The employees in question, works full time for the company. They only have asylums to be in South Africa. Do they then still then need to register as taxpayers and complete a tax return?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
If you are the employer, you may have had to obtain a tax registration (or tax reference number) for them.
The obligation to register as a taxpayer is to be determined mainly under section 66 of the Income Tax Act, read with the annual notice to submit returns, and then also the Tax Administration Act.
A person must register for normal tax if that person is “a person chargeable to tax” (according to section 151 of the Tax Administration Act). A person chargeable to tax is a person upon whom the liability for tax due under a tax Act is imposed and who is personally liable for the tax (section 152).
We submit that ‘chargeable to tax’ should be interpreted to mean ‘liable to pay tax’. On that basis, a person below the tax threshold should not have to be registered as a taxpayer.
Section 66 now refers to ‘persons who are required to furnish returns for assessment’. Such a person is also not required to submit a return unless one the following circumstances applies:
“… (f) every natural person who— …
(ii) is not a resident and had capital gains or capital losses from the disposal of an asset to which the Eighth Schedule to the Income Tax Act applies;
…
(vii) subject to the provisions of paragraph 3, at the end of the year of assessment—
(aa) was under the age of 65 and whose gross income exceeded R75 750;
(bb) was 65 years or older (but under the age of 75) and whose gross income exceeded R117 300; or
(cc) was 75 years or older and whose gross income exceeded R131 150;
(h) every non-resident whose gross income included interest from a source in the Republic to which the provisions of section 10(1)(h) of the Income Tax Act do not apply; …”
Of course, these persons may not be “required to submit an income tax return in terms of paragraph 2(f)(vii) or (g) if the gross income of that person consisted solely of gross income described in one or more of the following subparagraphs:
(a) remuneration paid or payable from one single source, which does not exceed R350 000 and employees’ tax has been deducted or withheld in terms of the deduction tables prescribed by the Commissioner;
(b) interest (other than interest from a tax free investment) from a source in the Republic not exceeding—
(i) R23 800 in the case of a natural person below the age of 65 years;
(ii) R34 500 in the case of a natural person aged 65 years or older; or
(iii) R23 800 in the case of the estate of a deceased person;
(c) dividends and the natural person was a non-resident throughout the 2018 year of assessment; and
(d) amounts received or accrued from a tax free investment.”
If they have to submit a return they will have to register as a taxpayer.