Income tax law in South African has some special rules that favour non-residents over residents.
Perhaps the most significant section if you were previously resident in South Africa and have now established with the South African Revenue Services (SARS) that you are no longer resident, relates to interest.
The section was designed to encourage non-residents to invest in South Africa. But to qualify for the exemption two requirements must be fulfilled:
* You must not be in South Africa or in the common monetary area for more than 183 days of the tax year; and
* You must not have carried on business in South Africa at any time during that tax year.
The exemption also applies to companies which are managed and controlled outside South Africa, provided that the interest is not related to any business carried on in South Africa.
Another tax law thatrelates only to people who are resident in this country deals with the source of income. For example, if you are resident in South Africa and are employed to do a job here, but are required to work temporarily outside South Africa, you will still be taxed here even if you are paid by someone outside South Africa.
Another example is a section which was introduced last year relating to investment income which residents earn from sources outside South Africa.
In this context investment income means annuity, interest, rental, royalty or similar income.
If you are a resident and receive an overseas pension or social security grant, you will not be taxed in South Africa because the definition of annuity excludes a pension from past employment or a payment made under another country's social security system.
There are specific rules relating to how that income will be taxed in this country, particularly if it is also taxed in another country.
There are also exemptions for income from investments which immigrants to South Africa held prior to becoming resident here.
The point is, though, that if you have established that you are not resident in South Africa, and you earn "investment" income from overseas, even though you spend time in South Africa, you will not be taxed on that income here.
The legislation does not set any time frames for your presence in South Africa, so provided that you are not resident here the provisions will not apply.
A number of other sections distinguish between people who are resident in South Africa and those who are not, but only one more is worth mentioning.
The provisions relating to donations tax affect only those who are resident in South Africa.
If you are a South African resident, you can only donate R25 000 of your assets a year without being liable for tax. Any donations in excess of this amount are taxed at 25 percent.
If you are not a resident, you will not be liable for this tax.
There may, however, be exchange control requirements that need to be fulfilled. Again this provision does not look at the amount of time the non-resident might have spent in South Africa during the tax year.
If you are planning to leave South Africa and still have assets here, you need to know, firstly, whether you will qualify as a non-resident for South African tax purposes and, secondly, the requirements of the provisions under which your transactions with those assets will be exempt from tax.