Many expatriates, or expats, are looking to change their tax status to non-resident. They want to reduce their tax bills and match their financial duties with their lives abroad.
Written by Ethan Willemse – Content intern at Zeelie Professional Accountants SA
Many people have recently asked for help. They received a surprising letter from the South African Revenue Service (SARS).
The letter from SARS has raised concerns for South Africans living abroad. This is especially true due to recent changes in tax rules that affect their responsibilities. These changes may include new rules for tax residency.
They could also involve changes to tax rates for non-residents. Additionally, there may be updates on how foreign income is taxed. Therefore, it is important for expats to understand their non-resident tax status and what it means for them.
For many expats, changing their tax status can be complicated and challenging. It requires a good understanding of South African tax law and the tax rules of their current country. Expats must also know the risks of not following SARS regulations. These risks can include penalties, interest on unpaid taxes, or even legal action.
Because of these complexities, South Africans living abroad should seek help from tax advisors or legal experts. These professionals know international tax law well. They can offer important advice on how to change tax status. They can also help avoid any problems during the process.
In summary, the recent changes by SARS greatly affect South Africans living abroad. Many are now rethinking their tax status.
It is important for these individuals to stay informed. They should be proactive about their tax obligations. This will help them comply and avoid unexpected financial issues.
Before submitting their 2024 tax returns, it is important to check their nonresident tax status with SARS. If their tax affairs are not in order, they may face serious consequences. These can include a full SARS audit, unexpected additional tax assessments, and penalties. They may also face issues with South African banks and encounter other problems that they can avoid.
Many expats want to change their tax status to non-resident. They have asked for help after getting an unexpected letter from SARS. This letter asks for documents to prove their new tax status.
These requests from SARS come from earlier declarations on their eFiling profile. This shows how important it is to have current and relevant supporting documents.
Will your “Emigration Confirmation Letter” from the South African Reserve Bank (SARB) work as proof of tax non-residency? This letter was issued before March 2021. Unfortunately, it will not.
SARS has made verification processes stricter. They now require more detailed documentation. The “Emigration Confirmation Letter” alone is not enough for expats to file their tax returns as non-residents.
SARS shifts goalposts
SARS is known for changing rules for expats. The latest change requires expats to re-verify their non-resident status on eFiling.
This extra step is needed for accurate tax submissions in the future. If you do not follow this process, SARS will consider you a tax resident. This can lead to automatic assessments and penalties.
As careful taxpayers who followed the right steps, it can be frustrating to deal with this new requirement. However, it is important to adjust to these changes and check your tax non-resident status.
Following up is essential
SARS has changed the tax residency status of many South Africans living abroad to “resident” on their eFiling profile. You need to update your tax residency status. This applies even if you previously checked the non-resident box or obtained a Tax Clearance Certificate for Emigration. Make sure to include your cessation date.
Getting a tax-residency verification request from SARS is important. It is a serious matter that needs quick action.
You should respond to this request right away. This helps ensure that SARS officially recognizes your tax non-residency status.
After you submit the required documents and complete the SARS verification process, they will update your tax residency status. Your eFiling profile will show “tax non-resident.” You will also receive a Notice of Non-Resident Tax Status confirmation letter.
This letter confirms that you can now submit your tax returns as a non-resident in South Africa. It is important for any future non-resident tax return submissions.
If you are no longer a tax resident under the old rules, you need to take action. The first step is to apply for the SARS Notice of Non-Resident Tax Status Confirmation Letter. This request is both a warning and a chance to avoid tax risks and non-compliance.
Contact Zeelie Professional Accountants SA today 021-180-4616 website: www.zeeliepasa.co.za
