The South African Budget Review 2022, delivered by Finance Minister Enoch Godongwana in what was his maiden budget speech on 23 February 2022, reconfirmed that South Africans living abroad remained in the sights of the South African Revenue Service (SARS). There were three main areas of focus. First, the proposal to apportion the interest exemption and capital gains tax annual exclusion when someone ceases to be an SA tax resident. Second, the proposal to modify many Double Taxation Agreements with many different countries to be able to tax the retirement funds of expats who still have retirement funds in South Africa. Third, the proposal that SA expats can withdraw their pension funds from South Africa, if they can demonstrate an unbroken time frame of three years as a tax non-resident. “If one intends to withdraw a personal policy in South Africa, one will require a South African bank account in their personal name. Unfortunately, policy providers will not pay to a third party nor an overseas bank account.
In addition, for a successful policy withdrawal payout, the account in one’s personal name should be a non-resident account,” reports MoneyWeb.
SA taxes for expats
Under existing South African tax rules, you’ll be liable for South African tax if you live and/or work in South Africa or if you live in another country but are recognised to be a tax resident of South Africa. As such, you must pay your taxes in South Africa if:
- South Africa is the country in which you will reside on a permanent basis –regardless of whether you’re currently abroad.
- Lived within South Africa for more than 91 days in a given tax year, as well as more than 91 days in each of the last five tax years.
- Earn income from a South African source, including rental income.
- Own a home in South Africa, non-residents included (in the event that they are liable to pay capital gains tax on the property)
- Earn over R1.25 million in foreign employment income as a South African tax resident and do not meet the exemption requirements.
There are legitimate ways of mitigating tax liabilities on foreign employment income as a South African expat. However, the process can be complex and those seeking to do this would be advised to seek the help of a specialist cross-border financial adviser. In any case, if you’re an SA expat, this could be worth doing because, as MoneyWeb writes: “For the fifth consecutive year, there have been changes proposed [in the Budget Review] that clearly indicate that SARS is still targeting expats and view them as low-hanging fruit to boost revenue collection.”