A change of tax-residency status is the only sure-fire way to fully obviate the impact of the RSA tax on foreign employment income exceeding R1 million, effective as from 1 March 2020.
As I said in 192 TSH 2019, your tax-residency status is one of fact and determined on its own merits. Thus a taxpayer’s unilateral declaration of tax non-residency is not decisive and must be evaluated.
In evaluating the tax test for nonresident status, you have regard to (a) the so-called double tax agreement between the RSA and the country in which you reside; (b) the meaning under our tax case law (including the famous Appellate Division judgments in Cohen and Kuttel) of the expression ‘ordinarily resident’; and (c) the physical presence/absence test, considered by SARS in its Interpretation Note 4 (issue 5), of 3 August 2018.
Notification to SARS if tax-residency status changes, is required.
It is important not to conflate the SARB emigration process (which amongst other things requires a SARS tax clearance) with a stand-alone change of tax status, the latter not requiring a formal emigration.
If a taxpayer is formally emigrating (as distinct from becoming nonresident for tax purposes only), the SARB application form MP 336(b) must be duly completed and signed, together with an application for a tax clearance certificate via SARS eFiling. (This is not on the income tax return.)
Alternately, if there is no formal emigration, SARS can be informed of a taxpayer’s intention to cease to be a resident through the wizard on the income tax return in the section in which the taxpayer is asked whether he or she ‘ceased to be a tax resident’.
When a taxpayer ceased to be a tax resident it should thus be indicated on the income tax return, together with the date on which it occurred.
Whichever route you adopt, the so-called exit charge under s 9H of the Income Tax Act applies (see 192 TSH 2019).