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 In Articles, SARS, Tax
SOUTH AFRICANS WORKING ABROAD. Must you submit a tax return to SARS? 1


Must you submit a tax return to SARS?

The new expat tax law that came into effect from 1 March 2020, is going to affect the majority of South African taxpayers that have never submitted a tax return since leaving The Republic. Whilst some have no intention of returning to South Africa, their failure to follow the correct exit procedures when leaving South Africa, which includes paying one’s “exit tax” and formally changing one’s status to “non-tax resident” with SARS and the South African Reserve Bank (“SARB”) can find the taxpayer remaining a tax resident of South Africa.

A word of warning: tax law is more complicated than you think

Whilst many “tax advisors” are dangerously saying that all South Africans working abroad are not tax resident, these statements are both negligent and misleading, as they are often made without looking at an individual taxpayer’s personal circumstances nor correctly applying the South African tax residency tests. Taxpayers must clearly understand that the consequences of not following formal exit procedures nor correctly applying Double Tax Treaty relief ultimately means that they remain a tax resident of South Africa.

SARS provides clarity to taxpayers working abroad

In the Government Gazette dated 3 July 2020, the SARS Commissioner invoked the provisions of section 25 of the Tax Administration Act and specifically noted individuals who were required to submit tax returns for the 2020 tax year assessment.

The general rule is that natural persons whose gross incomes exceed the 2020 income thresholds are required to submit a tax return. However, persons whose gross incomes consist solely of remuneration paid or payable from one single source, which does not exceed R500,00.00 and employees’ tax has been deducted or withheld in terms of the deduction tables, are not required to submit a return for the 2020 tax year of assessment.

In addition, section 3(2)(c) states the above exclusion does not apply to natural persons who received any amount or who has an amount accrued to them in respect of any services that they rendered outside of South Africa.

Consequently, South African tax residents who receive income due to services that they render outside of South Africa will still be required to submit a tax return even where their gross income for the 2020 tax year of assessment does not exceed R500,000.00. Such individuals will be required to declare their foreign employment income and thereafter claim their foreign employment income exemption in terms of section 10(1)(o)(ii) of the Income Tax Act (if applicable).

Being forewarned will ensure you are better prepared

The fact that SARS specifically requires South African tax residents working abroad and earning foreign income to submit tax returns, is a further indication that South African expatriates are on the SARS’ radar. This further supports the fact that SARS will endeavour to identify all South African tax residents earning income abroad and is one of the expressively stated reasons for the implementation of the amended expatriate tax law.

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