Tax Residence | The Expat Series Part 1

This mini series explores the complexities of tax residency, foreign employment and the changes coming 1 March 2020.
Link to the Income Tax Act
www.gov.za/documents/income-t...
The tax rates in this video apply to the 2020 year of assessment (tax year)
Find me on social media:
Follow me on Twitter: / andre28071990
Other useful links:
SARS: www.sars.gov.za/

[@Jensway1]

Great explanation Andre. The video was well thought out and presented perfectly. Appreciate your time.

[@AndreBothmaTax]

Thank you for the comment! I've uploaded Part 3

[@drjesuselshaddai9537]

Helpful indeed. Good for students too

[@SixFootScream]

Great information

[@AndreBothmaTax]

Thank you!

[@wynandradyn1092]

Basically then, we expats working on a rotational basis (month on/month off) are screwed. The financial implications are just too much to remain in SA. There is no option but to exit. Great, informative video, Andre. Thanks a lot.

[@AndreBothmaTax]

In part 2, I'll discuss the potential tax consequences of breaking tax residence with SA.

[@peet1250]

:I'm not in the same boat but asked the consultant dealing with my F. E. about your category and he agreed, you are screwed! I think expats who are clearly resident abroad may also in future be subjected to the ordinary resident test if we still retain investment properties, so we will be deemed to be of the intention to return.. Ultimately the only solution for a sane South African may be to disinvest almost completely if you are able to do so.

[@BlasphemyIsAwsome1]

So I think you and I are in a very similar situation, working on a rotational basis. From what I understand from the video, and hopefully Andre Bothma can correct me if I am wrong, but basically we would be considered tax residents of SA. However, that doesn't necessarily mean we are liable to pay normal income tax, due to the nature of our income. Our income or portions of it could be considered exempt. This would be based on the criteria explained in part 2 and 3 of this video series. On a side note, just want to say thanks to Andre for making this video. This has been the clearest explanation I have come across. I have spent hours on the web trying to figure all of this out and only wish I had found this video sooner.

[@KirstHart2012]

Andre! You are freakin great!!!

[@AndreBothmaTax]

Thank you Kirstin :)

[@rift5980]

Great video, would be good to learn about Physical Pres Test and some practical examples.

[@angeliquedewet5691]

Thank you very much I am still not sure exactly where to declare the income so that I do not get taxed on it?

[@AndreBothmaTax]

There is a specific section under foreign income - if you get stuck, you can email us for assistance at [e-mail]

[@shanedaniel3927]

Thank you Andre; very informative. Please will you follow up with a video of the tax effects on existing assets which are externalised when becoming non-resident.

[@AndreBothmaTax]

Thank you Shane - I'm planning on doing a video regarding the tax consequences of ceasing to be a tax resident of South Africa.

[@ychinamale]

Awesome videos Andre! Could you do a Freelancer series next? That would be very beneficial!

[@AndreBothmaTax]

I'm thinking of doing a freelancer series in November/December

[@sebastianjohannes2316]

Great explanation. How do you now formalise point 2 (Residency) with SARS? (As obviously Point 1 is not the way). Does SARS issue a Non-resident certificate?

[@laurenbarr732]

Thanks for this. Really helpful and answered a lot of my questions already. Last point I'd like to clarify please is if you are no longer tax resident and you sell a house in SA would the capital gains be taxed only in your country of residence. UK in my case.

[@AndreBothmaTax]

Non-residents who sell property in SA must either pay 7.5% withholding tax on the sale of the property, or the seller can apply for a 0% tax directive if the sale of the property is declared on a South African tax return. It could be that declaring the sale of the property in SA for CGT purposes will be more tax effective than paying 7.5% withholding tax.

[@josgarage]

Great video , thanks. When can we expect Part 2 & 3?

[@AndreBothmaTax]

Thanks for the comment :) I'm recording Part 2 today - I think there will be more than just 3 parts though.

[@kjlovescoffee]

What sort of time scales are considered for "eventually"? If someone has left SA and intends to live overseas for a long time (say 10+ years) but eventually return (e.g. to retire), where do they draw the line?

[@peet1250]

I think they will draw it wherever they want. I cannot access the Income Tax Act for free on the net, but last time I checked SARS left the issue wide open in the definition of "resident".

[@AndreBothmaTax]

So in your example, if the person left SA with the intention of staying overseas for a long time, and did things which supports that intention, then that person is a non-resident, until that person decides to return to South Africa (and carries out that intention). So the key to tax residency is two-fold: 1) An intention to stay overseas (leave SA) for a long time or indefinitely; 2) The intention is carried out - you move your family with you, you buy a house there, you gain citizenship in that country, you ask the foreign tax authorities to deem you a resident of that country etc.

[@tester0086]

Hi Andre, Thanks Great video! Two questions, 1. can you elaborate on article 10A as an expat i work rotational basis, as i understand from my tax consultant that i will get R 1000 000.00 exemption on my Gross income and then there is DTA between the country i work and SA that i will get credit for the Tax i pay here, i think there is big confusion and a lot of guys do not understand this. 2. i have been working in this country for 5 years and have permanent contract with the company i am working for, i do not have intention to leave my job until i retire or get global position with in this company, but my family is staying in SA only to give them stability, i am only in SA for 90 days a year, should i do presence test i do not classify as ordinary residence or do i?

[@AndreBothmaTax]

In part 3 and 4 of the series, I'll explore foreign employment and the section 10(1)(o)(ii) exemption. Unfortunately, I'd rather not step on the toes of your tax consultant. I suggest you ask your tax consultant for his professional opinion in writing, specific to your scenario. Just from what you've said in point 2) you have not moved your family out of SA and you clearly have the intention to return here from time to time, and you haven't moved them out of the country etc. This would indicate that you would still be considered tax resident in South Africa, but like I said. rather get a detailed opinion, in writing, from your tax consultant because they have your full story.

[@alexsanderrost8186]

Do you have a video on Interest and Dividends for non and residents?

[@AndreBothmaTax]

Not yet, sorry

[@FranckChanda]

Hi please I want to be tax practitioner any recommendation or any short course I can do. I just have matric

[@AndreBothmaTax]

Hi Franck, my recommendation is that you explore either a BCom degree with a university or a taxation course via SAIT. I also further suggest that you should get at least 2 - 3 years of tax experience within an accounting firm before registering as a tax practitioner. No university education is going to get you practical tax experience (all SARS's systems and rules, eFiling etc).

[@Brendan-gw5yb]

Example if i am South Africa resident and got a job in uae with tax free salary and earn 21000 dirham,how much tax do i pay to SARS please explain

[@dirkmostert1815]

Great video, thank you sir ! I stumbled on this one a while back, in regards to FE and residency. What is your thoughts on point # 2 ? www.sars.gov.za/FAQs/Pages/2101.aspx

[@AndreBothmaTax]

FE is only necessary when you want to cash out your retirement annuity when emigrating, or when you want to move a substantial amount of financial assets outside of South Africa.