Returning to South Africa does not affect you being able to have foreign savings. However, as a tax resident, any interest income earned from these savings would need to be declared to SARS.
If the money being transferred into the South African bank account is from a foreign source, and falls within the definition of ‘gross income’, or is subject to a special inclusion, then it would be regarded as foreign income. An example is income earned from employment services rendered by you, while you are physically outside South Africa (even where your employer is in South Africa).
Obtaining an Emigration Tax Clearance Status (“ETCS”) will not automatically be provided for upon calculating your deemed CGT or “exit charge”. Other factors would need to be considered to ensure that SARS would be able to produce the ETCS.
The location of the employer does not play a significant role in determining where your tax residency falls. However, further investigations would need to be made on your circumstances to properly advise.
Tax residence determines where you regarded as a resident for tax purposes, i.e., where you should be paying taxes. In South Africa, there are two tests used to determine tax residency:
Ordinarily Resident Test: this test looks at the taxpayer’s subjective intention together with objective factors to support this subjective intention. Should you not qualify under this test, then the next test is considered.
Physical Presence Test: this test considers the average time spent physically present in South Africa within a specified period.
As tax resident you will be taxed on your worldwide income and assets which include all foreign and local income and assets.
Determining your Tax Residency is dependent on two tests, the Physical Presence Test, and the Ordinarily Resident Test – thus even if you don’t spend any time in SA, you can still be considered a tax resident under the latter of the two tests, which focuses on what your intention is.
The Ordinarily Resident Test is the test used to determine your tax residency taking into consideration your intention and surrounding circumstances. Our teams can assist in ascertaining your tax residency status.
Non-tax residency must be formally declared to SARS and is not automatically applied even where you are theoretically no longer regarded a tax resident in terms of the residency tests.
Being outside of the country for 330 consecutive days only has an effect of your tax residency status where you became a tax resident by way of the physical presence test. As such, we would first need to ascertain whether you are ordinarily resident or not and thereafter evaluate whether the 330 consecutive days in which you are outside of the country have a bearing on your tax residency status. Here again, non-tax residency must be formally declared to SARS and is not automatically applied even where you are theoretically no longer regarded a tax resident in terms of the residency tests.
This would be dependent on what your intention is in doing so. We would need to further investigate your circumstances to sufficiently advise. It must be noted, however, that where a company holds an interest in a company, any income generated because of that property will be taxed at a rate of 28%. This would be beneficial in the instance where your individual taxable income is taxed at a rate higher than 28%. On the other hand, having a company hold an interest in a primary residence, for example, may result in higher CGT implications upon sale of the primary residence and the primary residence exclusion cannot be claimed by a company.
Yes, South African sourced income will still need to be declared to SARS even where you are a non-tax resident.
The tax rate on rental income is not determined independently but it would be dependent on the total taxable income.
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