SARS turns up the heat on SA expats: What you need to know

By Kristin Putter *.Think again if you're a South African living overseas and believe you're exempt from paying taxes. The South African Revenue Service (SARS) has made it clear that tax compliance is now mandatory for South African expats and that they are now firmly in the limelight. If you're still regarded as a South African tax resident, SARS wants to know whether you're working from a beach in Bali, teaching English in Seoul, or enjoying a cup of coffee in London..Who counts as a South African tax resident?.To determine whether SARS still considers you one of their own, two key tests are applied:Ordinarily resident testThis test isn’t about where you currently live, but rather where your heart is — or more accurately, where your home is. If South Africa is the place you naturally return to after your travels, you’re probably still an SA tax resident.Physical presence testThis one is more straightforward: it looks at how many days you’ve actually spent in South Africa during the previous 5 years of assessment, and the current year of assessment. Meet the criteria, and you’re in SARS’ tax net — whether you like it or not..When do you stop being a tax resident?.Your residency status doesn’t change just because you packed your bags and caught a flight. You officially cease to be a tax resident:Ordinarily resident: When you emigrate with the genuine intention of making a permanent home elsewhere.Physical presence: Should you have become a South African tax resident by virtue of the physical presence test, then you cease to be a tax resident when you’ve been physically outside South Africa for at least 330 consecutive full days..The new emigration process: No more SARB.Prior to March 2021, formally emigrating meant dealing with the South African Reserve Bank (SARB) for exchange control purposes. That’s now a thing of the past. Today, your tax residency status is handled directly through SARS. You’ll need to submit a formal declaration along with solid proof that you no longer meet either residency test..Understanding the South African tax system.South African tax residents are taxed on their worldwide income — yes, that includes your salary in Sydney, your flat rental in Berlin, and your crypto gains in Canada. The only way to escape this net is by formally ceasing your tax residency.Some countries have Double Tax Agreements (DTAs) with South Africa. These agreements sometimes help avoid being taxed twice on the same income, but they don’t automatically remove your obligations to SARS. In certain situations where income is subject to taxation in two countries, the Double Tax Agreement (DTA) may provide relief by allowing credits in Country A for taxes paid in Country B. If you’re still considered a resident, you must file annual tax returns declaring everything — both locally and abroad.Even after ceasing residency, you may still need to file a return for any South African-sourced income (like rental income from property back home, etc.). New developments:SARS has rolled out new tracking systems to monitor former residents who return to South Africa. This means the tax authority is now watching for people who’ve previously declared themselves non-residents but have quietly come back without updating their status.If you return to South Africa — even temporarily — and your intentions suggest you’re back for good, SARS expects you to file a RAV01 form via eFiling to declare the “Reinstatement Date of RSA Tax Residency.”Why is this important? Because SARS is no longer just interested in when you leave — they now care just as much about when you come back..What happens if you don’t declare?Ignore your obligations and you might be in for a nasty surprise:Penalties and interest for non-disclosureBackdated tax assessments on your foreign earningsA full audit, complete with questions regarding your whereabouts, your financial situation, and your previous tax status To put briefly, trying to blend in could cost you far more than a late-night headache. The citizenship question: Some good news On a more positive note, the Constitutional Court has decided that obtaining a different nationality does not inevitably result in South Africans losing their citizenship. Previously, you risked losing your South African citizenship if you didn't seek for authorization before getting a second passport. That provision has now been declared unconstitutional.But—and this is crucial—your tax residency and your citizenship status are two very different things. You are not automatically a tax resident just because you have a South African passport, and vice versa. Final thoughts South African expatriates can no longer afford to be complacent as SARS continues to hone its instruments and expand its surveillance. Knowing and controlling your tax residence is essential, regardless of whether you're establishing a life abroad or just staying temporarily. Although breaking the regulations could have major financial repercussions, maintaining compliance doesn't have to be a nightmare. The secret? Be proactive, keep yourself informed, and seek professional assistance when in doubt. Because ignorance is never bliss when it comes to SARS. * Kristin Putter is a paraplanner for advisors Marise Reinach, CFP®, and Charize Beukes, CFP®, at Brenthurst Wealth, Pretoria kristin@brenthurstwealth.co.za.

SARS turns up the heat on SA expats: What you need to know

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