Tax Residency in South Africa

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What is the definition of an 'ordinarily resident' individual in South Africa?

A person who would naturally return to South Africa after travels. (correct)

A person who has acquired permanent residency.

A person who is primarily based in South Africa for work purposes.

A person who has lived in South Africa for over 6 months.

Which of the following conditions must be met for a person to be considered a resident for tax purposes in South Africa?

Presence in South Africa for at least 30 days in the current year and 180 days over the past three years.

A permanent address in South Africa and a South African bank account.

Presence in South Africa for more than 91 days in the current year and each of the five preceding years. (correct)

Regular visits to South Africa over a period of 10 years.

Under what circumstance is a person not considered a resident of South Africa?

If they maintain a residence in South Africa but travel often.

When they leave South Africa temporarily for more than 330 full days. (correct)

When they are physically present in South Africa for more than 180 days.

If they have a work permit in another country.

What is the minimum number of total days a person must be physically present in South Africa over five years to qualify as a resident?

915 days Signup and view all the answers

When does a person qualify as a resident effective from the first day of assessment?

When they meet the physical presence test criteria. Signup and view all the answers

What will SARS do if Taxpayer B is unaware of the changes made on Taxpayer A's return?

Notify Taxpayer B about the changes and request a review. Signup and view all the answers

What happens if supporting documents are not provided to SARS within the required period after an assessment?

The estimated assessment becomes final and not subject to objection. Signup and view all the answers

What is the deadline for Taxpayer B to review the changes made on Taxpayer A's return?

21 business days. Signup and view all the answers

Under what condition can SARS make a revised estimated assessment?

If there is no response to the request for supporting documents. Signup and view all the answers

What basis of taxation is applied to residents in South Africa as of January 1, 2001?

Residence basis of taxation on worldwide income. Signup and view all the answers

What options does a taxpayer have to submit supporting documents to SARS?

Through eFiling, the MobiApp, or in-person at SARS. Signup and view all the answers

What typically triggers a notice of assessment (ITA34) from SARS?

Adjustments made to the marital status. Signup and view all the answers

What can a taxpayer do if they seek an extension to provide supporting documents to SARS?

Provide reasonable grounds for the extension. Signup and view all the answers

What condition must be met for remuneration paid to an employee of a foreign government in South Africa to be exempt from normal tax?

The employee must hold office solely as an official of a foreign government. Signup and view all the answers

Which of the following individuals would NOT be exempt from normal tax under section 10(1)(c)(iii)?

A domestic servant of a foreign government who is a South African citizen. Signup and view all the answers

Under what circumstance will the exemption of remuneration for foreign government employees in South Africa cease to apply?

The employee receives a permit for permanent residence in South Africa. Signup and view all the answers

What type of income is NOT exempt from normal tax for foreign government employees in South Africa?

Interest income earned from a South African bank. Signup and view all the answers

What must happen if remuneration is not exempt and PAYE has not been withheld by the diplomatic mission?

The employee is considered a provisional taxpayer. Signup and view all the answers

Which requirement is NOT necessary to apply for up to three tax reference numbers during an insolvency?

The taxpayer must personally request the numbers. Signup and view all the answers

What is the maximum number of tax reference numbers a person may potentially receive to finalize an insolvent estate?

Three Signup and view all the answers

Who is eligible to have their tax number coded as an insolvent person?

The appointed trustee or administrator. Signup and view all the answers

What is the maximum number of Public Benefit Organisations you can claim donations for?

99 Signup and view all the answers

Which time period does the solar energy tax credit apply to?

01 March 2023 to 29 February 2024 Signup and view all the answers

Which income types are excluded when reporting other income?

Amounts received as a beneficiary of a trust Signup and view all the answers

From which year of assessment can the question about receiving other income first appear?

2017 YOA Signup and view all the answers

If a taxpayer did not receive an IRP5/IT3(a) certificate, what can they still claim?

Medical expenses and retirement annuity Signup and view all the answers

What option must be selected if you incurred allowable expenses not addressed in the initial questions?

X for additional income Signup and view all the answers

What type of income is NOT addressed by the questions regarding other income?

Income received as a beneficiary of a trust Signup and view all the answers

When does the solar energy tax credit primarily apply?

For installations mainly used for domestic purposes Signup and view all the answers

What is the purpose of the document?

To provide guidance for completing the ITR12 return. Signup and view all the answers

Which section is related to commission income expenditure?

Section 11(a) Signup and view all the answers

What is the purpose of the second tax reference number?

It is applicable to the insolvent estate after the date of sequestration. Signup and view all the answers

When does a taxpayer need to use the third tax reference number?

For tax liabilities after the date of sequestration. Signup and view all the answers

What is covered under Section 11(i) and (j)?

Bad and doubtful debts. Signup and view all the answers

Which criterion relates to foreign employment services exemption?

Section 10(1)(o)(i) Signup and view all the answers

What event signifies the date of sequestration?

The date the court accepts the voluntary surrender of an estate. Signup and view all the answers

Who is responsible for registering the second tax reference number?

The appointed representative if verified with SARS. Signup and view all the answers

What year of assessment is detailed for statutory rates in section 12.1?

2023 Signup and view all the answers

Which of the following statements is true about the first tax reference number?

It refers to the taxpayer's identity prior to insolvency. Signup and view all the answers

Which section addresses the holders of a public office?

Section 8(1)(d) Signup and view all the answers

What type of income and deductions does the second tax reference number deal with?

Income and deductions applicable to the insolvent estate. Signup and view all the answers

What is the last section mentioned in the content?

Disclaimer Signup and view all the answers

What section outlines the qualifying criteria for exemption relating to s8A/8C gains?

Section 10(1)(o)(ii) Signup and view all the answers

What follows the date of insolvency, as defined in the content?

The day immediately following the date of insolvency. Signup and view all the answers

Which condition must be met for the appointed representative to register via eFiling?

They must already be recorded and verified as registered with SARS. Signup and view all the answers

What is section 8C primarily concerned with?

Losses in the context of taxation. Signup and view all the answers

Which section provides insight into amounts refunded related to specific tax provisions?

Section 11(nA) Signup and view all the answers

What is the significance of the Voluntary Disclosure Programme (VDP)?

It allows taxpayers to disclose previously unreported income without penalties. Signup and view all the answers

What section pertains to deductions for foreign taxes paid?

Section 6quat(1C) Signup and view all the answers

Which section discusses statutory rates for the year of assessment 2025?

Section 12.3 Signup and view all the answers

Which section outlines the requirements for partnerships?

Section 9.4 Signup and view all the answers

Study Notes

SARS External Guide - ITR12 Income Tax Return for Individuals

This guide provides comprehensive information for completing the ITR12 South African Income Tax Return for Individuals.
The effective date is 24 June 2024.
Revision 32.
The guide covers 135 pages.
A table of contents is included.

Summary

Taxpayers must submit the ITR12 by the due date as published in the Government Gazette.
The deadline varies by taxpayer status (e.g. provisional vs. non-provisional).
Certain taxpayers are not required to submit a return if their gross income falls below a certain threshold or meets specified conditions.
SARS offers various methods for requesting and submitting returns (e.g., eFiling, mobile app).
SARS may automatically assess tax returns based on available data, and taxpayers have the option to confirm or dispute the assessment.
Taxpayers can seek guidance from accredited tax practitioners.

General Information

Due Dates: Income tax return deadlines are published annually in the Government Gazette.
Exemptions: Taxpayers with specific income sources or below income limits might not be required to submit a return. This includes certain remunerations or interest.
Documentation: Supporting documents are crucial, for example, IRP5/IT3(a) Employee Tax Certificates, interest statements, and receipts.

Information to Create the ITR12

Form Wizard: This tool on the SARS website helps guide the completion of the tax return.
Standard Questions: These questions cover personal details, employment status, deductions, investments, assets, donations, employment-related income, local or foreign income and allowable expenses.

Completing the Return

Taxpayer Information: (Name, ID, contact details, residence, etc.). This section is vital and often pre-populated.
Declaration and Signature: Taxpayers or tax practitioners sign the return, verifying the completeness and accuracy of the information provided.

Taxpayer Information - Income

Investment Income: Includes local and foreign interest and dividends.
Foreign Income: This includes various types of foreign income, excluding investment income.
Capital Gains/Losses: This section covers capital assets such as shares, and property and includes details for both local and foreign transactions.
Trust Income: Income from trusts must be separately declared.
Rental Income: Separate section is provided for income from leased property.
Director/Member of Close Corporation: If applicable, this section requires listing the business activities conducted as a director/member.
Donations: Specify any donations made to approved entities.

Deductions

Medical Expenses: Taxpayers can claim tax credits for medical scheme contributions.
Retirement Contributions: Tax credits/deductions are available for contributions during the relevant year.
Other Deductions: This broad category includes a wide range of other deductible expenses, such as travel expenses (with logbooks), legal fees, expenses related to home office use, etc.

Residency Information

Residence Basis: South Africa has switched from a source-based tax system to a residence basis. Taxpayers residing in South Africa are assessed on worldwide income. Non-residents are taxed on their South African-source income.
Spousal Assessment: If married in community of property, income is usually jointly declared. This involves the sharing of both income and deductions based on the portions assigned.

Tax Credits

Foreign Tax Credits: Taxpayers are eligible for credits for some foreign taxes paid on South African-sourced or foreign-sourced income.

Specific Sections

Urban Development Zones (UDZ): A deduction for accelerated depreciation may be available for certain buildings in UDZs.
Research & Development: Taxpayers can claim deductions for qualifying research and development expenses.
Venture Capital Companies: Income earned through approved Venture Capital Companies may qualify for deductions.
Partnerships: Details for partnership income and expenses are required, including share percentages.
Information on Capital Improvements: Taxpayers can have deductions for these if they spent money on certain improvements to premises.
Other Taxable Receipts & Accruals: Taxpayers should declare any other income not fitting in other pre-defined categories.

Summary of Important Topics

Electronic Filing: SARS prefers electronic filing of tax returns where practicable. Information, such as banking details, and other records necessary to complete the returns should be retained for a period of five years after submission of the tax return, for SARS auditing purposes.

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Description

This quiz explores the definition of an 'ordinarily resident' individual in South Africa and the criteria for residency status for tax purposes. It also covers the implications of tax assessments and the requirements for supporting documentation with SARS. Test your knowledge on these important tax concepts!