The implementation of the new ‘Expat Tax’ has raised many questions from South African citizens living and working abroad. With financial emigration not guaranteeing non-residency, taxpayers need to be certain in which country they are tax resident as well as any Double Tax agreements between their country of work and South Africa.
The first step in understanding whether this tax applies to you is to firstly determine your residency.
To be ordinarily resident in South Africa, SARS will first look at your home address. Even if you are working abroad, if the place you return to and consider your home address is in South Africa then SARS will consider you as a tax resident.
The next step in determining residence is the physical presence test. To be physically resident you need to meet the following criteria. You need to be physically present for more than 91 continuous days in each of the past five years of assessment as well as more than 915 days in total in the previous 5 years.
If you are working and/or living abroad, it is crucial to determine your residency before 28 February 2021 to ensure that you are tax compliant, as SARS has indicated strict penalties for tax avoidance on Expat Tax.
