How SARS Physical Presence Test Affects Your South African Tax Residency

You’ve moved abroad and are enjoying everything that comes with working and living overseas. But what happens when SARS comes knocking? When preparing to relocate, the last thing on your mind is sorting out your South African tax obligations. After all, if you’re living abroad, why would you still need to deal with the South African taxman?

Many people are surprised to learn that even if they live or work outside the country, SARS may still consider you a tax resident. This is because SARS taxes individuals based on their tax-residency status. Therefore, understanding your responsibilities as a South African tax resident before you head overseas is essential to ensuring you don’t incur unnecessary penalties.

In our previous blog post, we discussed the Ordinarily Residence Test and what it means for taxpayers. This “test” is conducted first and is used to determine your “real home” when considering your tax obligations. If SARS determines that you are not ordinarily resident, they may still use the Physical Presence Test to classify you as a resident.

This article will explore how the physical presence test can be applicable to you, even after declaring yourself as no-longer ordinarily resident.

What Is the SARS’ Physical Presence Test?

The SARS Physical Presence Test is an “in-person” test to verify your tax residency. This is an objective test that uses the specifications set by the Income Tax Act, and is based on the number of days you are physically present in South Africa over a specific period. This test is only conducted when you don’t pass the Ordinarily Residence Test or when SARS needs further verification of your tax residency. 

This is a test that must be performed every year to assist SARS in determining whether you are a South African tax resident. To satisfy the test, you must meet all three of the following requirements: 

• More than 91 days in South Africa in the current tax year; AND

• More than 91 days in South Africa in each of the five preceding tax years; AND

• A total of more than 915 days in South Africa over those five preceding years

The 330 Rule:

If you do meet the above day's test but subsequently leave South Africa for at least 330 consecutive full days, SARS will treat you as a non‑resident from the day you left. Meaning that the physical presence test, even though initially satisfied, no longer applies. 

If you do not meet all of the above requirements, you will not be seen as physically present (i.e. as a tax resident) for the purposes of this test.

What is seen as a day?

In the last few years, SARS has become stricter about the manner in which days are counted or considered. These general rules are applied by SARS to determine the days: 

• Any part of a day counts as a full day.

• A day starts at midnight (00:00), so even if you arrive at 11:55 p.m., it counts as a full day.

• The day you arrive and the day you leave are both included.

• Passing through South Africa without actually entering the borders (in transit) does not count.

💡 Expert Note:

This rule does not apply to individuals who are residents under the Ordinarily Resident Test. Their residency only ends when their real home is permanently moved abroad.

What the Tests Mean for Your Tax Status

If you are ordinarily resident in South Africa, SARS considers you a tax resident. Even if you’re not ordinarily resident, if you pass the Physical Presence Test, SARS will treat you as a tax resident.

SARS wants to confirm how much time you actually spend in the country, which helps determine whether you’re still considered a tax resident. If it is determined that you are a resident via the physical presence test, there may be a possibility of double taxation as you would possibly be liable for taxation in both countries. The double taxation treaties and foreign tax credits will then have to be applied in order to ensure you are paying the correct taxes in each jurisdiction.  

If you meet neither test, you are not considered a South African tax resident. This means you’re taxed only on income that comes from a South African source, not on income you earn overseas.

How do I inform SARS that I have ceased to be a resident?

When you stop being a tax resident, you must formally inform SARS as it does not happen automatically. This to make sure you’re being taxed as a non-resident and not as a South African tax resident. 

You do this by:

1. Updating your RAV01 form on SARS eFiling: 

Log in to eFiling and update your Registration, Amendments and Verification (RAV01) form. Under the Income Liability Details section, you’ll need to indicate that you have ceased to be a tax resident.

2. Submitting supporting documents: 

Once you update your details, SARS will open a case and send you a letter requesting supporting documents. These are usually uploaded via eFiling or SARS’ online query system. 

SARS will review the all documentation and inform you once they are satisfied that you are no longer a South African Tax Resident. 

The Takeaway 

SARS taxes individuals based on their tax residency status. Tax residency in South Africa can be complicated and it's often easy to make mistakes or misunderstand your tax residency status. Taking the right steps now can save time, stress, and potential penalties later. While the SARS Physical Presence Test can sound intimidating, it’s usually a routine verification process and not a sign that you’ve done something wrong.

If you’re struggling to navigate the complexities of South Africa’s residence-based tax system, Eqeight is here to help you do so with confidence. Speak to us today about understanding your tax residency status and staying compliant.