Expat tax matters: claiming your tax back in South Africa

Did someone say “tax refund”? Yes, that’s a real thing. Believe it or not, the South African Revenue Service (SARS) isn’t always about taking all of your money. Sometimes SARS even gives some of it back! All jokes aside, as a South African living and working overseas, you may qualify for a tax refund which will allow you to claim back tax you paid in SA. Let’s take a look at which tax refunds you might qualify for, and how these work.

 

Tax refund South Africa

How do you know which tax refunds you qualify for?

You’re likely to qualify to claim tax back in South Africa if you have done any of the following:

• Paid a lump sum tax on retirement fund withdrawals
• Paid withholding tax on interest
• Paid tax on pension and annuity income received from SA

 

Getting a tax refund where you paid tax on lump sums from retirement funds

A tax refund may be due to you if you have withdrawn or retired from your South African retirement fund ( annuity, pension, or provident fund) in the last three years.

You will only qualify for a tax refund if:

• You contributed to retirement annuities previously but you only cashed in your funds after 2017.
• You were living, working, and registered for tax abroad before withdrawing retirement funds.

 

How are lump sum payouts from different retirement funds treated for tax purposes?

It all depends on whether there is a Double Taxation Agreement in play that applies taxing rights to both countries, or to the country of residence exclusively.

• 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 tax refund, you must lodge an objection with SARS to claim this tax refund.
• Objections can be lodged up to five years after the lump sum was received.

 

Getting a tax refund where you’ve paid withholding tax on interest

Levied on non-residential individuals, this tax applies to interest paid from a source within South Africa and usually has a final withholding tax rate of 15%. To get the difference back as a tax refund, it is necessary to submit a “Withholding Tax on Interest Declaration” to the payer of the interest, and this document can be obtained from SARS on application.

• Where the withholdings tax was deducted from you at a rate higher than was necessary (in other words, before you’d shown that you qualify for a reduced rate), you could qualify for a refund on the withholding tax that you overpaid.
• As long as the application is submitted to SARS within three years of paying the interest, the difference will then be refunded.

 

Getting a tax refund where you’ve paid tax on pension/annuity income received from South Africa

Income tax is charged on pension and annuity income in South Africa, but non-resident individuals may qualify for tax relief in the form of a refund. 

• If you are retired abroad but your income is paid in South Africa, you may qualify for this tax relief.
• You must submit an RST01 application to SARS, which is an application made by a tax non-resident to gain relief from tax on pension and annuities paid in terms of a Double Taxation Agreement. This application must be done every year.
• Where you have already paid tax on their South African annuity and pension income, you can claim a refund by submitting an RST02 application.

 

Do South African expats qualify for any other tax refunds?

Where you have spent the entire tax year abroad or part thereof, you may qualify to reclaim tax paid, for example,  on remuneration received from a South African employer.

You are likely to qualify for a tax refund from South Africa if you:

• Only worked for a portion of the tax year
• Worked for an employer outside South Africa
• Received a lump sum payout (like a bonus or redundancy package)
• Worked for more than one employer during the year
• Received interest income in South Africa
• Have not yet filed your tax return

 

Your expat tax needs, covered with FinGlobal

Dealing with SARS isn’t anyone’s idea of a good time, but we’ve turned it into an art form, providing tax expertise on tap for South African expats living abroad. Whether you need help with tax refunds, tax clearance or completing your tax emigration, FinGlobal can handle it for you, every step of the way:

• We have a 100% success track record in everything we do.
• We handle all the admin and provide you with signature-ready paperwork.
• All you need to do is sign and track our progress online.
• No upfront fees, payment due only on completion of services.

Realised that you’re due a tax refund after reading this article? When you’re ready to give us the go-ahead on claiming that tax return and getting the proceeds transferred abroad for you, leave us your contact details and we’ll be in touch.