On 24 April 2023, SARS launched the new AIT process… A SAICA webinar with Piet Nel and Mark Kingon (SARS), had Mark hinting that all applications in the pipeline would be judged based on the old rules.
For those in the know, with experience in offering services of ‘Ceasing to be Tax Resident’ - there are many hurdles that need to be crossed.
In a space of 7 years, we have witnessed:
1. No formal exit system,
2. The MP336b application – more for the Reserve Bank, but processed through SARS
3. The TCS application, offering a tax PIN which expires after 12 months for the Reserve Bank, but processed through SARS
4. The Cease to be resident application for SARS exit tax event
5. The Cease to be resident application and AIT application (effective 24 April 2023) for both SARS and the SARB
Each application is different and unique and there are challenges apparent before one even considers making the application.
The focus of this article is how SARS treats all those successful applications that were made prior to 24 April 2023? In our view two things need to happen:
1) SARS record you as a non-resident,
2) The South African Reserve Bank allows you to repatriate the wealth declared on your exit application (which was subjected to an exit tax event).
In those days, once you passed the final hurdle and repatriated moneys abroad, the emigration process ended. One of the requirements was to pass the SARS application.
Only recently have SARS introduced a change in the RAV01 form to non-resident.
What happens to all those individuals who have successfully left South Africa, been through the MP336b application process, declared all assets and wealth, been vetted by SARS - to receive a SARS stamp on the MP336b form, before they could even take the application to the banks for SARB approval and repatriation?
One can only expect that constructively, they are gone and out of the SAARS system. But are they reflected as non-resident? Has SARS updated their records? Or will their profiles be subjected to the infamous ADMIN penalty for non-submissions of returns… Some clarity is needed.
Already, the fight of man versus machine is a challenging one. To apply for ceasing to be resident, a SARS e-Filing Tax profile needs to be compliant. The moment one opens an old profile, and tries to update it for several years abroad and zero returns, you face the risk of the system generated ADMIN Penalty. Such penalty should not arise, but that is not how SARS e-Filing program works.
Suggestions to request suspension for a profile, to avoid the admin penalty are most welcome – but not always practical or feasible. Some clients are inactive, dormant, active and these have different implications and give different outcomes on SARS e-Filing.
Hopefully SARS will clarify.
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