{"id":169819,"date":"2024-05-01T07:33:00","date_gmt":"2024-05-01T05:33:00","guid":{"rendered":"https:\/\/wereldwyd.co.za\/take-note-of-flagged-tax-returns-even-if-you-are-a-non-resident\/"},"modified":"2024-05-01T07:33:00","modified_gmt":"2024-05-01T05:33:00","slug":"take-note-of-flagged-tax-returns-even-if-you-are-a-non-resident","status":"publish","type":"post","link":"https:\/\/wereldwyd.co.za\/en\/take-note-of-flagged-tax-returns-even-if-you-are-a-non-resident\/","title":{"rendered":"Take note of flagged tax returns even if you are a non-resident"},"content":{"rendered":"\n

By Amanda Visser<\/em><\/p>\n\n\n\n

There has been a noticeable increase in the number of South Africans living abroad who are being flagged for not submitting tax returns. The South African Revenue Service (SARS) has sent these taxpayers letters to inform them of outstanding returns for multiple years. \u201cIt appears that SARS has obtained third-party information on the taxpayers through the automatic exchange of information based on common reporting standards\u201d, says Jonty Leon, managing partner at the Leap Group. He says failure to respond to these letters may result in the levying of penalties. Leon advises South Africans abroad to review their SARS profiles. \u201cThe crucial first step is to assess if they meet the South African residence requirements.\u201d<\/p>\n\n\n\n

On its website, SARS clarifies that if the individual is neither ordinarily resident nor meets the requirements of the physical presence test, that individual will be regarded as a non-resident for tax purposes. Such individuals will only be subject to tax on income that has its source in South Africa.<\/p>\n\n\n\n

\u201cTo be deemed an exclusive tax resident of another country based on a double tax agreement (DTA), you must pass the \u2018tiebreaker\u2019 test within the DTA when applied to your factual situation\u201d, adds Leon.<\/p>\n\n\n\n

Worldwide income<\/strong><\/p>\n\n\n\n

Submitting a tax return without formalising non-residence with SARS will result in the return being assessed based on the assumption that the taxpayer is a resident subject to tax on worldwide income.<\/p>\n\n\n\n

\u201cEven if an individual is certain of their non-resident status, failure to formally cease tax residence before submitting flagged returns could result in SARS assuming that individual is a tax resident,\u201d remarks Leon.<\/p>\n\n\n\n

Reinert van Rensburg, tax attorney at the Leap Group, advises people residing abroad to log into their eFiling profiles to verify their tax residence status. \u201cEnsure that all returns, especially those flagged by SARS, are submitted accurately, considering the individual\u2019s tax residence status.\u201d He warns that ignoring or delaying action might lead to unwanted tax liabilities and penalties.<\/p>\n\n\n\n

The tests<\/strong><\/p>\n\n\n\n

SARS explains that the determination of whether an individual ceases to be a tax resident in South Africa is based on the way such an individual has been a tax resident in South Africa.<\/p>\n\n\n\n

It is a factual enquiry to determine if a person is no longer ordinarily resident in South Africa, and it is supported by various objective factors. A person will cease to be an ordinarily tax resident from the day such person ceases their residence.<\/p>\n\n\n\n

SARS sets out, amongst others, the following factors that should be considered to determine whether a taxpayer has ceased to be a tax resident of South Africa:<\/p>\n\n\n\n