Delusion and I will have assets in SA in the form of shares on the JSE. As my wife and I have formally emigrated, we cease to be residents and will pay no tax on divies and our interest earned will also not be taxed.
Delusion on the other hand, has not formally emigrated and will have to pay the witholding tax on all his divies and normal tax on his interest if over the limit here as normal.
Hi Orca
Wrong on multiple accounts.
1. There is absolutely no reference to formal immigration in the South African income tax act as far as tax residency is concerned. You can for example formally immigrate, and be found to be a SA resident via the physical residence test. For your reference, the definition of residence in the income tax act is as follows.
"resident
means any—
a)natural person who is—
i)ordinarily resident in the Republic: or
ii)not at any time during the relevant year of assessment ordinarily resident in the Republic, if that person was physically present in the Republic-
aa)for a period or periods exceeding 91 days in aggregate during the relevant year of assessment, as well as for a period or periods exceeding 91 days in aggregate during each of the five years of assessment preceding such year of assessment; and
bb)for a period or periods exceeding 915 days in aggregate during those five preceding years of assessment,
in which case that person will be a resident with effect from the first day of that relevant year of assessment,"The act of formally emigrating will assist in determining if you are ordinarily resident in the SA. But it is not the only test.
2. Any dividends paid to a non-SA resident (whether you've formally emigrated or not), will be subject to a dividend withholding tax. Exceptions include the following;
a) Where the company declaring the dividend is not resident in SA (i.e. easy way to remember it, its a non-SA resident company paying a dividend to a non-SA resident. Why would you pay SA tax on it?)
b) Where the withholding tax is amended by the specific provisions of a double taxation agreement with a country in which you are resident.
3. Any interest paid to a non-SA resident (whether you've formally emigrated or not) will typically (there are exceptions) be exempt from South African income tax.
I also refer you to the SARS info page on the South African tax consequences of being a non-residence are nicely captured on the SARS website. Note however this is not complete and i advise any individual to consult a professional when the need arises
http://www.sars.gov.za/ClientSegments/Individuals/Learn-About-Taxes/Pages/Non-Residents.aspxIt is also important to differentiate the income tax consequences away from exchange control rules. They are different animals governed by different legislation.
Another important consideration is other consequences of seeking to be deemed a non-resident, these included deemed capital gains and potential withholding tax on property sales. It is important to consult an expert if you are affected. It could save you in the long run.
