Non-residents and earners of foreign income are also receiving extra attention this year
The tax season for the 2022 tax year has just started, and it will be one of the shortest to date. The period to submit tax returns opened on 1 July 2022 and runs to 24 October 2022 for individual taxpayers who are not provisional taxpayers.
Determining whether you need to file a tax return
On 3 June 2022, SARS Commissioner Edward Kieswetter declared who he requires to file a tax return for the 2022 filing season.
In general, you only need to submit a tax return if any of the following circumstances apply to you:
- You received a salary or retirement income from more than one source;
- Your salary or retirement income was from a single source, but exceeded R500 000;
- You conducted a trade within or outside South Africa;
- You are a South African tax resident but received employment income from outside South Africa;
- You receive travel, subsistence, or office-bearer allowance against which you will be claiming expenses;
- You have a company car;
- You held funds in foreign currency or assets outside South Africa with a combined value exceeding R250 000 at any stage during the tax year;
- You had capital gains or losses exceeding R40 000 on the disposal of local assets;
- You received income or capital gains from any foreign asset; or
- You hold participation rights in a Controlled Foreign Company.
However, if a tax return is issued to you or you receive notification from SARS that you are required to submit a return, such return will need to be submitted even if you have answered ‘no’ to all of the criteria listed above.
Comments on the notice issued by the SARS commissioner
The Commissioner indicated in his notice that he requires South African tax residents to disclose their foreign assets and funds they held during the 2022 tax year. He also requires tax residents to declare all foreign-sourced earnings (irrespective of the amount received) and mentioned more than once that residents who received any amount for services rendered abroad need to submit tax returns.
This underlines SARS’s continuous focus on South Africans who are working in foreign countries, and it is critical that these South Africans declare their foreign earnings—even if they are subject to the foreign exemption, and irrespective of whether tax has been deducted by the foreign jurisdiction (although such tax will entitle the taxpayer to foreign tax credits to the extent that such tax does not exceed the equivalent South African tax liability on such income).
Only taxpayers who do not fulfil the South African residence tests do not need to declare their foreign earnings or assets. It is thus critical for South Africans who have left the country permanently to formalise their non-resident status with SARS in order to align their factual situation with their SARS tax status.
Taxpayers who have completed the Tax Emigration process in order to become non-resident for tax purposes are only taxed on South African sourced earnings, and not their worldwide earnings. Accordingly, SARS is taking an extremely stringent approach in considering whether or not a taxpayer is non-resident.
Also, bear in mind that while there is an option to include the date upon which you ceased tax residency in your tax return, doing so does not result in the necessary manual intervention by SARS to prove and obtain non-resident status in the majority of cases.
SARS KEY TAX SUBMISSION DATES
