A taxpayer emigrated in a previous year of assessment, however he did not go through the process of financial emigration, so the taxpayer’s South African tax number is still active in South Africa. The ITR12 individual tax return asks whether a person emigrated during the current year of assessment, however the system furthermore does not allow one to add a date prior to the start of the current year of assessment. Please advise on the following: 1. What is the correct manner to complete the ITR12 for an individual where that individual emigrated in a previous year of assessment? 2. How does one go about deregistering a taxpayer for income tax in South Africa?
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
There are two issues here. The first is to notify SARS that the person ceased being a resident of the RSA, and then to deregister the taxpayer’s registration with SARS. The tax event, for the individual, is ceasing to be a resident of the RSA (either on emigration or in terms of a treaty). And the taxpayer was required to declare that in the year of assessment that the person ceased being a resident. That is why the return does not allow for an earlier date to be captured in the current ITR12. The taxpayer’s year of assessment also ended on the date he or she ceased being a resident. The person may well not be required to file a return in years of assessment after the date he or she ceased being a resident. The correct position is to do a voluntary disclosure, unless there was no capital gain, see section 9H of the Income Tax Act. You can, after correction of the default, request SARS to deregister the person as a taxpayer, but they will only do so if there is no requirement to submit a return (in future).