Taxpayers often assume that their South African tax affairs remain unchanged or that everything is in order simply because they have not received communication from the South African Revenue Service (SARS). However, their SARS profile may reflect outstanding returns, outdated personal information, unresolved compliance matters, or historical tax positions that may no longer align with their current circumstances. Failing to address it, could impact cessation of your tax residency process and the encashment policies.
None of these should be ignored as the consequences of outstanding tax debt or non-compliance can be costly penalties and interest.
It is time for a SARS Health Check which provides taxpayers with insight into their current tax position by reviewing their SARS eFiling profile and broader tax affairs. It is a proactive assessment designed to identify potential risks and provide clarity on the steps required to ensure ongoing compliance.
For expatriates in particular, this review is important before undertaking significant tax processes, such as confirming tax residency status, applying for a Tax Compliance Status (TCS) PIN, requesting Approval of International Transfer (AIT), or regularising historical tax affairs.
The question every South African abroad should be asking is: “If SARS reviewed my profile today, would I know exactly what they would find?”
A SARS Health Check Provides the Answer
A SARS health check is conducted through a comprehensive Tax Diagnostic Report, which furnishes a detailed review of a taxpayer’s SARS eFiling profile, tax history, and overall compliance position. This is an example of a taxpayer’s compliance profile, with each section containing a further drop-down menu:
The Tax Diagnostic Report reveals the following:
- The taxpayer’s SARS eFiling profile and registration details.
- Whether the tax profile is active and accessible.
- Submitted and outstanding income tax returns.
- SARS Notices of Assessment and Statements of Account.
- Outstanding balances, administrative penalties, and interest.
- SARS correspondence, including verification or audit matters.
- Personal, banking, and contact details recorded with SARS.
- Foreign income declarations and applicable exemptions.
- Potential tax residency implications.
Many expatriates only discover issues with SARS when they attempt to complete an important process, such as applying for tax residency cessation or transferring funds offshore.
By completing a Tax Diagnostic Report as part of the SARS Health Check, taxpayers gain clarity on their current compliance position and can address matters before they become obstacles.
Could You Be Paying More Tax Than Necessary?
A SARS Health Check is not only about identifying compliance risks — it can also uncover potential opportunities for tax relief.
One common issue among South African expatriates is that they may continue submitting tax returns on the basis that they remain South African tax residents, despite their circumstances potentially indicating that they had ceased to be South African tax residents under South African domestic law or an applicable Double Tax Agreement (DTA).
In these circumstances, taxpayers may have continued declaring foreign employment income in South Africa even though their tax residency status had changed. Depending on the taxpayer’s circumstances and the applicable legislation, reviewing their historical tax treatment may identify opportunities to correct prior filings, reduce unnecessary tax exposure, or potentially recover overpaid tax.
The Tax Diagnostic Report may also identify:
- Foreign income reporting that may require review considering the taxpayer’s current tax residency position.
- Opportunities to amend or correct prior tax returns where the historical treatment no longer aligns with the taxpayer’s circumstances.
Understanding whether you have paid the correct amount of tax is just as important as ensuring compliance with SARS.
Why a SARS Health Check Should Come First
Before making any significant tax decisions, taxpayers should first understand their current SARS position.
A SARS Health Check, supported by a Tax Diagnostic Report, allows expatriates to identify risks, resolve outstanding matters, and ensure that their SARS profile accurately reflects their circumstances.
Rather than waiting for SARS to identify issues during a future application, verification, or audit, taxpayers can proactively review their position and approach SARS from an informed perspective.
For South Africans living abroad, a SARS Health Check provides clarity, identifies opportunities, and creates a roadmap towards effective compliance.
