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SJ272

Retention of SA citizenship

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21 hours ago, SJ272 said:

Whaaaat?

on the one hand it’s not a huge issue for us as we go down to LA every so often anyway (not that I want to spend my free time at the consulate though) but the LA SACG covers a massive area and it’s not so easy for everyone. 

sorry another semi trivial question, did you use one money order and one addressed envelope to cover everyone in your family?i think I’m gonna get them off this week. 

It’s an 11hr drive for us. Would be a good excuse to get out that way and visit my friend up in Santa Barbara, but still darn annoying every time you need to do something. Thankfully, after my wife’s passport, we shouldn’t need anything for another 8 years. I hope!

We mailed in our apps separately with, two separate checks and two return envelopes. Funny thing is they sent our certificates back in one envelope, addressed to the both of us ?

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Ok, I finally mailed my application in yesterday. Given some of the timelines mentioned I didn’t bother paying the extra for 1-day delivery ?  

According to the SACG website current processing time for this via LA is 4 weeks - I’ll update when we get our certificates.

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3 hours ago, SJ272 said:

Ok, I finally mailed my application in yesterday. Given some of the timelines mentioned I didn’t bother paying the extra for 1-day delivery ?  

According to the SACG website current processing time for this via LA is 4 weeks - I’ll update when we get our certificates.

Yay! Good luck! Will be interesting to see if they’ve picked up the pace or whether our application was just an outlier.

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Update: our forms arrived Monday this week, today (Friday) I received an email from the consulate telling me we need to submit copies of our green cards as well as affidavits that we have no other citizenship currently. I thought I had thoroughly read all that I needed to send ? but apparently not! Anyway at least we know they’re working on it.

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Our certificates arrived back today, with a note that the children don’t need them because they automatically retain citizenship if they’re under 18. So just about 2 months from when we sent them in, probably would have been a couple of weeks faster if we hadn’t missed that we needed to send those affidavits plus copies of green cards in.

By the way we had sent everything in one envelope with one money order and one return envelope, all worked out fine.

Edited by SJ272
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For now..I just realized that if I don’t get my oath before my older kid turns 18, which on their timeline I won’t, we will actually still have to do one for her...  lol. First world problems!!!

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All expats and SA citizens. The new SA tax laws for expats will become law in March. It has the potential to affect every South African who earns outside of the country to the tune of 45% above the 1 mill earnings threshold.

If you officially emigrated or are a US citizen? No worries. 

Other wise make sure you are on the right side of this. 

https://m.fin24.com/Money/Tax/sa-expat-tax-law-how-to-avoid-sars-clamp-down-on-expat-income-20190120

 

Edited by Adder

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I don’t understand why this is an issue for expats, can someone clarify? The article says “...South African tax residents abroad...” people living elsewhere are generally not tax resident.  The article is not clear at all on the exact requirements. It talks about South Africans “working abroad” (not living abroad). Does anyone have a link to the SARS directive /publication on this?

Edited by SJ272

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SARS definitions - http://www.sars.gov.za/ClientSegments/Individuals/Tax-Stages/Tax-and-Non-Residents/Pages/default.aspx

According to this I still don’t see how an expat actually living abroad is subject to the above. Is the above perhaps some kind of crackdown on people who are living in SA but have somehow got themselves classified as non resident for tax purposes? Or linked to previous talk about getting people working in tax free locations?  

Details in the text and the last paragraph especially  

 

NON-RESIDENTS 

South Africa has a residence-based tax system, which means residents are, subject to certain exclusions, taxed on their worldwide income, irrespective of where their income was earned. By contrast, non-residents are taxed on their income from a South African source.  

Avoiding double taxation 

Since tax systems differ from country to country, there is a chance that a particular amount could be taxed twice. This possibility of double taxation is, however, often alleviated  by tax relief contained in various Double Taxation Agreements (DTAs). These DTAs are international agreements contracted between countries to deal with potential competing taxing rights against the income of the same taxpayer.
 
DTAs are important for encouraging investment and trade flow between nations. South Africa has DTAs with a number of other countries with a view to, amongst other things; preventing double taxation of income accruing to South African taxpayers from foreign sources, or of income accruing to foreign taxpayers from South African sources.
 
Top Tip: Do you need to apply for a directive for the relief from South African tax on pension and annuity income or want a refund of tax that was withheld, click here for more information.

Why do we need to know whether an individual is a non-resident?

Although South Africa taxes residents on their worldwide income, taxpayers who are non-residents will be taxed only on their income that is sourced in South Africa (such as interest on capital invested in a local bank; or rental income generated from a fixed property situated in South Africa). A distinction therefore needs to be made between a resident and a non-resident for tax purposes. In addition, certain tax exemptions are afforded to residents and non-residents. For example, any amount of interest received by or accruing to a non-resident will be exempt from tax in South Africa, provided certain criteria have been met.

Who is regarded as a non-resident?

Let’s start by defining what we mean by "resident". Understanding that, you will know whether you meet the criteria or not and thus whether you can be regarded as a resident or a non-resident.
 
Under South African law there are different types of residents, for example a resident defined by the Income Tax Act, 1962 in terms of the so-called "physical presence test" and an ordinary resident defined in terms of South African common law.
 
Any individual who is ordinarily resident (common law concept) in South Africa during the year of assessment or, failing which, meets all three requirements of the physical presence test, will be regarded as a resident for tax purposes. 
 
An individual will be considered to be ordinarily resident in South Africa, if South Africa is the country to which that individual will naturally and as a matter of course return after his or her wanderings. It could be described as that individual's usual or principal residence, or his or her real home. If an individual is not ordinarily resident in South Africa, he or she may still meet the requirements of the physical presencetest and will be deemed to be a resident for tax purposes. 
 
To meet the requirements of the physical presence test, that individual must be physically present in South Africa for a period or periods exceeding –
  • 91 days in total during the year of assessment under consideration; 
  • 91 days in total during each of the five years of assessment preceding the year of assessment under consideration; and
  • 915 days in total during those five preceding years of assessment.
An individual who fails to meet any one of these three requirements will not satisfy the physical presence test. In addition, any individual who meets the physical presence test, but is outside South Africa for a continuous period of at least 330 full days, will not be regarded as a resident from the day on which that individual ceased to be physically present.
 
If the individual is neither ordinarily resident, nor meets the requirements of the physical presence test, that individual will be regarded as a non-resident for tax purposes. This means that individual will be subject to tax only on income that has its source in South Africa, for example, interest earned from a South African Bank; rental income earned from a property in South Africa; and services rendered in South Africa.
Edited by SJ272

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Here’s a KPMG article on it that describes it properly. https://home.kpmg/xx/en/home/insights/2018/01/flash-alert-2018-020.html

the main point to note is that it’s not blanket anyone who is a SA citizen and hasn’t financially emigrated as is implied by the one newspaper article - see “who will be affected” below. The background indicates that this is indeed part of the push to get tax from those people who are working in Dubai etc and not paying any tax in SA because of the physical presence exemption but who don’t have tax residence anywhere else either.

Another article I read that wasn’t as detailed said that if you have tax residence elsewhere (home, family, assets, pay normal tax there etc) this doesn’t affect you,  it is aimed at SA tax residents abroad on employment contracts.

Who Will Be Affected?

The new cap will mainly affect South African tax residents working abroad; either as self-sponsored individuals who take a job opportunity in a foreign jurisdiction, or as employer-sponsored assignees that may or may not be tax protected/equalised.   

 

Background

South African tax residents are taxed on their worldwide income through the residence-based system. While DTTs exist to prevent double taxation under certain circumstances, a specific provision in the South African tax legislation provides a pre-emptive exemption, i.e., an exemption that statutorily limits South Africa’s taxing rights based on a set of criteria. 

Many South African tax residents work abroad for a period during their working lives.  Section 10(1)(o)(ii) of the Income Tax Act, No. 58 of 1962 (ITA) exempts employment income received by a South African tax resident during any year of assessment for services rendered outside South Africa for or on behalf of any employer, if that individual was outside South Africa for:

a period or periods exceeding 183 full days in aggregateduring any 12-month period, and 

a continuous period exceeding 60 full days during that 12-month period.

The exemption is only available to employees of private-sector companies. 

According to National Treasury, the exemption of foreign employment income from the South African tax net appears excessively generous, particularly in instances where the individual worked in a foreign country with a low or zero personal income tax rate. 

 

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Well that clears it up thanks. Seems for those of us who live in the US permanently there is no issue despite the scare mongering I have seen on some sites and in Facebook.

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Thanks SJ272 for clearing that up.

I have read so many articles that pretty much scare you into believing all hell will break loose if you did not formally emigrate. The tax resident status test sorts that one out. Good stuff. 

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