Azra Hoosen | ah@radioislam.co.za
31 May 2024 | 13:00 CAT
2 min read

Many South Africans who venture abroad for work find themselves entangled in tax complexities with the South African Revenue Service (SARS), even after years of living abroad. Despite their relocation, failure to formally emigrate leaves them classified as South African taxpayers by SARS, subjecting them to taxes on global income.

The issue arises from a lack of notification to SARS regarding their residency change, leading to continued taxation even while residing abroad. Individuals must understand that South Africa taxes worldwide income unless a double taxation agreement is in place with their current country of residence.

According to independent financial advisor Kenny Meiring, leaving South Africa without formally emigrating can lead to tax issues with SARS, even after 10 years.

“There is usually some kind of a double taxation agreement in place, so if the country you are staying in has this agreement, you won’t pay double tax, but there are certain limits and certain amounts, for example, if you earning 1.25 Million, SARS will start taxing you on anything above that amount. But if you intend on not returning, you have to notify SARS that you are no longer a resident; you should be deregistered, however, this will trigger other issues,” he said.

Meiring emphasized the significance of timing when notifying SARS about the cessation of tax residency in South Africa. Once this status is terminated, SARS considers individuals to have sold all their assets, triggering capital gains tax based on the day preceding the cessation of tax residency.

To rectify their tax status, individuals must inform SARS of their change in residency, triggering capital gains tax on South African assets. This move ultimately relieves them from South African tax obligations and estate duties.

However, the process is not without its complexities, particularly concerning capital gains tax calculations. Seeking professional advice is advised to navigate these intricacies effectively.

Meiring advises consulting with someone knowledgeable about South African tax laws and the tax regulations of the country where you currently reside. In many cases, there may be no penalties involved, and you simply need to submit nil returns to ensure compliance with tax requirements.

“Even if you are living abroad, register for e-filing and make sure you submit your returns. Most of the time, no real tax is required. However, if you don’t intend to return, you will have to pay your capital gains tax, and you can move on with your life in your new place of residence and a different country,” he said.

South Africans living abroad must proactively manage their tax status with SARS to avoid prolonged tax liabilities and ensure compliance with relevant regulations.

LISTEN to the full interview with Ml Sulaimaan Ravat and financial advisor Kenny Meiring, here.