The Rising Tide of South African Expats Returning Home
The Drive to Return
Many South Africans living abroad are increasingly feeling the pull to return to their homeland. This desire is often driven by the allure of reconnecting with family, raising children in familiar surroundings, or enjoying a peaceful retirement. However, beyond the emotional and personal reasons, there are significant tax considerations to keep in mind.
SARS and the Returning Expat
Tax obligations are one of the major concerns that returning expats face. Many expatriates wrongly assume that leaving the country automatically terminates their tax responsibilities. This misconception can be costly. The South African Revenue Service (SARS) is highly vigilant when it comes to monitoring the tax affairs of returning citizens. Unless a formal termination of South African tax residency is secured, SARS may still consider expatriates liable for taxation, even after extended stays abroad.
“Whether or not the formal financial emigration procedures were followed by returning expats, they need to prepare themselves for SARS to query their initial departure and their decision to return,” warn tax specialists Richan Schwellnus and Nicolas Botha from Tax Consulting SA.
SAS statistics on emigration and returns
Since 2000, approximately 413,000 South Africans have emigrated. Of these, only just under 28,000 South Africans chose to return. These numbers reflect a sizeable trend, where the number of returnees has risen in recent years.
Navigating the Tax Landscape on Return
For expatriates planning their returns, the scrutiny from SARS can be intensified. Specialists Schwellnus and Botha share that returning expatriates often face ambiguous inquiries from SARS. These queries are sometimes framed in such a way that they create confusion. Depending on a South African dedicated gaining financial obspecially if overseas investments have grown accumulate.
SAS Specific challenges expats will face
- Having South African financial assets but sending capital gains tax for selling property or inheritance through retirement accounts . Expats who have retirement investments are particularly at risk, If you have assets that you withheld earning.
SARS advices to expats.
Risk factors and Mitigation
| Risk Factor | Mitigation Strategies |
|---|---|
| Audit Triggers | Seek guidance from specialized tax advisors. These professionals help you navigate compliance and audit risks. |
| Surveillance by SARS | Carefully preparing comprehensive responses to SARS queries and regularly reviewing tax histories can simplify the return process. |
| Charges and Penalties | Mitigation audits can result in penalties. Therefore, careful planning should include how to leverage offshore capital correctly. |
| Confusion with vague questions | Seek tax experts to understand several notifications that SARS might send out, so it’s clear what you need and how to interact with finance departments being appropriate. |
SAPS commission checklist
- Returning expats need to undergo the IRP6 & sars form
Pro Tips
To manage your finances, expats are advised to review past tax submissions before registering as residents again. It is crucial to check whether the customer’s departure was correctly disclosed to SARS, regardless of having maintained tax residency abroad or formally terminating it. South Africans who officially ended their tax residency may receive extra scrutiny. Why? Because SARS might question whether the initial statement was accurate and if the expats genuinely intended to stay abroad permanently.
Finding Your Footing Back in South Africa
For a seamless transition into the local tax system, it is pivotal to re-evaluate or reanalyze your tax liabilities, records & returns. Schwellnus and Botha suggest reaching out to expert tax consultants for compliance support while preparing for repayments.
“These professionals ensure risk mitigation. Seek preemptive reintegration strategies to provide compliance checks and ensure your records are in order,” they insisted.
It is important to take steps ahead of making your travels to ensure what needs to be dealt with will simplify the whole process of reintroduction and enable a stress-free rehab serving in South Africa.
Join the Conversation
Are you a South African expat considering a return home? What steps have you taken to ensure your tax affairs are in order with SARS? Share your input and join the conversation by commenting below to be part of the ongoing conversation!
Frequently Asked Questions
Q: How can I determine if I still hold South African tax residency?
A: Review your tax returns and any communications from SARS. If unsure, consult with a tax specialist.
Q: What should I do if I receive a query from SARS?
A: Respond clearly and accurately. Consider seeking help from a financial professional.
Q: How can I mitigate audit risks upon returning to South Africa?
A: Engage a tax advisor to help you navigate SAS checks, ensure your records are in order and prepare accordingly.
Q: Does SARs govern the tax regulations for retiring income abroad?
A: Withholding or the foreign income allowance, you should confirm with assistance from your tax advisor.