When earning an income in South Africa, you are probably paying tax. The Income Tax Act 58 of 1962 (“the Act”) describes gross income as:

“(i) in the case of any resident, the total amount, in cash or otherwise, received by or accrued to or in favour of such resident; or
(ii) in the case of any person other than a resident, the total amount, in cash or otherwise, received by or accrued to or in favour of such person from a source within the Republic, during such year or period of assessment, excluding receipts or accruals of a capital nature…”

How do you know whether you are, as the Act describes, a resident for tax purposes? In short, a resident is defined in the Act as:

1. A natural person who is ordinarily resident in the Republic
2. A non-resident who is ordinarily resident in the Republic at any time during the relevant year of assessment, if
that person was physically present in the Republic:
• for a total period exceeding 91 days during the relevant year of assessment, as well as for periods exceeding
91 days in each of the five years of assessment preceding that year, or
• for a period or periods exceeding 915 days in total during those five preceding years of assessment. 

A resident, in terms of the Act, is an ordinary resident. A person can be a resident of more than one country, but can only be an ordinary resident of one country. 

This concept can be confusing and not as simple as it seems. The Court takes different factors into consideration, like temporary absence, primary home, habitual residence and physical presence. 

In the matter of Cohen v CIR, the Court stated that a person need not be physically present in a country in the year to be an ordinary resident, that the question of ordinary residence was a question of fact and where a person’s real home is and their intention as to where they will return to. 

Should a person intend to immigrate, then section 9H(2)(b) of the Act will apply, but should a person return to South Africa for a short period, the days must be counted to determine whether the physical presence test is applicable for that year of assessment, if they spent the prescribed days in South Africa. If that person fulfils the test of physical presence in that year of assessment, that person will be treated as a resident. This is a test that should be done each year of assessment. 

A person will cease to fall within the ambit of the definition of resident on the day that he leaves South Africa for a continuous period of at least 330 full days. 

In terms of Interpretation Note 3 issued by SARS, the following factors need to be taken into account to determine if a person is an ordinarily resident, namely:
• an intention to be ordinarily resident
• fixed and settled place of residence
• habitual abode
• place of business/business interest
• employment and economic factors
• status of individual (i.e. work permit period, immigrant, etc.)
• location of belongings
• nationality
• family and social relations
• political, cultural or other activities
• application for permanent residence or citizenship
• period, purpose and nature abroad
• frequency of and reasons for visits.

As evident from the factors listed above, determining residency for tax purposes involves a complex, multi-faceted analysis. Both legal definitions and factual circumstances must be considered to ensure compliance with South African income tax law.

Given the complexity, individuals are encouraged to seek professional tax advice when uncertain about their residency status or obligations under the Act.

Reference list:
1. The Income Tax Act 58 of 1962.
2. Cohen v CIR, 13 SATC 362, 1946 AD 174.
3. Haupt, P. & Haupt, E., 2025. Notes on South African Income Tax 1st ed (2025)

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