The South African Revenue Service (SARS) has introduced a new declaration form that can be used to inform the group that a taxpayer has broken South African tax residency.
Up until very recently, the primary method of informing SARS that a taxpayer has broken South African tax residency was by marking the date of cessation on the relevant annual tax return, and a taxpayer or their representative could set up a meeting at a SARS branch to inform SARS, said Daniel Baines, manager at PwC South Africa.
“This (new) form is not a replacement of using the traditional method of marking the cessation of residency on the tax return; it is an alternative,” he said.
“A taxpayer thus has the option to either inform SARS with the new declaration form or to mark it on the tax return. If the declaration form is used, the taxpayer or their representative will need to email the form with supporting documents to the relevant SARS email address. There is no difference in the outcome no matter the method used.”
While it may seem pointless to use the new declaration form, there are some circumstances where it needs to be used and some circumstances where it can be advantageous to use the form, Baines said.
These are set out as follows:
- If the taxpayer broke tax residency before the option to inform SARS was available, and they now want to inform SARS that they have broken their tax residency, the declaration form can be used to provide an added level of certainty;
- If the taxpayer does not have an Efiling profile – as they left South Africa prior to Efiling being established – the declaration form can be used instead of the taxpayer having to set up a new Efiling profile;
- If the taxpayer wants formal confirmation from SARS that they have broken their South African tax residency. Currently, the only confirmation that a taxpayer is able to obtain from SARS that a taxpayer has broken their tax residency is to take a screenshot of the RAV01 (from Efiling) form that contains the taxpayer’s tax residency status. If the taxpayer has marked that they have broken their tax residency on their tax return, the RAV01 should reflect the taxpayer as a non-resident taxpayer. Formal confirmation of tax residency status from SARS can be very useful for a taxpayer, especially if they are concerned about SARS trying to tax them on worldwide employment income earned over R1.25 million in the event of being tax resident (though any residence declaration to SARS can be subject to challenge);
- As a taxpayer’s representative, you do not have access to that person’s Efiling profile but are assisting them with breaking their South African tax residency.
“As can be seen, the new declaration form that can be used to inform SARS that a taxpayer has broken South African tax residency can be a very useful tool, even for employers,” said Baines.
“If a taxpayer’s employer needs formal confirmation from SARS that an employee has broken tax residency to mark them as a non-resident on payroll and thus not withhold PAYE, under certain circumstances, this new declaration form can also be used by the employer.”
You can find out more about the required documentation on PwC’s website here.