Tax warning for South Africans living overseas

SARS has warned South Africans living abroad to urgently confirm that their tax residency status is correctly recorded on the system before filing, as discrepancies could result in being taxed on worldwide income.

On 28 July 2025, SARS issued a notice specifically aimed at South Africans abroad concerning their tax residency status.

It deals with how an individual who is a non-resident taxpayer on the SARS system should complete their tax return this filing season.

In this notice, SARS also announced enhancements to the 2025 ITR12 tax return, making it easier for South African taxpayers who are not local tax residents but who have South African source-based income.

“These enhancements aim to ensure that non-residents complete the correct required fields in the return,” the taxman explained.

“An interim solution to activate this part of the tax return has been introduced via the SARS Online Query System. This allows non-resident taxpayers to request the non-resident section of the tax return.”

SARS added that a more permanent solution will be introduced later, directly on the tax return through the tax return “wizard”.

However, Mbalenhle Mahlaba, expatriate tax specialist at Tax Consulting SA, explained that these changes do not address the critical issue of what will happen if their SARS profile does not match their non-resident tax status.

Many South Africans abroad think they are non-resident taxpayers, but the SARS system does not reflect this status.

“With South Africa’s residency-based tax system, different tax rules apply to residents and non-residents, with a significant difference in tax liabilities,” Mahlaba said.

“Therefore, expatriates should urgently confirm their tax residency status before they submit their returns this filing season.”

This is crucial because even taxpayers who previously ceased tax residency by formally emigrating and have supporting records may find discrepancies. In some cases, the SARS system has reverted them to being tax residents.

Non-residents face incorrect taxation

Mahlaba said there are various reasons why one’s status can be reverted. But the important takeaway for expatriates is that SARS will tax them according to their tax residency status on record.

“South Africans living and working abroad should not assume they are non-resident if that is not what is reflected on their eFiling profile.”

According to Mahlaba, the correct legal document expatriates must possess is the SARS-issued Non-Resident Tax Status Confirmation Letter, introduced in 2021.

This letter confirms the cessation of tax residency and indicates the effective date of cessation of tax residency in South Africa. “With this letter, you will protect your worldwide income from being taxed in South Africa,” she said.

The SARS note serves as a timely reminder to expatriates to check their non-residency tax status.

The filing deadline of 20 October 2025 allows non-resident taxpayers enough time to obtain the Non-Resident Tax Status Confirmation Letter should their tax status on eFiling reflect incorrectly.

With this letter, South Africans can file according to their status. “South Africans abroad who are uncertain how to check their status should seek assistance from tax specialists,” Mahlaba advised.

“Completing a tax diagnostic as a first step will provide an all-encompassing review of the taxpayer’s tax affairs and reveal any inconsistencies.”

“If your status is indeed correctly reflected as non-resident, you can proceed with submitting your tax return – either a zero return or a return declaring your South African-sourced income for the year of assessment.”

If the system incorrectly shows a taxpayer’s residency status, they should request their Non-Resident Tax Status letter with a simple submission to SARS. Once issued, their details will be corrected on the SARS eFiling platform.

“With the guidance of an expert tax practitioner, this letter can be obtained within a reasonable time,” she said. For example, Tax Consulting SA recently obtained a letter within three weeks.