Who is regarded as a non-resident?

04 Feb 2021 12:00 am

Withholding tax: Allen West discusses the so-called physical presence test and an ordinary resident definition and as defined in terms of South African common law for purposes of Section 35A of the Income Tax Act.

Under South African Law there are different types of residents, for example a resident defined by the Income Tax Act, 1962 in terms of the so-called physical presence test and an ordinary resident defined in terms of South African common law.

Any individual, who is ordinary resident (common law concept) in South Africa during the year of assessment or, failing which, meets all three requirements of the physical presence test, will be regarded as a resident for tax purposes.

An individual will be considered to be ordinary resident in South Africa, if South Africa is the country to which that individual will naturally and as matter of course return after his or her wanderings. It could be described as that individual’s usual or principal residence, or his or her real home. In an individual is not ordinarily resident in South Africa, he or she may still meet the requirements of the physical presence test and will be deemed to be a resident for tax purposes.

To meet the requirements of the physical presence test that individual must be physically present in South Africa for periods exceeding-

  • 91 days in total during the year of assessment under consideration.
  • 91 days in total during each of the five years of assessment preceding the year of assessment under consideration; and
  • 915 days in total during those five preceding years of assessment.

An individual who fails to meet any one of these three requirements will not satisfy the physical presence test. If the individual is neither ordinary resident, nor meets the requirements of the physical presence test, that individual will be regarded as a non-resident for tax purposes. This means that individual will be subject to tax only on income that has its source in South Africa as well as the withholding of tax on the sale of immovable property as provided for in Section 35A of the Income Tax Act 1962.

Should you require more information in this regard, kindly contact me.

Allen West
Tonkin Clacey Pretoria
012 346 1278