CLOSURE OF A RESIDENCY LOOPHOLE HIGHLIGHTS SARS’ CONTINUING FOCUS ON EXPATRIATES
THE 2023 Budget Review was presented on 22 February 2023 by Finance Minister Enoch Godongwana, mainly focusing around the energy crisis in South Africa. However, as usual, there are proposed amendments to the tax legislation.
In recent years, there has been a continual and concerted effort at targeting South Africans who are living abroad—whether it be changing the foreign employment exemption, or clamping down on those who fail to declare their foreign income.
Tax residence loophole
This year’s Budget Review provided us with another example that ever-changing expatriate tax law will continue to im-pact South Africans who do not formalise their non-residence with SARS in time to align their factual situation with their SARS tax residence status.
The effect of ceasing tax residence in South Africa is that a taxpayer who ceases to be a resident will have two years of assessment during the 12-month period of the tax year in which they become non-resident. The reason for this is that their year of assessment is considered to have come to an end on the day just before their tax residency ceased, and their next succeeding year of assessment will start on the very next day.
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