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sen

Consequences of not filing tax returns

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Hi all,

I’ve been in the US for almost 15 years now and I am a US citizen (retained SA citizenship too).  I filed null tax returns for my first two years, but stopped after (documentation at the time suggested that given I had no SA income at all, this wasn’t necessary).

 

This seems to be a murky issue - some say that even tax non-residents who are below the taxable income threshold should have been submitting.  I am planning a visit to SA (first in many years), and am wondering if this could be an issue? Is this checked when I go through immigration?

 

I am planning to file for FE this year because of the 2020 rules coming up.

 

Any thoughts would be welcome.

 

Thanks!

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You are liable to pay income tax if you earn more than:
 
For the 2019 year of assessment (1 March 2018 - 28 February 2019) - see changes from last year
  • R78 150 if you are younger than 65 years.
  • If you are 65 years of age or older, the tax threshold (i.e. the amount above which income tax becomes payable) increases to R121 000.
  • For taxpayers aged 75 years and older, this threshold is R135 300.
 
For the 2018 year of assessment (1 March 2017 - 28 February 2018)
  • R75 750 if you are younger than 65 years.
  • If you are 65 years of age or older, the tax threshold (i.e. the amount above which income tax becomes payable) increases to R117 300.
  • For taxpayers aged 75 years and older, this threshold is R131 150.
 
For the 2017 year of assessment (1 March 2016 - 28 February 2017)
  • R75 000 if you are younger than 65 years.
  • If you are 65 years of age or older, the tax threshold (i.e. the amount above which income tax becomes payable) increases to R116 150.
  • For taxpayers aged 75 years and older, this threshold is R129 850.
For the 2016 year of assessment (1 March 2015 - 29 February 2016)
  • R73 650 if you are younger than 65 years.
  • If you are 65 years of age or older, the tax threshold (i.e. the amount above which income tax becomes payable) increases to R114 800.
  • For taxpayers aged 75 years and older, this threshold is R128 500.

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As long as you are in line with the above, you will not have any problems.

In fact, I stopped filing when I moved here as I had 0 SA income. I visited SA frequently during that time and never once had an issue coming in or going out.

However, once I started the process of financial emigration from SA, I just had to first submit tax returns for all those missing years to get my SARB clearance. Which was not a problem at all.

Some info on financial emigration from SA:      https://www.finglobal.com/services/financial-emigration

 

Edited by marcjvr

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What exactly is this 2020 rule that is coming up?

I am in a similar position with having no SA income for the past 18 years and not filing any tax returns as a result but I do have an RA over there still and have not done the financial emigration obviously.

Unlike you though Sen I did not do the retention of SA citizenship (Did not know about it at the time) so technically have been deprived of that.

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I stopped filing after the second year too. The SARS website recommended this when I had no irp 5 to file. But this new ruling is a very curious state of affairs. I'm reading that anything over R mil will be taxable up to the SARS tax rate shortfall. I could kinda understand this if the money was being shipped back to SA but in a lot cases expats are just living overseas off of it. A bit of a overreach for SA Law IMO. But hey, what isn't over there? 

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Thanks all.

After talking to an SA accountant about all this, his take was that FE is not necessary for me (because I have no RA or substantial cash/assets there).

 It’s a gray area about the returns, but I am not considered to be owing any returns or any monies right now (an accountant can query SARS about this with your tax number, BTW).

Also, the 2020 ruling is for tax-residents only, which should exclude those of us who are clearly not that tied to SA.  In my situation I own a US home, have US citizenship, and have spent maybe 2 months in SA in the last 15 years.

There appears to be a lot of scary misinformation being spread right now, particularly by companies that profit from providing FE services.

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On 1/17/2019 at 1:02 PM, marcjvr said:

As long as you are in line with the above, you will not have any problems.

In fact, I stopped filing when I moved here as I had 0 SA income. I visited SA frequently during that time and never once had an issue coming in or going out.

However, once I started the process of financial emigration from SA, I just had to first submit tax returns for all those missing years to get my SARB clearance. Which was not a problem at all.

Some info on financial emigration from SA:      https://www.finglobal.com/services/financial-emigration

 

The confusion is due to whether or not we need to submit returns or not.  Even with 0 SA income, we are apparently supposed to report our worldwide income to SARS, even though we will owe them nothing.  

Technically, it looks like we can be fined for this, but in practice, from what I’ve managed to gather at least, this has never occurred.   A) SARS doesn’t know what your worldwide income is and B), chasing down people who don’t owe any taxes and fining them isn’t a good use of resources.

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