There are two ways to change your tax residency. You can either become a tax resident in South Africa or cease to be a tax resident in South Africa. You may wonder why this is important. South African tax residents are taxed on their worldwide income, whereas non-residents are taxed only on South African source income.
To be a South African tax resident, you must meet either the ordinarily resident test or the physical presence test.
The ordinarily resident test generally looks to the place to where you return from your wanderings. It is a subjective test supported by objective factors that determine where your real home is.
The second test is the physical presence test. This test is entirely objective and considers the number of days you spent in South Africa over a six-year period. The test states that a natural person must be physically present in South Africa for a period or periods exceeding:
- 91 days in total during the year of assessment under consideration, as well as
- 91 days in total during each of the five years of assessment preceding the year of assessment; and
- 915 days in total during those five preceding years of assessment.
If you meet either of these tests, you will be regarded a tax resident in South Africa and taxed on your worldwide income. However, irrespective of whether you qualify as a South African tax resident under either the “ordinarily resident” or “physical presence” test, you will not be a tax resident in South Africa if the double tax agreement between South Africa and another country determines otherwise.
If you cease to be a tax resident in South Africa, you must inform SARS through the completion of an RAV01 form on eFiling and submit relevant supporting documentation. The exact date on which you cease to be a resident is important when determining your tax liabilities and must be submitted to SARS as part of your disclosure.
The following documentation will need to be submitted along with your RAV01 form:
- The cease-to-be resident Declaration Form;
- Supporting documentation which evidences that you ceased to be a South African tax resident, which includes practical documents such as a copy of your passport, visa, permanent residency permit to reside in the foreign country and a travel diary since the date you ceased to be a South African tax resident; and
- A motivational letter.
This declaration informs SARS of your change in tax residency and how you should be taxed in the future. The information required by SARS is extensive and subject to change without notice. We recommend that you contact your tax advisor for assistance with this process.