The date for the dreaded “Expat Tax” draws ever near. Still a lot of confusion over who this will apply to, and in all honesty, a lot of this confusion is caused by companies who make money over the panic.
Individuals who have lived overseas for years are concerned that SARS is suddenly going to demand payment from them.
The reality is that in order for Expat Tax to apply to an individual, they have to be tax resident in South Africa, What does that mean? Well, they have to meet the criteria for residency either by way of ordinary residence or by way of physical presence.
The physical presence test is a calculation of the amount of time you spend in South Africa. So, if you spend 91 days, in the current year, in South Africa, plus 91 days for each of the preceding five years, and a total of 915 days over those five years, then you will fall into the definition of a tax resident. If you are caught by the physical presence test you will be taxed as if you are resident in South Africa.
The ordinary resident test is a little more “airy fairy”. There is no set definition but SARS looks at where “home” is. Do you have assets in South Africa? Are your family based here? Do you have a home here? Is this where you always come back to? If so, then you would be considered a tax resident.
If you have been based in another country for a period of time, you need to check if there is a Double Taxation Agreement (DTA). A DTA will determine which country you are a resident of. Once again, this often depends on – Where is your home?
If you have packed up lock, stock and barrel and moved over the seas, bought a house, had kids – that is your home, not South Africa. You are not an ordinary resident here. Even if your parents live here, and you have other family living here, this is not your primary residence.
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