Leaving SA? Here’s what Sars wants you to know

FOREIGN EMPLOYMENT INCOME

- RAEESA KADER

AS MORE South Africans look abroad for work opportunities, study options or a fresh start, the question of tax becomes unavoidable.

The emotional side of leaving is real, but the practical reality is that the SA Revenue Service (Sars) does not forget about you when you board a plane. The tax landscape for South Africans moving abroad is nuanced, but taxes should not be the hurdle that trips you up.

South Africa adopts the residents-based tax system, which means that residents are taxed on their worldwide income, irrespective of where it was earned.

Nonresidents, however, are taxed only on South African-sourced income. The term “resident” should not be confused with “citizen”. You can cease tax residency without losing your South African passport, because residency is purely a tax law concept.

Whether or not Sars regards you as a resident depends on two main tests. The first is whether you are “ordinarily resident” in South Africa. This is the country you regard as home, the place you naturally return to after time away.

Even after years abroad, if you maintain strong ties such as family, property or the intention to return, you may still be regarded as ordinarily resident in South Africa.

The second is the physical presence test, which looks at the number of days you physically spend in the country.

If you spend more than 91 days in the current tax year, more than 91 days in each of the five preceding years, and more than 915 days in total across those five years, you will still be considered a tax resident. All three conditions must be met.