Some interesting tax facts that may cause panic!
Time clean up and tidy up your #SARSCompliance and file the February 2019 tax return.
Not tax registered? Follow this link to register or call on us, and we can assist.
If you cannot be registered through your employer you will need to visit a SARS branch to register.
Don’t know your number? Time to call SARS as they will assist based on your SA ID number.
Here is some interesting fact which tax resident Expat #Saffas need to consider:
Ensure SARS knows and confirmed you are tax non-resident. It is not good enough to be tax deregistered and there is no comfort in a dated tax clearance or tax good standing certificate. Assuming you have not notified SARS that you are tax non-resident, herewith then some interesting facts:
- You earned remuneration for foreign services rendered, and then the following rules applies:
- You are obliged to file or submit a return for the 2019 year of assessment, despite your income being below R500 000.
- If your employer is NOT tax registered with SARS (i.e. you did not receive an IRP5 or IT3) you are deemed to be a provisional taxpayer and you need to also file the IRP6 forms for August 2018 and February 2019
- It follows that if you sold an asset, where ever in the world, the CGT was due by end of the provisional tax period (either August or February) and NOT on assessment.
- It follows that most expats, until they have successfully changed their tax status with SARS to that of tax non-resident, will be liable for provisional tax payments and were obliged to file said provisional tax returns
- You are not employed, on a spousal or sponsored Visa in another country. Do you need to file a tax return? Most probably YES! Why?
- If you held any funds in foreign currency or assets outside South Africa, in aggregate exceeding R225 000, on any one day during the period March 2018 until February 2019?
- Note: if the foreign assets included an interest or low interest loan accounts to any person or entity that is not SA tax resident, you are obliged to pay income tax on either the attributed income (section 7(8) of the SA Income Tax Act) and or the deemed interest income (section 31 primary adjustment), and wait for this: a further 20% (at least) on the deemed interest or section 31 transfer pricing adjustment (secondary adjustment).
- SARS issued a tax return? Then you are obliged to file. No exception and do ensure you have filed your provisional tax returns as well.
- This is normally where SARS records suggests you a trust beneficiary, a director of a company or a member of close corporation.
- We also see SARS issuing a tax return, when they are aware that you have a share (albeit a minority share) in CFC (controlled foreign company), i.e. a non-SA company where SA tax residents holds the majority (50% plus 1) of the shares and votes
- From 1 June 2018 all taxpayers who, together with any connected person, held at least 10% participation rights in any CFC must complete the CFC information in the new IT10B schedule.
- If you and your spouse jointly held 10%, or more you have to file this IT10B schedule as part of your IT12 or annual income tax return, despite not earning one cent of income from the company.
- NOTE: low or interest free loans to CFC and any other non-SA tax resident person, will most probably result in deemed foreign income. See above
- You earned interest, either in SA or outside SA, or received same from a local or foreign trust as a trust distribution
- Even if you are tax non-resident in terms of the income tax act (being ordinarily resident deemed tax non-resident because of a tax treaty application or tie-breaker), you remain subject to estate duty as none of our DTA’s dealing with normal tax, switches off or change your SARS estate duty exposure.
- If you hold any interest (directly or indirectly) in a fixed property (immovable property which includes some shareblock companies) you are most probably not able to deregister from SARS, as you will face CGT (capital gains tax) on death or disposal of the said immovable property. Tax non-resident status does not impact or change your CGT exposure in SA
- Note: Despite being tax non-resident and despite SARS so confirming, should your selling price on a residential property, exceed R2m you will be subject to section 35A CGT withholding tax at 7,5% OF THE SELLING PRICE.
Should you argue that you have told SARS you left SA, and were given a tax good standing letter of some sort, you remain to be SA tax resident in SARS’ view. Leaving the country and notifying SARS is not adequate. To be tax non-resident you need to ensure that:
- Your notify SARS of the fact that you are tax non-resident. Just saying you leaving the country is not adequate
- You need to disclose to SARS the reason why you are considered tax non-resident, being either no longer ordinarily resident in SA or being deemed exclusively tax resident in terms of an income tax treaty with another treaty country
- If you are tax non-resident in terms of treaty rules, relax the days in SA rules can most probably NOT bring you back into the tax system as a resident. The reason being that fact that you most probably ordinarily tax resident yet defined not a [tax] resident because of the treaty. The physical presence test or the days test making one resident, only applies to persons not ordinarily resident i.e. immigrants coming in for the first time, from another country, availing to a short term work permit (vs. a permanent residence permit)
- Very few South Africans can claim tax non-residency bases on the days outside SA. It is just not relevant to most born Saffas
- SARS considers your non-South African spouse, you met in and married while you were both in SA, as most probably tax resident i.e. there is no requirement to hold a permanent residence or to have been employed in SA.
Need some more information? Feel free to follow the link and make contact with Hugo van Zyl
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