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Up till very recently the primary method of informing SARS that a taxpayer has broken South African tax residency was by marking the date of cessation on the relevant annual tax return (a taxpayer or their representative could set up a meeting at a SARS branch to inform SARS). SARS has now introduced a new declaration form which can be used to inform them that a taxpayer has broken South African tax residency.
This form is not a replacement of using the traditional method of marking the cessation of residency on the tax return; it is an alternative. A taxpayer thus has the option to either inform SARS with the new declaration form or to mark it on the tax return. If the declaration form is used, the taxpayer or their representative, will need to email the form with supporting documents to the relevant SARS email address. There is no difference in the outcome no matter the method used.
While it may seem pointless to use the new declaration form; there are some circumstances where it needs to be used and some circumstances where it can be advantageous to use the form. These are set out as follows:
As can be seen, the new declaration form that can be used to inform SARS that a taxpayer has broken South African tax residency can be a very useful tool, even for employers. If a taxpayer’s employer needs formal confirmation from SARS that an employee has broken tax residency to mark them as a non-resident on payroll and thus not withhold PAYE (under certain circumstances), this new declaration form can also be used by the employer.
As part of this process SARS are requesting the following supporting documentation with such an application –
Standard requirements (To be submitted with all declarations)
In addition to the aforementioned information, also supply the following as applicable, depending on the basis you have ceased to be a tax resident in South Africa:
Qualifying basis 1: Cease to be ordinarily resident
Qualifying basis 2: Cease by way of the physical presence test
Qualifying basis 3: Cease due to application of Double Tax Agreement (DTA)
Given that the process is new it remains to be seen the extent to which SARS will audit such documents or the extent of disallowance of the declaration. As such, professional support should be sought in advance of any such approach to SARS so the criteria for cessation of residence can be examined and assistance provided in the validation of supporting documentation.