SARS targeting homesick South Africans

Many South Africans who have spent years abroad eventually find themselves drawn back home. However, tax experts warn that SARS has been waiting.

Repatriation is a common occurrence, whether due to the lure of familiar surroundings, a desire to raise their children near family, or the prospect of enjoying a comfortable retirement.

However, those making the move back may face an unexpected challenge: scrutiny from the South African Revenue Service (SARS).

According to Richan Schwellnus and Nicolas Botha from Tax Consulting SA, a common misconception among expats is that leaving the country automatically severs all tax obligations to South Africa.

Unfortunately, simply boarding a plane and building a life overseas does not necessarily absolve one of tax responsibilities.

Expats who have not taken the necessary steps to formally cease their South African tax residency may still be considered taxpayers by SARS—even after years or decades abroad.

Schwellnus and Botha noted that as more South Africans return home, SARS is paying closer attention to their tax affairs, raising queries about the timing and nature of their departure, as well as their return.

“This can come as an unpleasant surprise for those who assume that their tax matters were settled long ago.

“Whether they had officially emigrated or not, returnees are now facing increased scrutiny, with SARS seeking to determine whether they have met all legal compliance requirements,” they said.

Recent trends suggest a rise in South Africans choosing to return home, influenced by personal, economic, or social factors.

While some reports suggest a wave of repatriation, Statistics South Africa data indicates no dramatic surge in returnees.

Since 2000, around 413,000 South Africans have emigrated, while just under 28,000 have returned.

This suggests that while some expats are drawn back to South Africa, the majority still find life abroad more appealing.

At the same time, SARS has become more proactive in monitoring returning expats.

“In our experience, many of the questions posed by SARS to returnees are vaguely structured, which can lead to confusion,” said Schwellnus and Botha.

“Whether intentional or not, this ambiguity can result in incorrect disclosures by expats who may not fully understand the implications of their answers,” they added.

Responding without careful consideration can open the door for further investigation into one’s tax history and financial affairs.

One of SARS’s key concerns is whether expats correctly disclosed their tax status when they initially left the country.

If an expat formally ceased their tax residency but later returned, SARS may question whether their original declaration was accurate or whether they had ongoing tax obligations during their time abroad.

This can result in reassessments, penalties, or unexpected tax liabilities.

For those planning a return to South Africa, a proactive approach to tax compliance is essential. Before repatriating, expats should review their historic tax status to ensure that all necessary disclosures were made to SARS.

This applies whether they remained tax residents while abroad or had officially ceased their tax residency. Ensuring that the original departure was properly recorded can prevent complications upon return.

Expats who neglected their tax affairs after leaving South Africa are particularly vulnerable to scrutiny.

Many assume that because they were no longer living in the country, SARS had no further interest in their financial matters. This is not the case.

SARS retains the authority to investigate tax residency status, and non-compliance can lead to significant tax liabilities.

Ultimately, for those returning home, navigating SARS queries can be a complex process. Given the risks involved, it is advisable to seek professional assistance to ensure a smooth transition.

Understanding the tax implications of repatriation and addressing compliance issues in advance can help avoid financial and legal challenges, ensuring a seamless reintegration into South African life.