Non Resident for Tax Purposes Question

[Mauro]

Hi,

I'm busy trying to complete my SARS Tax Return and I have a question around the non-resident for Tax Purposes.

We moved over to Australia in 2018 on a permanent basis. I understand that there are two "tests", namely:

 

• Ordinarily Residence Test - We don't intend to go back to South Africa, so we won't pass that tests
• Physical Presence Test - We dont pass the first of the three tests (IE. 91 days in total during the year of assessment under consideration) as we were only in SA for 69 days of the 2019 Financial Year

 

I just wanted to ask the following questions:

• From the above, we aren't a resident for tax purposes, is that correct?
• Do I need to list my foreign income on my SARS tax return for the 2019 period?
• What documents do I require to prove that I was only in SA for 69 days?
•  

Thanks very much,

[Hugo2]

4 hours ago, Mauro said:

. I understand that there are two "tests",

NOT the tests you quoted!You testing for incoming immigrants to SA! You are tax resident SA having left SA? Then there is only one test as the exit test of 330 days (physical presence test is not applicable to most born Saffas. 

 

4 hours ago, Mauro said:

 

 

namely:

 

• Ordinarily Residence Test - We don't intend to go back to South Africa, so we won't pass that test

Intention is but one of many test so you probably won't convince SARS on intention only

 

I just wanted to ask the following questions:

• From the above, we aren't a resident for tax purposes, is that correct?

i think you failed sars test or did not lead adequate evidence

 

4 hours ago, Mauro said:

• Do I need to list my foreign income on my SARS tax return for the 2019 period?

only if you can convince them and if you tax emigrated during tax year 2019 you have to show foreign income. If you tax emigrated before 1 March no need to disclose

• What documents do I require to prove that I was only in SA for 69 days?

Not a relevant test

 

 

[Hugo2]

Mauro,

you approach the matter incorrectly 

 

you ignoring tax treaty

 

you mentioning nothing about CRS update to banks i.e. have you sent your ATO tax number to all banks even SA banks? Did you update FICA to Oz address?

 

stop worrying about physical presence test unless you gave maintained an habitual home in SA and Oz

 

so one needs so much more on life style and other steps you took to exit SA and to cement the exit

 

financial Emigration is not the steps I am referring to 

[Mauro]

Hi Hugo,

 

Thanks for the reply. From what I understand I am NOT a non resident for tax purposes?

 

When would someone become a non-resident for tax purposes then?

 

Thanks

Mauro

[Hugo2]

1 hour ago, Mauro said:

 

 

When would someone become a non-resident for tax purposes then?

 

RESIDENT in terms if ITA South Africa: As defined in section 1 of the IT Act-- Includes: Any natural person who is ordinarily resident in South Africa... but: Excludes any person who is deemed to be exclusively a resident of another country for purposes of the application of any agreement entered into between the government of South Africa and that other country for the avoidance of double taxation.

 

Jou vraag is dan eerder wanneer is jy tax resident in Australia en die tax treaty bepaal dat dit eers is wanneer jy aan ATO jou global of wereldwye inkomste verklaar. Daarom kan mense op werkspermitte nie tax non-residency in SA claim nie

 

Ek weet te min van jou feite stel  om kommentaar te lewer

 

[Hugo2]

1 hour ago, Mauro said:

 

 

Thanks for the reply. From what I understand I am NOT a non resident for tax purposes?

 

 

ATO: You may be treated as a temporary resident for income tax purposes if you are an Australian resident for tax purposes and you also hold a temporary migration visa. You don't have to pay tax on most of your foreign income if you: ... satisfy the requirements of being a temporary resident.

As jy nie ATO tax betaal op wereldwye inkomste nie, AG (DEEM) die treaty jou tax resident in SA

[Rossen]

Hi guys, I've gone through the posts above a few times and I am now even more confused than the two of you!

 

The way I understand this (having also immigrated to AU in the last year on a permanent resident visa) is that @Mauro is now a tax resident of AU and has ceased to be a tax resident of RSA. Taking this into consideration when doing your tax returns you should select the tick box that says that you became a non-resident of RSA for tax purposes. Secondly, I don't believe you need to declare your AU income to SARS as you are no longer a resident of RSA. You may be a citizen but not a resident. And lastly, I don't know why you need to prove anything to SARS. 

 

Please do correct me if I am wrong as that is how I am treating my RSA tax affairs. I have merely submitted my tax returns online and have let them know that I have ceased to be a tax resident of RSA. 

[Mauro]

@Rossen I'm in the same boat as you. I am more confused than ever. 

 

Basically, all I wanted to know is if I need to select that checkbox about becoming a non-resident. From my initial investigation, I thought that I should select it.

 

With regards to the proof, I was expecting that they would require some sort of evidence to prove that you were a non-resident. Was any additional information requested from you when you submitted your return @Rossen?

 

[Hugo2]

1 hour ago, Rossen said:

Hi guys, I've gone through the posts above a few times and I am now even more confused than the two of you!

PERHAPS CAUSING IT YOURSELF AS YOU DO NOT READ WHAT IS SAID

1 hour ago, Rossen said:

 

The way I understand this (having also immigrated to AU in the last year on a permanent resident visa)

 

i AM NOT CONVINCED YOU IN SAVE WATERS BUT I KNOW TOO LITTLE ABOUT YOUR FACTS TO COMMENT BUT I AM BRAVE AND ARROGANT ENOUGH TO CHALLENGE YOU: AND YOU 100% SURE YOURS WAS DONE CORRECT?

1 hour ago, Rossen said:

s that @Mauro is now a tax resident of AU and has ceased to be a tax resident of RSA.

 

SO WRONG!!! WHERE IN THE LAW DID YOU READ THIS? THE TAX TREATY IS VERY CLEAR: YOU MUST BE TAX RESIDENT IN TERMS OF THE TREATY. HE SAID FAR TOO LITTLE FOR YOU TO MAKE THIS BOLD STATEMENT! PLEASE STOP MAKING SUCH STATEMENT WITHOUT TESTING ARTICLE 4 OF TH E TREATY. FIRST OF ALL THE TREATY SAYS WHEN YOU ARE TAX RESIDENT IN OZ BUT NOT PAYING TAX ON WORLDWIDE INCOME YOU NOT A TAX RESIDENT OF OZ. THERE IS IS THE FIRST GAP IN YOUR ARGUMENT AS YOU FAILED TO EVEN ADDRESS THIS

 

THEN IF YOU ARE OZ TAX RESIDENT AND PAY TAX ON WORLDWIDE INCOME YOUR HAVE TO PASS THREE TO FOUR MORE TIEBREAKER HURDLES BEFORE YOU CAN EVEN DARE SAY EITHER SARS OR ATO WINS

 

SORRY NOT ATTACKING YOU ATTACKING YOUR FALSE MESSAGE

[Hugo2]

1 hour ago, Rossen said:

Taking this into consideration when doing your tax returns you should select the tick box that says that you became a non-resident of RSA for tax purposes.

 

ONLY DARE DO THIS ONCE YOU HAVE CHECKED THE TAX TREATY 

 

Secondly, I don't believe you need to declare your AU income to SARS as you are no longer a resident of RSA. You may be a citizen but not a resident. And lastly, I don't know why you need to prove anything to SARS. 

WRONG, 2018 WHEN HE ARRIVED IN OZ IS MOST PROBABLY 2019 RSA TAX YEAR -IN EXIT YEAR YOU HAVE TO DECLARE AND STATE THE TREATY COUNTRY AND THE TREATY POSITION AND YOU MUST PAY THE EXIT TAX OR SHOW WHY NO EXIT TAX ON WORLDWIDE ASSETS 

 

Please do correct me if I am wrong as that is how I am treating my RSA tax affairs. I have merely submitted my tax returns online and have let them know that I have ceased to be a tax resident of RSA. 

I HAVE STATED ALREADY, YOUR OVER SIMPLIFY AND I THINK YOUR OUTCOME WAS NOT 100% TESTED AND COMPLIANT WITH RELEVANT RULES 

 

[Hugo2]

Article 4 sub 2 of the Protocol updated treaty between RSA and Australia reads

 

A person is not a resident of [Australia]  for the purposes of the Agreement if the person is liable to tax in that State in respect only of income from sources in that State

 

ATO then states

You may be treated as a temporary resident for income tax purposes if you are an Australian resident for tax purposes and you also hold a temporary migration visa. You don't have to pay tax on most of your foreign income if you: are an individual who is an Australian resident for tax purposes.

[Rossen]

2 hours ago, Mauro said:

@Rossen I'm in the same boat as you. I am more confused than ever. 

 

Basically, all I wanted to know is if I need to select that checkbox about becoming a non-resident. From my initial investigation, I thought that I should select it.

 

With regards to the proof, I was expecting that they would require some sort of evidence to prove that you were a non-resident. Was any additional information requested from you when you submitted your return @Rossen?

 

 

@Mauro, I haven't heard back from SARS yet as I only submitted my return this afternoon. I did however get a notification that leads me to believe that the submission will be audited which we all know is just a pain in the backside. I'm not worried as I'm sure that I'll be able to provide whatever evidence they need seeing as I have actually immigrated. If I'm wrong about the damned tick box then I'm sure I wont have to serve any jail time  or anything like that, I'll probably just have to update my submission with the check box unticked.  
 

I'll post updates as they develop.

[Rossen]

@Hugo2, you are clearly a very knowledgeable person. However it does not help when you use capital letters and attack people's opinions. There's no need for the aggression, no one challenged you.

 

What would be of great help is if you could explain these laws, treaties and clauses which you keep referring to. What do they mean for the people on this forum, particularly those on either temporary or permanent visas. I'm quite sure that those on 189/190 visas are treated differently than those on temporary visas? Could you give us examples? Please keep in mind that most of us are not Tax experts so layman's terms would be appreciated.

 

Also, both @Mauro and I are here on permanent visas, as in we have immigrated, so the bottom clause does not apply to us.

1 hour ago, Hugo2 said:

You may be treated as a temporary resident for income tax purposes if you are an Australian resident for tax purposes and you also hold a temporary migration visa.

 

Edited July 3, 2019 by Rossen

[Hugo2]

1 minute ago, Rossen said:

@Hugo2, you are clearly a very knowledgeable person. However it does not help when you use capital letters and attack people's opinions.

Sorry, I will attach the incorrect opinion and the caps was to show mine from him. I did made it clear  did not attack the person. This false messages keep on going around and I have preached the truth since 2012. I will continue to attack the false and incorrect message. 

[Hugo2]

3 minutes ago, Rossen said:

 

What would be of great help is if you could explain these laws, treaties and clauses which you keep referring to.

I suggest you start following all my posts - I have never attacked the false message without stating the facts and quoting the law. Please see lower down I even went so far as to quote the law

[Hugo2]

4 minutes ago, Rossen said:

 What do they mean for the people on this forum, particularly those on either temporary or permanent visas. I'm quite sure that those on 189/190 visas are treated differently than those on temporary visas? Could you give us examples?

 

I am not getting involved in the number of the visa. I keep to the ATO terminology. Is it a temporary visa or a permanent residence permit? If you on a temporary visa but may later qualify to convert, you a resident but a temporary resident. If you on a PR and it has been granted but not issued yet, you are no longer on a temporary visa. We have to start removing immigration law terminology from tax law. For tax its either a temporary or not a temporary visa. 

13 minutes ago, Rossen said:

 

@Mauro, I haven't heard back from SARS yet as I only submitted my return this afternoon. I did however get a notification that leads me to believe that the submission will be audited which we all know is just a pain in the backside. I'm not worried as I'm sure that I'll be able to provide whatever evidence they need seeing as I have actually immigrated. If I'm wrong about the damned tick box then I'm sure I wont have to serve any jail time  or anything like that, I'll probably just have to update my submission with the check box unticked.  
 

I'll post updates as they develop.

For others in this position: BEFORE you file obtain a Tax Administration Act section 223 opinion as well as an ATO tax adviser opinion and obtain an ATO tax residency certificate before you file. Use that as your evidence as @Mauronow has no evidence that he considered the tax treaty BEFORE he filed.

 

[Rossen]

@Hugo2, can you provide guidance for those of us who have immigrated on permanent residence visas? What do we do when submitting our tax returns? There's a lovely tick box which asks if we have ceased to be tax residents of RSA. Do we select it or not? what would be the reasons not to check it? Please interpret the law and the tax treaty for us. We no longer work in RSA and have no intention of returning. What would make me a tax resident of RSA?

[Rossen]

1 minute ago, Hugo2 said:

I am not getting involved in the number of the visa. I keep to the ATO terminology. Is it a temporary visa or a permanent residence permit? If you on a temporary visa but may later qualify to convert, you a resident but a temporary resident. If you on a PR and it has been granted but not issued yet, you are no longer on a temporary visa. We have to start removing immigration law terminology from tax law. For tax its either a temporary or not a temporary visa. 

For others in this position: BEFORE you file obtain a Tax Administration Act section 223 opinion as well as an ATO tax adviser opinion and obtain an ATO tax residency certificate before you file. Use that as your evidence as @Mauronow has no evidence that he considered the tax treaty BEFORE he filed.

 

 

Thank you @Hugo2, those are the answers we needed. Please keep in mind that most people on this forum have a ton of experience with the immigration process and very little with tax law.

Edited July 3, 2019 by Rossen

[Hugo2]

 can you provide guidance for those of us who have immigrated on permanent residence visas?

one needs to test the tax treaty tiebreakers should you have a house in SA or any link which places ordinarily resident in Aus ONLY, at risk

So if you have a holiday home in S but an habitual home in Oz, you need some guidance from a tax practitioner in either country or you need to take a stand and day to sars why you think Oz won

 

What do we do when submitting our tax returns?

if you emigrate on the ordinarily not resident in SA but in Oz: your life story and why you took the stand 

 

if you emigrate based on treaty, a tiebreaker analysis by yourself or best if done by a tax practitioner in either country

 

In all cases add an ATO tax residency certificate 

 

There's a lovely tick box which asks if we have ceased to be tax residents of RSA. Do we select it or not? what would be the reasons not to check it?

1. You not on a PR yet 
2. You have a house in SA and none of the tie-breakers favour ATO
3. Your family (wife and kid) are more in SA than Oz
4. You on an investor visa 
5. You on a last family member visa 
6. Your family sponsored your medicare/medical in Oz

 

 

Please interpret the law and the tax treaty for us.

I need much more that what you wrote here (below) best is to set up a meeting with some practicing tax in Australia 

 

We no longer work in RSA and have no intention of returning. What would make me a tax resident of RSA?

Is this question correctly stated? 

[Rossen]

Again, thank you @Hugo2! You have given me the guidance I needed!

 

@Mauro, sorry for hijacking your thread Mate!

[Mauro]

@Rossen It seems like I'm in the exact same scenario as you around this, so it is helping me out as well. I would really appreciate it if you could update me as to what happens with your submission.

[ChrisH]

12 hours ago, Rossen said:

@Hugo2, you are clearly a very knowledgeable person. However it does not help when you use capital letters and attack people's opinions. There's no need for the aggression, no one challenged you.

 

It's not the first time... this forum has had to pull Hugo in line before.

@Hugo2, as soon as you lose your cool you lose all credibility.  You claim to be a professional so act like one.

[Jelly]

Relax, Hugo.

[ottg]

perhaps its appropriate to post this for all - similar social rules applies to a web forum

https://www.nortec.org.au/email-etiquette/

[Hugo2]

On 7/3/2019 at 10:16 AM, Hugo2 said:

SORRY NOT ATTACKING YOU ATTACKING YOUR FALSE MESSAGE 

Sorry I left off the 😁 smiley face, but upfront did say I was not attacking the person 

Edited July 4, 2019 by Hugo2