Interpretation Note 3 - 2018 (Issue 2) – “Ordinarily Resident” - Layman Version

What Does “Ordinarily Resident” Mean for Tax in South Africa?

• • South Africa uses a residency-based tax system. This means if you’re considered a tax resident, you’re taxed on your worldwide income, no matter where you earn it. If you’re not a tax resident, you’re only taxed on income from South African sources.
  • One way you become a tax resident is by being “ordinarily resident” in South Africa. But what does that actually mean?

Simple Definition: What is “Ordinarily Resident”?

• • You are ordinarily resident in South Africa if South Africa is your real home – the place you naturally return to after travelling, working abroad, or living elsewhere.
  • It’s not just about where you are physically. It’s about your intention, lifestyle, and personal ties.
  • Think of it this way:
  • “Where is your usual or most settled place to live? Where do you keep going back to? Where is your real home?”

Why Does This Matter?

• • If you are “ordinarily resident” in SA:
  • You are a tax resident from the date you became ordinarily resident.
  • You must pay tax on global income, not just what you earn in SA.
  • If you stop being “ordinarily resident”:
  • You are no longer a tax resident from the date you leave and cut ties.
  • You only pay SA tax on income from South African sources after that.

How Does SARS Decide If You Are Ordinarily Resident?

• • There’s no single rule. SARS looks at your whole life situation to decide. Key factors include:

·        Factor	·        What SARS Looks At
· Where you live	·        Is there a home in SA you return to?
· Intention	·        Do you plan to stay in SA long-term? Or are you living elsewhere permanently?
· Family ties	·        Where does your family live? Kids go to school? Spouse live?
· Work and business	·        Where do you work, run businesses or hold investments?
· Visas and residency	·        Do you have permanent residency or citizenship in another country?
·  Travel	·        How often do you come back to SA? Are visits temporary or regular?
·  Belongings	·        Where are your personal items kept — car, furniture, bank accounts?
·      Lifestyle	·        Clubs, religion, community ties — where do you participate most?

• • You can still be considered ordinarily resident even if you’re not in SA for the whole year.

Real-Life Examples from Court Cases

• • Here are real examples of how courts have decided if someone was ordinarily resident in SA:

Still Ordinarily Resident:

• • A man travelled often for work but kept his flat, furniture, and life in SA.
  • A worker went to the US for 14 months, but his home, job, and bank accounts stayed in SA.

No Longer Ordinarily Resident:

• • A family moved to the US, set up home, got citizenship, and spent most of their time there. They kept some assets in SA, but their real home was now the US.

Can You Be Ordinarily Resident in More Than One Country?

• • Usually, no. Courts have said that “ordinarily resident” is your main home — not just one of many places you live. You can have multiple residences, but only one ordinary residence.

From When Are You a Tax Resident?

• • If you become ordinarily resident, you’re a tax resident from the exact date you move and settle here — not just from the start of the tax year.
  • If you leave SA and cut ties, you stop being a tax resident from the exact day you cease to be ordinarily resident.

What If a Tax Treaty Says You’re Resident Elsewhere?

• • Even if you’re “ordinarily resident” in SA, you may still not be a tax resident if:
  • A double tax agreement (DTA) between SA and another country applies.
  • The treaty says you’re only resident in the other country.
  • In that case, SA must follow the treaty, and you won’t be taxed in SA on worldwide income.

Conclusion

• • In short:
    • Ordinarily resident means SA is your real home, not just a place you visit.
    • SARS looks at your intention, lifestyle, and ties to SA vs. other countries.
    • If you’re still tied to SA in a meaningful way — even while living abroad — you might still be considered a tax resident.
    • If you emigrate and settle elsewhere permanently, you may stop being a tax resident, but SARS will look closely at all the facts.

What Is “Ordinarily Resident” in South African Tax Law? [2025 Guide]

• • Understand how SARS defines tax residency. Learn what “ordinarily resident” means if you’re working or living abroad. Updated for 2025.

Introduction 

• • Are you working abroad or planning to leave South Africa permanently? You might still be taxed on your worldwide income — depending on whether SARS considers you ordinarily resident.
  • In this complete guide, we explain what it means to be ordinarily resident for tax purposes, why it matters, and how to ensure you don’t get caught out by surprise tax bills.

What Does “Ordinarily Resident” Mean?

• • Key Definition 
    • Being ordinarily resident in South Africa means it’s your true home, where you normally live — not just where you spend the most time.
    • Think of it as your “main base” — the place you come back to after trips abroad, where your life is centred.
    • If SARS considers you ordinarily resident:
    • You’re a tax resident, and
    • You’ll be taxed on your global income.

How Does SARS Decide If You’re Ordinarily Resident? 

• • There’s no single test. SARS will look at your life as a whole. Key questions include:

Factors That SARS Considers 

 

·  Factor	·  What SARS Looks For
·        Home ties	·        Do you have a fixed home in SA?
·        Intent	·        Do you intend to come back to SA?
·        Family	·        Where does your spouse or kids live?
·        Work	·        Do you still work for an SA-based employer?
·        Banking	·        Do you have SA bank accounts or loans?
·        Belongings	·        Where’s your stuff — furniture, car, etc.?
·        Community	·        Are you active in SA clubs, churches, etc.?
·        Travel	·        Are your visits to SA frequent or short-term?

• • SARS can still consider you ordinarily resident even if you’re not physically present in SA for a full year.

Real-World Case Studies 

• • Still Ordinarily Resident 
    • A businessperson who spent months abroad but kept a home and strong ties in SA.
    • A contractor sent overseas temporarily, whose family, house, and job stayed in SA.
  • Not Ordinarily Resident 
    • A family who emigrated to the USA, set up a new life, and got citizenship.
    • An executive who cut ties with SA and only visited for short trips.

From When Do You Become or Stop Being Ordinarily Resident? 

• • If you move to SA permanently → You’re a resident from the date you settle.
  • If you emigrate and cut ties → You’re no longer a tax resident from that exact day.
  • You won’t be taxed on income earned before you became resident or after you left — unless that income is from a South African source.

What About Tax Treaties? 

• • Even if you meet the ordinary residence test, a double tax agreement (DTA) may say you’re only a resident of another country.
  • In that case, you won’t be taxed in SA on global income — only on South African-sourced income.
  • Common examples:
    • South Africa–United Kingdom DTA
    • South Africa–UAE DTA
    • South Africa–Australia DTA

Frequently Asked Questions (FAQ Schema) 

• • Can I be ordinarily resident in more than one country?
  • Courts generally say you can only be “ordinarily resident” in one place at a time — where your real home is.
  • Do I stop being tax resident as soon as I move abroad?
  • Not automatically. You must show that you’ve cut key ties to South Africa and no longer treat it as your main home.
  • What if I live overseas but visit South Africa often?
  • SARS may still see you as ordinarily resident, depending on the purpose and nature of your visits and where your life is based.

Tax Planning Tip 

• • If you’re working abroad or emigrating, speak to a tax professional about:
  • Ceasing tax residency in South Africa,
  • Triggering an exit tax (Capital Gains Tax), and
  • Avoiding double taxation via tax treaties.

Conclusion: Stay Informed, Stay Compliant

• • Understanding the meaning of “ordinarily resident” is key if you’re leaving South Africa or working internationally. SARS doesn’t just look at where you are — it looks at where your life is rooted.
  • If you want to stop being taxed on worldwide income, you need to break your ties with South Africa clearly and permanently.