Guidance for Swallows: Navigating South African Visas, Tax Implications, and Property Ownership

When is someone seen as a "swallow"?

• Most foreigners may visit South Africa freely without the need to apply for any VISA prior to entry;
• Most foreigners come to South Africa for holiday and once here, they realise how much they love it here;
• Such visitors, who have NO other VISA in their foreign passports, will arrive at passport control and their foreign passports will simply be stamped with a DATE STAMP;
• This date stamp entitles them to remain in South Africa for a maximum period of 90 days (calender). So there is a start and an expiry date for their visit;
• If the visitor reaches the 90-day period, they must leave the country;
• In order to avoid this complication, visitors are allowed to VISIT HOME AFFAIRS, within the first 30 days of entry to apply for a once-off 90-day extension to the initial period. This renewal application must be done in person and at a Home Affairs Office;
• If the renewal application is not done within the first 30 days of entry, the visitor will have to leave South Africa before the first 90 days expire;
• Many visitors do this 180-continuous days in South Africa on an annual basis (for many years in a row) completely legitimately. These visitors are called SWALLOWS as they follow the sun;
• Swallows (who are tax non-residents and financial non-residents) may borrow up to 50% of the value of the property. The other 50% MUST be paid from abroad with proof of this foreign payment required in order for this bond to register.

Tax Implications for "swallows"

• Visitors who avail themselves of the above, may not work in South Africa;
• This is why these swallows are usually retired;
• In order to work (or earn any form of income, including self-generated income other than rental) in South Africa, the visitor must apply for a temporary residency permit (like a work VISA);
• The temporary VISA application process takes 12 months to issue on average, sometimes even longer;
• Once a temporary VISA is issued, the visitor ceases to be a swallow;
• True swallows, who subsidise their 6 month visit here with income abroad, DO NOT HAVE TO REGISTER FOR INCOME TAX in South Africa. They will also not be seen as TAX RESIDENTS and will therefore not have to declare their foreign income in South Africa;
• Temporary residents however must register for income tax in South Africa and will be seen as tax residents in South Africa for the duration of their VISA. This is dangerous as many do not consider the tax implications of a temporary VISA and are then expected to declare ALL income in South Africa. Often leading to problems;
• Temporary residents may bond up to 75% of the value of their property BUT the 25% balance MUST be paid from abroad and not from South Africa in order for such a bond to register. Also, when the temporary resident leaves South Africa, the bond must be reduced to 50% of the original property value (with payment of cash into the bond) as the temporary resident reverts back to being a non-resident and failure to do this will result in all bank accounts being blocked.

Some important issues to remember when you are a swallow

• To apply for the additional once-off 90 days as soon as you can after first arriving in South Africa;
• NOT TO travel to another country for a short while to just re-enter South Africa (to commence a new 90-day visit). This is frowned upon by both Home Affairs and could lead to serious tax implications if you enter South Africa on multiple occasions in one year;
• If you are physically present in South Africa for more than 180 days, in total, over a year period, SARS will see you as a tax resident even if you do not have a temporary VISA;
• Rental can be earned by swallows at any time without attracting any tax consequences. South African rental is however taxable in • South Africa so swallows will declare rental earned here to SARS annually without the need to declare any other income.

Becoming a permanent resident

• You can apply to Home Affairs for a permanent residency VISA anytime after being a temporary resident for 5 continuous years;
• A permanent residency VSIA application could take up to 12 months (if not longer) to issue so it is important for temporary residents to ensure that their renewal or new permanent residency VISA application is submitted with enough time to spare;
• If their temporary residency VISAs expire before their renewal or permanent residency VISA is issued, they revert back to being a non-resident and must leave South Africa within 90 days after expiry. A big problem if the person is employed here. Such persons will be flagged for entry until the new VISA is issued.
• When your permanent VISA is issued, you are automatically deemed to be a tax resident with the need to submit worldwide income in South Africa. Even if you do not live here! Many people do not consider the tax consequences of this situation;
• The ability to also freely repatriate all funds introduced with submission of proof of these funds falls away after 5-year of the permanent residency VISA. Then such residents become subject to the same excon restrictions as us (R1mil without tax clearance // R4mill with tax clearance);
• Permanent residents may bond up to 100% of the property value with no requirement to introduce any portion of the purchase price from abroad.

When property is bough by more than one person with different status

• A big problem arises when there are two or more buyers who wish to bond a portion of the purchase price and each buyer has a different status;
• For example: a husband and wife where the husband is South African with an ID number and the wife is a non-resident waiting for a temporary residency VISA;
• The purchase price is then split in 2: the husband can bond 100% of his 50% in the property and the wife may bond 50% of her 50% in the property WITH A REQUIREMENT that the rest of the money must be paid by her from her bank account abroad (or a joint account). If there is no proof that the cash balance was paid from abroad, the bond CAN NEVER REGISTER as the excon condition can never be fulfilled.