Are you a South African EXPAT who lives abroad with a working permit but who has not emigrated and still holds a SA Passport?
Are you a foreign investor who wishes to or has bought a property in South Africa and need advice regarding possible double tax implications in respect of rental income and/or capital gains tax when the property is sold?
Are you a foreign investor who wishes to apply for a South African VISA to come and play in South Africa for a period in excess of the “visitor’s” 90 days?
Special rules apply when you own property in South Africa and you are an EXPAT or a foreigner with a VISA or without a VISA.
The first and one of the most important Government Departments with which you will need to deal, is the South African Reserve Bank which controls the payment of monies into and out of South Africa. Different rules apply when you are an EXPAT, a foreigner without any SA VISA, a foreigner with a temporary SA VISA or a foreigner with a permanent residency VISA. The opening of a bank account in SA is also not as easy as what it is to open an account in a country abroad and the consequences of bank accounts in SA are often not considered until it becomes a problem.
Foreigners may also register local mortgage bonds with South African banking institutions but again, special rules apply depending on your residency status. These rules are more often than not misunderstood and as the registration of the mortgage bond becomes conditional upon the fulfilment of these exchange control conditions, transactions get delayed beyond reason if a problem exists with these conditions.
Foreign investment in South Africa attracts taxes and many foreign investors fail to fully investigate the rules related to rentals and the eventual capital gains tax when buying property. Tax status also changes with residency status and many foreigners, who apply for residency VISAs in SA are caught in a tax trap where income in SA as well as income from abroad get deemed as being taxable in SA simply by virtue of the VISA.
EXPATS who live abroad also often decide to dispose of their properties in SA in order to invest their proceeds in the country where they now live. However, strict limitations exist with regards to the amounts which EXPATS may pay abroad and tax liability in SA equally become problematic if the EXPAT failed to advise SARS of his or her departure. Often SARS deems an EXPAT to be a tax resident of SA which clearly the EXPAT wants to avoid at all costs if the EXPAT pays income tax in the foreign country.
South Africans who live and work abroad on contract are also within SARS’s visor for 2021. Many contract workers are paid offshore and do not declare such income in SA for taxation here. The number of days spent outside of South Africa has always been the contract worker’s protection as it was always accepted by SARS that tax residence ceases upon being outside of SA for a period exceeding 180 days in total over a 12 month period. However, SARS is now applying both the “residency” rules – i) number of days outside of SA AND ii) where the contract worker ordinarily resides. If the contract worker comes home to SA in-between contracts, SARS is likely to deem the contract worker to be a tax resident of SA.
Get in touch for a specialist consultation.