The decision of whether an individual ceases to be a tax resident in South Africa is based on a number of both objective and subjective factors, says the South African Revenue Services (SARS).
In a note on Thursday (3 June), the revenue collector said this includes “a factual enquiry on whether or not that person’s subjective intention to cease to be ordinarily resident in South Africa and no longer make South Africa his or her real home”.
SARS said that the factors it will be taken into account to determine whether a taxpayer has ceased to be a tax resident of South Africa include:
- The type of visa on which they have gone to the foreign country;
- Proof of permanent residence in the foreign country;
- A certificate of tax residence from the foreign revenue authority or a letter from the authority that indicates that they are regarded as a tax resident in that country;
- Details of any property that they may still have available in South Africa;
- Details of any business interest (e.g. investment and employment) that they may still have in South Africa;
- Details of their family – including whether any family members are in South Africa and the reason thereof;
- Details of their social interests – such as your gym contract, recreational clubs and societies and location of their personal belongings;
- Details of any return visits to South Africa, the frequency thereof and the reason for undertaking such visits.
“An individual, who is resident by virtue of the physical presence test, ceases to be a resident when that person is physically outside the Republic for a continuous period of at least 330 full days,” it said.
“The individual will be deemed to have ceased to be a resident from the day such person left South Africa.
“An individual who has become a tax resident of another country through the application and for purposes of the application of a double tax agreement will also cease to be a resident for tax purposes in South Africa.”
How do I tell SARS that I am no longer a tax resident?
The taxpayer must inform SARS by way of one of the following two channels:
- If a taxpayer ceased to be a tax resident of South Africa during the current year of assessment, the taxpayer can inform SARS through the wizard on the income tax return (ITR12) and the date on which the taxpayer ceased to be a tax resident must be provided.
- Alternatively, the taxpayer can inform SARS by submitting the Declaration of Cease to be a Tax Resident here.
“The purpose of the declaration is to inform SARS of the change in tax residency that will impact the basis on which you will be subject to tax in South Africa and how your returns will be assessed going forward,” SARS said.
“The year in which you have ceased to be a tax resident may also result in a possible deemed capital gains tax disposal depending on the type of assets you held and where they are located at the time.”
You can read more about the process here.