Relief From South African Tax for Pension and Annuity Income

What is it?

Most countries impose tax on the worldwide income earned by a resident of that country as well as on income earned by non-residents on locally earned income. Therefore, someone can be double taxed because they can be taxed in the country where they are resident as well as in the country of source, where the income was earned. Certain countries have agreements to avoid double taxation. Normally these agreements provide that income of a certain nature will be taxed in only one of the two countries; or may be taxed in both countries and the country of residence will exempt the income or allow a credit for the tax which has been imposed by the source country. South Africa has agreements with a number of countries to prevent the double taxation of income.

Who is it for?

A non-resident, that is, a person who is not a tax resident of South Africa and receives income from a source in South Africa may apply for a directive for the relief from South African tax on pension and/or annuity income (excluding lump sums) or who wants a refund of tax that was withheld in terms of the Income Tax Act No. 58 of 1962 (the Act). The request should be in terms of the Double Taxation Agreement (DTA) that is in place between South Africa and the non-resident’s country of residence.

Top Tip: Effective 11 April 2025, the IRP3(a) – Application for a Tax Directive: Gratuities and Two-Pot Savings Withdrawals Benefit must be used by the Fund when paying a Savings Withdrawal Benefit, and on application the relief from South African tax on the Savings Withdrawal Benefit income will be considered.

How to apply for a directive?

You can apply for a directive for the relief of the withholding of Employees’ Tax from your pension and annuity if you are not resident in South Africa. Follow these steps to apply:

Log onto eFiling services and access the ‘RST01 – Application by Non-Resident for a Directive for Relief from South African Tax for Pension and Annuities in terms of a DTA’ application form.
You will not be able to submit the RST01 application without a tax number.
You must indicate the country of residence on the tax directive application form so that the correct DTA can be considered.
The tax office stamp is no longer a requirement when submitting the RSR01 electronically.
All the required fields and schedules on the RST01application form must be completed in full.
A certificate of residency must be attached.
A history of employment on the employer’s letter head must be attached. The letter must also include the following details:

- The number of months that the employee contributed to the Fund while employed.
- The number of months that the taxpayer rendered services outside of South Africa while contributing to the Fund.
- The number of months that the employee rendered services inside of South Africa while contributing to the Fund.

Where a DTA allows the source country (in this case South Africa) to exempt the income from tax to the extent the pension and annuity is included as income or taxable income in the country of residence, proof that the income is or was included must be attached to the RST01 application. The proof can’t be older than a year. An example of proof may be an assessment (in the country of residence) where the income is highlighted.
SARS will evaluate the tax directive application within 21 working days. Validity of the directive

With effect from the 2024 year of assessment, the period of validity for the relief from South African tax directive has been changed to be valid for a period of three years for the pension and/or annuity income.

Retirement Fund Administrators and / or Long-term Insurers must still ensure that –

the taxpayer provides the Retirement Fund Administrators and / or Long-term Insurers a certificate of residence for every year, and
the place of residence remains the same for the duration of the validity of the directive.

Where a taxpayer changed residence to a tax jurisdiction other than the one in respect of which the directive was issued, the directive automatically becomes invalid from the date of the change.

When will a directive application be rejected?

A directive application will be rejected if one of the following applies:

The tax affairs of the non-resident (who is registered in South Africa for Income Tax purposes) are not in order.
Proof that the pension and annuity income (reflecting as included in income in the assessment of the country of residence), is not included.
Additional information asked for that was not submitted.
If, in terms of South Africa’s domestic law and the DTA, SA had the right to withhold tax.

Top Tip: Where Employees’ Tax was incorrectly withheld from a non-resident’s pension and/or annuity, in terms of the DTA between South Africa and the country of residence, a refund may be requested.

How to request a refund?

Firstly, the non-resident must be registered in South Africa for Income Tax purposes. For more information on how to register as a taxpayer, click here. Follow these steps to apply for a refund:

An Income Tax Return (ITR12) must be completed and submitted for that relevant year of assessment. This is the first step which allows SARS to refund the Employees’ Tax that was withheld from the pension and/or annuity.
A copy of the IRP5 – Employee Tax Certificate, issued by the fund responsible for withholding the Employees’ Tax, must be in your possession.
The completed ITR12 must be submitted:
- Using eFiling, if you are registered. If you aren’t registered, just following these simple steps
- Or appoint a representative taxpayer in SA to submit the ITR12 on your behalf. A TPPOA – Special Power of Attorney must be completed to enable the representative to deal with SARS on your behalf.

Top Tip: The Comprehensive Guide to the ITR12 for Individuals is available to assist in completing and submitting your return. Please note that the submission of the ITR12 doesn’t make provision for creating a refund immediately. Therefore, the ITR12 may be selected for verification and if it wasn’t, on receipt of the Notice of Assessment (ITA34) an objection must be lodged within 80 business days of the date of the assessment or submit Request for Reduced Assessment.

To enable SARS to revise your assessment and to create a credit (refund) on your account, submit the following relevant documents when lodging your objection or requested reduced assessment or if you have been selected for verification:
- The fully completed RST02 – Request by Non-Resident for a Refund from South African Tax for Pension and/or Annuities in terms of a Double Taxation Agreement and all the relevant documents listed e.g. a bank statement, proof of residence, ID document, etc.
- A copy of the IRP5 – Employee Tax Certificate
- Any other document used to complete the ITR12.
- Proof that the income was included in the taxable income where a DTA allows the source country (in this case South Africa) to exempt the income from tax to the extent that the pension and annuity are included as income or taxable income in the country of tax residence. The proof cannot be older than a year.

When will a refund be rejected?

An RST02 application for a refund may be rejected where –

in terms of South Africa’s domestic law and the DTA, South Africa has the right to withhold tax.
The RST02 is incomplete.
The documents needed to complete the request, is not provided. The documents as listed on the RST02 are:
- Stamped copy of bank statement (1st page only) – must reflect the account details
- Proof of residential address; and
- Copy of client’s ID/Passport
The tax office in the country of residence did not sign and stamp the RST02.
The date stamp of the tax office is older than one year.
The non-resident’s tax affairs are not in order.
Proof that the pension and annuity income (reflecting as included in income in the assessment of the country of residence), was not included.
Any other additional information requested not submitted.

Frequently Asked Questions

FAQ: Must I be registered for Income Tax to request a refund for relief from SA Tax?

Yes, tax withheld can only be refunded if a person...

Last Updated:

11/04/2025
15:31