SARS return for the year you emigrated

[Donovan83]

Hey guys

So I have a few questions and hope I can learn from my fellow forumites who have been there and done it before.

I'm completing my SARS tax return at it asks me if I have earned any foreign income for the year. Am I correct in assuming that the answer to this is yes? My gut feel says that but then there's also the argument that on the date I emigrated, I stopped being a tax resident in RSA and thus any 'foreign' income would not fall into this category, since for tax purposes, I myself will be a foreigner subject only to tax on income earned from South Africa.

Then the next question is - if I do need to declare what I've earned in Australia, then what rate should I translate it to Rand in? I'm quite happy to declare it. I was planning to just use the average rates per their web site at http://www.sars.gov.za/Legal/Legal-Publications/Pages/Average-Exchange-Rates.aspx .

Any tips would be appreciated

D

[GideonVD]

Interesting indeed... also want to follow this as I'll most likely have to do that also next year.

[chzaau]

If you have left South Africa and are living in Australia, then you declare your South African earned income up to the day you left and you declare your Australian income from the day you arrived.

The only time you declare any income in South Africa once you have left is if you for instance earn a rental income etc. Then it get complex, you have to declare this income in Australia on your tax return and provide the relevant proof that you paid the tax i.e. your South African tax clearance certificate. Based on the tax treaty you may get some relief, or you may be required to pay additional tax etc.

[Donovan83]

chzaau - thanks

I'm still a bit unclear though - do you mean declare RSA income on the RSA return (and nothing else), and then AU income on the AU return (and nothing else)?

[chzaau]

Yes that is correct. You pay tax in the country you reside in, so if for example you left SA in Sep and then arrive in Oz in Oct to take up residency. You would complete your tax return in RSA with only the income earned up to Sep. You would complete your tax return in Oz with income earned from Oct onwards.

The only time this changes is if you continue to earn an income in both countries. Then you would pay tax in RSA on income earned in SA. You would declare this income on your Oz tax return in Oz and provide proof of tax paid in RSA on that money I.e a tax return from SA. Oz will then recognise that tax payment and not double tax you. If the tax paid in SA is not sufficient to Oz calculations you may have to pay additional tax. Examples of income in SA may be rents, dividends etc

Edited July 3, 2013 by chzaau

[Sunnyskies]

Hmm, not sure I agree. Depending on when you leave SA you may still be a tax resident on 28 Feb (I was). I answered yes I had earned foreign income, I declared what it was and how much tax I had paid, no questions asked. The next year I was no longer a tax resident so I only had to deal with Aus tax. Bit of a question mark on interest, as you may fall under the threshold in SA but no similar threshold in Aus, so you have to pay tax here .

[chzaau]

Sunnyskies, you have to answer the question when did you become a tax resident in Australia, you obligation to pay tax is only bearing on you from when you become a tax resident in Australian law not before that date.

The same thing becomes true when you leave South Africa and go to Australia, you don't pay tax in South Africa on your Australian income and vice versa. There is a question in the tax return that ask when did you become a tax resident. Most likely answer would be when you requested your tax number when you arrived in the country or your day of entry to take up residency.

An example you fly to Australia to activate your visa only and then return to South Africa, activating your visa is not in itself a declaration that you have become tax resident and nor is it an indication in South Africa that you have left the country.

You can find quite a lot about tax residency testing here http://www.exfin.com/australian-tax-residency

Here another link to the ATO http://www.ato.gov.au/General/International-tax/In-detail/Residency/Residency---what-you-need-to-know/?default=&page=1

[Brad76]

i would think your gut feel is correct! Even though you're no long ordinarily resident in RSA you would most likely satisfy the residence requirements in terms of the physical presence test for the 2013 year!

[Hugo2]

http://www.ato.gov.au/Individuals/International-tax-for-individuals/In-detail/Other-foreign-income-of-Australian-residents/Foreign-income-exemption-for-temporary-residents---introduction/?default=

The above is the more correct link. If you on a 457 you probably not paying tax on world wide income to ATO

Before you can claim non-resident status do ask yourself:

1. Did you notify SARS through eFile tax return IT12 in the Feb tax year end following your departure...did you see i do no use the word emigrate, as that in tax law is a loaded definition. D (permanent resident) I assume you have PR so the link above is not applicable to you then you have to answer yes to this question or treat yourself as resident and in this IT12 claim change in tax status! Bu do check 4 below as treaty overrides all tax laws in SA and Australia

2. Assume you did tax emigrate did you declare your CGT output event? Yes, don't claim non-resident status before you file exit CGT return

3. Do you own a family home in SA? Rented out or standing empty ready for sale

4. Did you check the tax treaty tie-breaker rules?

I hope this will help but add your TAX profile info and I will try to assist

[Hugo2]

Hey guys

So I have a few questions and hope I can learn from my fellow forumites who have been there and done it before.

I'm completing my SARS tax return at it asks me if I have earned any foreign income for the year. Am I correct in assuming that the answer to this is yes? My gut feel says that but then there's also the argument that on the date I emigrated, I stopped being a tax resident in RSA and thus any 'foreign' income would not fall into this category, since for tax purposes, I myself will be a foreigner subject only to tax on income earned from South Africa.

Then the next question is - if I do need to declare what I've earned in Australia, then what rate should I translate it to Rand in? I'm quite happy to declare it. I was planning to just use the average rates per their web site at http://www.sars.gov.za/Legal/Legal-Publications/Pages/Average-Exchange-Rates.aspx .

Any tips would be appreciated

D

Use average rate but even if you exempt the IT12 must show you tax resident ATO and what amount you consider tax free in SA. Next year you will no longer be required to do so but this being the first year you claim tax residency status based on PR not overruled by DTA. So you ave to answer yes to the question on other income not declared above. You also have to say yes to SA CGT disposal even if there was no actual sale as tax emigration = cgt event!

[DavidEF]

Does the money have to enter Australia for it to count as Australian income? i.e. rental income earned in SA and paid to a SA bank account?

[21yearsoutofrsa]

Once you become an Australian tax (normally when you arrive permanently in Australia) resident worldwide income becomes taxable in Australia. It doesn't matter where it is paid.

Taxes paid in other tax jurastictions may be deducted from Australian taxes paid, limited to the amount of Australian tax payable on that income.

So once you've moved to Australia any rental earned in RSA is taxable in Australia even if it is paid to a RSA bank account. You may also claim expenses in the production of this income. Capital gains taxes are also payable in Australia on the gain from the date of becoming an Australian tax resident to date of sale.

Edited July 17, 2013 by 17yearsoutofrsa

[Almost there]

Following this thread while trying to find my answer asked elsewhere ... I am correct in understanding that one then is also liable to pay the ATO tax on any retirement annuity/pension payout through formal emigration even if you have paid tax in SA on this money before being paid into your Australian bank account?

Edited July 25, 2013 by Almost there