As a South African living and working overseas, you may not be aware of the fact that you could qualify for a tax refund from the South African Revenue Service (SARS) which will allow you to claim back on tax you paid in South Africa. That’s right. You can get back some of the money you paid to SARS! Let’s take a look at which tax refunds you might qualify for, and how these work.
What tax refunds do you qualify for?
If you’ve paid a tax on lump sum payments from retirement funds
If you’ve withdrawn or retired from your South African retirement fund (whether annuity, pension or provident fund) in the last three years, a tax refund may be due to you.
How to tell if you qualify:
- You must have contributed to a retirement annuity previously
- You must have been living, working, and registered for tax abroad before withdrawing your retirement funds.
- You must have cashed in your retirement funds after 2017.
When it comes to taxing lump sum payments from different retirement funds, this is determined by the Double Taxation Agreement that assigns taxing rights either to both countries, or exclusively to the country of residence. Whether or not a lump sum payment qualifies for a tax refund from South Africa depends on the nature and source of the lump sum. If a lump sum is eligible for a refund, it is necessary to lodge an objection with SARS in order to claim this tax refund. Objections can be lodged up to five years after the lump sum was received.
If you’ve paid withholding tax on interest
This is a tax that is levied on non-resident individuals on interest paid from a source within South Africa, which has a final withholding tax rate of 15%. It is possible that you may qualify for a reduced withholding tax rate, however, this reduced rate does not automatically apply and trigger a rebate.
To get the difference back, you must submit a “Withholding Tax on Interest Declaration” to the payer of the interest. This document can be obtained from SARS on application. This means that the withholding tax was deducted from you at a higher rate than was necessary, and you may accordingly be eligible to request a refund for the overpaid withholding tax. If this application is submitted to SARS within three years of payment of the interest, the difference will then be refunded to you, the non-resident individual.
If you’ve paid tax on pension and annuity income received from South Africa
Recipients of pension and annuity income in South Africa will be charged income tax. Non-resident individuals may qualify for tax relief in terms of a refund. To qualify for this tax relief in South Africa, you will need to submit an RST01 application to SARS. This is an application made by a tax non-resident seeking relief for tax on pension and annuities that are made in terms of a Double Taxation Agreement. You will need to apply anew to use this relief every year.
If an individual has paid tax on their South African annuity and pension income, they are able to claim a refund for the tax paid by submitting the RST02 application.
Other tax refunds for South African expats
It is possible to reclaim tax paid if you have spent a part of, or the whole tax year overseas, and have received remuneration from a South African employer.
You are likely to qualify for a refund from South Africa if you:
- Only worked for part of the year
- Worked for someone outside South Africa
- Received a lump sum payment (like a bonus or redundancy)
- Had more than one employer during the year
- Received interest income in South Africa
- Have not filed tax returns
Still got tax questions? FinGlobal can help
We provide tax expertise for South African expats living abroad. We’re ready to assist you with your tax refunds, tax clearance or tax emigration.
- We handle each step of every process, telling you exactly what supporting documentation you need and providing you with signature-ready electronic paperwork.
- You can track our progress online, and see exactly where we are in the process. We have all the right relationships with SARS to ensure that your transactions are speedy, efficient, and concluded without delay.
- We’re so confident in our ability to assist with your tax refund, that we only charge our fee upon successful conclusion of our service. No refund for you, no need to pay us!
Ready to talk about transferring your refund abroad to you and getting your money where you need it to be? Leave your contact details and we’ll be in touch.