Tax FAQ: Confirming Non-Resident Tax Status by SARS
Background
Your client has moved to France and needs confirmation of their non-resident tax status for a South African fund manager. They’ve provided proof of Italian residency, updated tax returns, and a signed RAV01 form. Below, we explain the steps, required documents, and tax implications—including possible Capital Gains Tax (CGT) liabilities.
Key Questions and Answers
How can a client confirm they have ceased to be a South African tax resident?
To confirm non-residency, clients must follow specific SARS processes. Here's a step-by-step guide:
Determining Non-Residency
A taxpayer can cease to be a South African tax resident based on these criteria:
Ordinary Residence Test:
The client no longer considers South Africa their permanent home.
They have established a permanent home in another country.
Physical Presence Test:
The client has been outside South Africa for at least 330 consecutive full days.
They are considered a non-resident from the day they left.
Double Taxation Agreement (DTA):
If the client qualifies as a tax resident in another country under a DTA, they cease to be a South African tax resident.
Declaring Non-Residency
To officially notify SARS, the client must:
Step 1. Update the RAV01 Form on SARS eFiling:
Log in to SARS eFiling and complete the "Income Tax Liability Details" section of the RAV01 form.
Specify the date they ceased to be a resident.
SARS will generate a case and request supporting documents.
Note: If the client is not registered on eFiling, they can email contactus@sars.gov.za.
Step 2. Provide Supporting Documents:
Standard required documents include:
Proof of permanent residency in the new country (e.g., residency card).
Registration with the foreign tax authority.
Signed declaration explaining why they ceased tax residency in South Africa
SARS may require additional documents depending on which criteria is applicable to determine non-residency:
For Ordinary Residence:
Visa details for the foreign country.
Proof of permanent residence or tax residency certificate from the foreign tax authority.
Details of South African property or investments and their purpose.
Information about family, social ties, and any return visits to South Africa.
For DTA Application:
Tax residency certificate from the foreign tax authority.
Capital Gains Tax (CGT) Implications
Ceasing tax residency may trigger an exit CGT, requiring the client to pay tax on the deemed disposal of worldwide assets.
South African immovable property is excluded from this rule.
Considerations for Supporting Documents
SARS evaluates various factors, including but not limited to:
Evidence of immediate family residing in the foreign country.
Participation in community or religious organisations abroad.
Ownership and usage of South African property or investments.
Frequency and purpose of return visits to South Africa.
Tax residency certification from the foreign revenue authority.
2. Does financial emigration alone establish non-residency?
No. Financial emigration only refers to moving funds out of South Africa and does not affect tax residency status.
3. Who submits the declaration to SARS?
The client or their authorised representative (e.g., a tax practitioner) must submit the declaration.
Tips for Accountants
Prepare Documentation Thoroughly: Make sure all required documents are ready before submitting the RAV01 form to avoid delays.
Understand CGT Implications: Educate clients on the potential CGT liabilities when they cease to be South African tax residents.
Stay Updated: Regularly review SARS guides and updates, such as:
For additional guidance, contact CIBA’s Technical Team at technical@myciba.org or consult a tax professional.
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