Background: Mr and Mrs S have South African passports, but left South Africa over 25 years ago to join a missionary organisation based in the UK. During this period, they never worked in South Africa and have been registered for tax in the UK. In August 2018 they were seconded to SA on a three-year contract and are paid a monthly stipend by the UK mission organisation. Based on the physical presence test they were present in South Africa for 167 days during 2019 and for 320 days during 2020. Questions: 1. When determining tax liability in South Africa for the 2019 and 2020 year of assessment do I consider physical presence first (ie 5-year rule) or the fact that their services are rendered in South Africa regardless of where payment is made? 2. Will they be tax liable on their stipend during their contract period in South Africa?
Important:
This answer is based on tax law year ending 28 February 2020.
Answer:
You would need to confirm whether or not the individuals actually ceased being residents of the RSA by formally emigrating from the RSA. From the information it appears not, and they may well have remained ordinarily resident in the RSA, but were persons deemed exclusively to be a resident of the UK (see paragraph 4 of the treaty). It would then depend on where their permanent home is.
On that basis, the number of days physically present in the RSA would then be irrelevant. Either way, the RSA would include the remuneration in gross income, either because it is from a source in the RSA and accrued to a person not resident in the RSA (see Article 14), or because they are RSA residents.