residency, if they have an intention to return to South Africa they may be regarded as tax residents of South Africa.

As a non-tax resident, can I buy property in South Africa as an investment?

Yes, you may. However, banks limit the loan they provide to non-residents. The National Treasury announced in the budget speech earlier this year, that restrictions imposed on emigrants being allowed to invest, having bank accounts and being able to borrow money in South Africa had been repealed. Therefore, it is likely that we may see a change in accessibility and availability of loans to non-residents post 1 March 2021.

Is it possible to get all signoffs from SARS to prove that I am no longer a tax resident without coming to South Africa?

Yes, we can assist you in formalising your non-tax residency and as we would be acting under a Power of Attorney, the process would not require you to be present in South Africa.

How will the exemption of R1.25mil be calculated considering the different exchange rates?

SARS publishes average exchange rates to be used to determine foreign income received by the taxpayer. It is further possible to use the spot rate on the day on which your salary was transferred.

Are there any other mechanisms in place to reduce taxable income beside RA and tax-free savings?

Yes, there are. Our company can assist you with a tax planning memorandum in which we provide you with further tax reducing mechanisms.

Can SARS audit foreign bank accounts?

Yes, under the Common Reporting Standards (“CRS”) all South African and international financial services providers are required to report financial data on all foreign account holders to SARS.

Does Tax Consulting offer a one stop service?

Yes, any tax related work that needs to be done can be done by our company. In addition, our practice provides Tax Planning, Dispute Resolution and Compliance services across all tax types, with deeply experienced Tax Attorneys, CA’s and Professional Accountants. We perform CIPC Services, including Essential Services Certificate Applications, Work Visa Services (South Africa and Africa), Accounting work and sign-off, Forex as well as Employee Remuneration and NED work

Is it possible to own property both in SA and abroad and what are the tax implications?

Both residents and non-residents are able to own property in South Africa and abroad. Insofar as South Africa is concerned the difference lies in the loan amount that can be offered by the respective banks. Generally speaking, tax residents are required to declare all assets owned to SARS. However, further tax implications would need to be investigated based on your individual circumstances.

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