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The South African Tax Mystery Revealed

By July 2, 2019October 3rd, 2023Tax services and consulting

The South African Tax Mystery Revealed

July 2, 2019


Residents in South Africa know that they are required to pay tax on a monthly basis, based on their annual income. The reasons for why you pay tax are varied, but most governments require tax to ensure the efficient running of the country. “Why do we pay tax in South Africa?” is a question that many South African residents ask when they leave South Africa to live abroad and discover they are still required to pay tax in South Africa. In this article we will explore your tax obligations as a South African resident living within South Africa and living abroad.


Why do we pay tax in South Africa?


Your tax obligations living in South Africa

If you live in South Africa, for the 2020 year of assessment, you are required to pay income tax if you are younger than 69 years and earn more than R79 000 a year. If you are 65 years or older, the tax threshold – the amount above which you pay income tax – increases to R122 300.


For taxpayers over 75 years and older, this threshold is R136 750. The amount of tax you pay every month in South Africa depends on your annual salary, with tax rates varying from 18% of your annual income to R 532 041 plus 45% of your annual income if you earn more than R1 500 001.


Paying tax in South Africa if you live abroad

If you are a South African living abroad, you need to determine if you need to pay tax. South Africa has a residence-based tax system, which means that people who are “resident” in South Africa (for tax purposes) are taxed on their worldwide income subject to certain exclusions. Non-residents are taxed only on income that has its source in South Africa, e.g. rental and interest.


For the purposes of paying tax, the Income Tax Act considers you a South African tax resident if you meet one of two tests:

  • The ordinarily residence test or
  • The physical presence test and
  • You are not deemed to be exclusively a resident of another country for the purposes of the application of any tax treaty

The ordinarily resident test

The ordinarily resident test is based on the intention of the person to reside in South Africa and is conducted first to determine residency. Only if the answer is negative will the physical residency test be used. Someone is ‘ordinarily resident’ in South Africa if they have their usual or primary residence (their real home) in South Africa. If this is uncertain, the question that is asked by SARS is “Where do you go home from your wanders?”


Physical presence test

This is an objective test and it is based on the number of days you have spent in South Africa over a specific period. The South African Income Tax Act has set the following parameters listed below for this test. If your circumstances comply with their parameters you will be deemed a South African resident and will be obliged to pay income tax in South Africa on your worldwide income – even if you don’t consider South Africa to be your home anymore.


These parameters determine you to be a South African resident:

If you are physically present in South Africa for a period or periods exceeding:

  • 91 days in aggregate during the tax year under consideration;
  • 91 days in aggregate during each of the five tax years preceding this tax year; and
  • 915 days in aggregate during the five preceding tax years.

If you don’t meet the South African tax requirements you will be classified as a non-resident for tax purposes in South Africa.


If you are a South African living abroad and would like to know more about our tailor-made tax solutions for South Africans around the world, contact FinGlobal today.




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