SARS introduces new procedure to break South Africa’s tax residency

The South African Revenue Service (SARS) has introduced a new declaration form which can be used to inform the group that a taxpayer has broken South African tax residency.

Until recently, the primary method of notifying SARS that a taxpayer had severed their South African tax residency was to mark the termination date on the relevant annual tax return, and a taxpayer or their representative could arrange a meeting. in a SARS branch to inform about SARS, said Daniel Baines, director of PwC South Africa.

“This (new) form does not replace the traditional method of mentioning the cessation of residence on the tax return; it’s an alternative, ”he said.

“A taxpayer thus has the option of either informing SARS with the new declaration form, or of marking it on the income tax return. If the declaration form is used, the taxpayer or his representative should send the form with supporting documents by email to the relevant SARS email address. There is no difference in the result, regardless of the method used.

While it may seem unnecessary to use the new declaration form, there are certain circumstances where it should be used and certain circumstances where it may be beneficial to use the form, Baines said.

These are defined as follows:

• If the taxpayer broke their tax residency before the option to notify SARS was available and now wishes to notify SARS that they have broken their tax residency, the declaration form can be used to provide a level additional certainty;

• If the taxpayer does not have an Efiling profile – as he left South Africa before the establishment of Efiling – the declaration form can be used instead of the taxpayer having to create a new Efiling profile;

• If the taxpayer wants formal confirmation from SARS that he has broken his South African tax residency. Currently, the only confirmation that a taxpayer is able to get from SARS that a taxpayer has broken their tax residency is to take a screenshot of the RAV01 form (from Efiling) which contains the taxpayer’s tax residency status. . If the taxpayer has indicated that he has broken his tax residence on his tax return, the RAV01 must reflect the taxpayer as a non-resident taxpayer. Formal confirmation of SARS tax residency status can be very helpful for a taxpayer, especially if they are concerned that SARS is trying to tax it on global employment income earned over R125 million in the event of a loss. tax residency (although any declaration of residency in SARS may be disputed);

• As a representative of a taxpayer, you do not have access to that person’s electronic reporting profile, but you help them break their South African tax residency.

“As can be seen, the new reporting form that can be used to notify SARS that a taxpayer has broken South African tax residency can be a very useful tool even for employers,” Baines said.

“If a taxpayer’s employer needs formal confirmation from SARS that an employee has broken their tax residency to mark them as a non-resident on the payroll and therefore not withhold PAYE, under certain circumstances, this new declaration form can also be used by the employer. “

You can read more about the required documentation on the PwC website here.