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Unpacking expats

Updated: Oct 21, 2021

Fear and confusion about SARS expat rules still abound amongst South Africans who are no longer living in South Africa. Some of this is caused by the media hype around expat tax so I thought in my blog post today I would unpack this a bit more.

The real issue at hand here is WHO (or what) is an expat?

For starters an expat has to be an employee. The offending expat clause in the SA Income Tax Act says that “There shall be exempt from tax …. any form of remuneration … (that doesn’t currently exceed R1 000 000 paid to) … any EMPLOYEE….”

It is absolutely clear then, that if you are not an employee you are automatically excluded from the expat tax debate. So for those of us that are self-employed expat tax is irrelevant.

And before anyone moans at me, TM has indicated that the R1 000 000 will be moving to R1 250 000 but that’s not legislated yet so, because it’s not legislated it isn’t!!!

The next issue at hand is where you are resident. This is not quite as simple as it sounds and there are a number of “tests” that all Revenue authorities use to determine where you reside. To cut to the chase though, if you are:

  • employed physically outside South Africa; and

  • are still ordinarily resident in South Africa; and

  • are still a South African citizen with other economic ties to the country

then you are classified as an expat and need to treat your tax returns to SA as such. That means FULL COMPLIANCE if you wish to avoid penalties. This would include keeping track of the amount of time you are out of the country which must be supported by the departure and entry stamps in your passport.

But there’s another group of people who may need to give this all some thought – and I think that this is a much bigger group pf people than the expats. These are folk who are:

  • employed physically outside South Africa; and

  • are NOT ordinarily resident in South Africa after 2001; but

  • are still South African citizens and have retained economic ties to the country.

This group are not expats BUT they could well have historical compliance issues. For example, if you are in this group and have failed to submit your tax returns since you left then you are not compliant. Simply because you sold up, packed your bags and got on a plane doesn’t mean that you have “left South Africa” from either a SARS or SARB perspective. In fact, it’s quite the opposite – if you haven’t told them you’ve left, then, you are assumed to still be part of the SA system and processes.

So, if you are like many South Africans on foreign shores and fall into this 2nd group then you should stop worrying about expat tax and start worrying about getting your SARS returns up to date. And don’t think SARS doesn’t know you have an “offshore bank account” – with the recently implemented CRS system worldwide (except the USA which has FATCA) SARS has access to every bank account you have virtually anywhere in the world.

If you ARE in this category or you are an expat and need some help then pop us an email and we will do our best to either help you or put your mind at rest. First contacts never cost money so you have nothing to lose.

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