South Africa: Taxation of Expatriates

Have you ever wondered how you will be taxed in South Africa, especially since you have left the country and are now residing somewhere else in the world? We often get questions about this subject matter as most people more often than not, choose to ignore the subject as the mere thought of tax gives you a good reason to adopt the ostrich strategy (putting your head in the ground and hoping that you will not be seen).

The facts about your physical offshore status are however as follows:
Since 2001, residents (called 'ordinarily resident') are taxed on their world-wide income, but non-resident persons continue to be taxed only on their South African source income.
'Ordinary residence' is not defined in the law, but has been described as involving some continuity of residence, or as being the place where a person's belongings are stored, and to which he means to return.

Expatriates on assignment are normally classified as 'temporarily resident', which is equivalent to non-resident from a tax perspective, although there might come a point at which this could be challenged if roots start to go down too deeply.

On departure, an expatriate may take away his savings, but needs to confirm that he has not emigrated from South Africa before.

South African-source (taxed) income includes earnings from employment, remuneration for services rendered in South Africa, rent from property assets located in South Africa, and interest from loans applied or used in South Africa. Dividends however are not taxed in the hands of a South African natural person

A person is resident in South Africa for tax purposes if he or she:
• spends 183 days or more in the country;
• is “ordinarily resident” in the country (i.e. has a permanent dwelling in South Africa, or has close family, business or social ties with South Africa); or
• is physically present in South Africa for more than 91 days in each of the current and the previous five tax years, and is physically present in South Africa for a period exceeding 915 days in aggregate.

So be aware and take note how you will be taxed in South Africa:
Resident individuals are taxed on their worldwide income; non-residents are taxed on their South Africa-sourced income only.

A good reason to consider your tax residency status in South Africa!

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