Tax residency implications for South Africans living abroad
10 April
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9 July

Tax residency and the physical presence test

South Africa has a “residence” basis of tax.  Prior to 2001 South Africa applied a source basis of tax.  This meant that amounts were only subject to tax (in South Africa) if they were from a South African source.  The residence of a taxpayer was by and large irrelevant.  The source basis of tax was replaced by a  residence basis for years of assessment commencing on or after 1 January 2001.  The residence basis of tax means that South African residents are taxable on their worldwide income regardless of the source of that income.A resident is defined in section 1 of the Income Tax Act as either:

  • A person who is “ordinary resident” in South Africa.  In other words, South Africa is his or her true home.
  • A non-resident who has spent a certain number of days in South Africa, i.e.

–  more than 91 days in total in each of the current and previous five tax

years and:

–  more than 915 days in total during the previous five tax years.

The  days need not be consecutive.

Note that this “days test” or physical presence test only applies to persons who are not ordinarily resident at any time during the year of assessment.  If a person who is a resident in terms of the “physical presence, he or she is deemed to be no longer test leaves South Africa for a continuous period of 330 full days, he or she is deemed to be no longer resident from the first day of the 330-day period.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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