South African Tax Law & the Resident: A General Summary

The current Income Tax Act of 1962 (as amended), levies tax on persons who are resident in South Africa.

If a person is not resident, tax is levied on the amount received or accrued to a person from a source either within or deemed to be within South Africa.

A resident for tax purposes is:

  • If a natural person, he or she is ordinarily resident in South Africa. However, if he or she is not  ordinarily resident in South Africa, he or she needs to be physically present in the Country for a given period
  • If a non-natural person, it is either incorporated, established or formed in South Africa or has its place of effective management in the Country.

There are also some exceptions for Double Tax Agreements and Financial Services as well as rules which govern the change of residence.

For natural persons, resident or ordinarily resident from a tax perspective hold a different meaning to what is generally understood to constitute residence or nationality.

Both South African and foreign Courts have to some degree narrowed down a definition of this particular concept "ordinarily resident" in various cases presented to them. It is, as mentioned in some case law, a country to which a person “would naturally and as a matter of course return from his wanderings…” (Cohen v CIR 1946 AD 174) or “what may be described as his real home” (CIR v Kuttel 1992 (3) SA 242).

The above is a brief general summary and the law itself is quite specific. It is always advisable to consider it carefully. Ismail Ayob and Partners practice Tax Law and would be able to assist you with any Tax queries you have.