For section 10(1)(h) ITR12 2026 claims, SARS now requires the non-resident interest exemption, and any Double Taxation Agreement relief, to be claimed against the specific account that earned the interest. You keep the prepopulated IT3(b) line, then record the exemption on that same account. Left unclaimed, the interest risks being assessed as taxable.
SARS published its Changes for Filing Season 2026 notice on 29 June 2026, moving these lines from container level to transaction level. With the non-provisional deadline of Friday 23 October 2026 now 29 days away, emigrants and non-residents who file an ITR12 are finding their bank interest prefilled as taxable, with the exemption waiting to be claimed account by account.
I’m Chris Herbst, Managing Director at CH Consulting. I hold the CBAP(SA) designation as a Practising Member of the Southern African Institute of Business Accountants and the GTP(SA) designation as a Practising Member of the South African Institute of Tax Professionals. Our practice prepares ITR12 returns for South African individuals, including emigrants, split-year filers and non-residents who still hold SA bank accounts, and this season we have been reconciling their IT3(b) interest line by line against the new per-account fields.
What changed for section 10(1)(h) ITR12 2026 claims?
From Filing Season 2026, SARS requires the section 10(1)(h) interest exemption and Double Taxation Agreement (DTA) relief to be declared against the specific account that earned the interest, rather than as one figure for the whole return. The notice says these line items “will be handled at the transaction level as opposed to the container level”, and that where section 10(1)(h) and/or a DTA applies, you must “declare such against that particular account”.
The Updated Guides for Filing Season 2026 page lists three items now declared per institution: interest expenses claimed (described as “Section 11G” and limited to the interest income for the year), amounts accrued as an exclusive deemed-resident of another country under a DTA, and interest exempt under section 10(1)(h). The Comprehensive Guide to the ITR12 (IT-AE-36-G05) carries “Effective Date: 29 June 2026”.
What do container level and transaction level mean?
SARS calls each section of the ITR12 a container, such as the Investment Income container. Since the 2024 season, local interest under source code 4201 has been prepopulated per institution from IT3(b) data, with a locked total equal to the sum of the lines. Transaction level means your claim now sits on the line for one institution and one account number.
What did the ITR12 say before 2026?
The 2023 ITR12 example told non-residents to include section 10(1)(h) interest in the Local Interest field, and said SARS would “do the required apportionment(s) and / or apply the applicable exemptions”. The 2026 design puts the claim in your hands. What SARS’s assessment engine does when a non-resident return has prefilled interest but no per-account claim is not published, so we treat it as unverified.
Why does the notice mention interest expenses next to section 10(1)(h)?
The notice places this item under a heading that pairs “Allowable interest expenses” with “Section 10(1)(h) of the Act”, even though section 10(1)(h) is an exemption and not an expense. The Updated Guides page separates the three items, and we treat the guide as governing. The section of the Act behind SARS’s “11G” label could not be confirmed against the Act text in our research, so that reference is unverified.
Who does the per-account section 10(1)(h) rule affect?
The change mainly affects non-residents, emigrants and treaty tie-breaker cases who file an ITR12 and hold South African interest-bearing accounts, along with residents with foreign interest who may be tempted to use the DTA line. Which ITR12 you see depends on SARS’s RAV01 residency indicators: the date you ceased residency, the date you reinstated it, the date you became resident, and Nature of Entity.
Emigrants who ceased residency during the 2026 year
From the 2025 year of assessment, a year in which residency ceases shows two form wizards: a resident one for the period before and a non-resident one for the period after. The 2026 year of assessment runs from 1 March 2025 to 28 February 2026, under Notice 7422 in Government Gazette 54598 of 30 April 2026.
Non-residents with SA rental or trade income
If you file because you earn SA rental or trade income, your SA bank interest comes onto the return with it. Our guide to rental income in South Africa covers the rest of that return.
Treaty tie-breaker cases
A person deemed exclusively resident of another country under a DTA is excluded from the definition of “resident”. Ceasing residency this way triggers a deemed disposal of worldwide assets except SA immovable property, and SARS points to Interpretation Note 4 (Issue 5) for the physical presence test. Our article on tax residency in South Africa explains the tests.
How does the section 10(1)(h) exemption work?
Section 10(1)(h) of the Income Tax Act 58 of 1962 exempts interest received by or accruing to a non-resident from normal tax, unless the person was physically present in South Africa for more than 183 days in aggregate in the 12 months before the interest was received or accrued, or the debt is effectively connected to a permanent establishment in South Africa. SARS’s non-residents page confirms this.
How do you count the 183 days?
The look-back runs from each receipt or accrual date, not from the tax year. Two interest credits in the same year can give different answers, so a returning visitor needs a day count for the 12 months before each credit, built from passport stamps and travel records.
What if you fail the 183-day test?
SARS says a non-resident present for more than 183 days is subject to normal tax on SA-source interest, with an exemption then available, including R34 500 for a person aged 65 or older. For the 2026 year of assessment, the local interest exemption is R23 800 under 65 and R34 500 at 65 and older.
Does withholding tax on interest apply instead?
Withholding tax on interest is a final tax of 15% on SA-source interest paid to non-residents, from 1 March 2015, governed by sections 50A to 50H and Interpretation Note 115 (issue number unverified). Section 50D exempts interest paid by any bank as defined in the Banks Act 94 of 1990, and a 2018 practitioner article concludes non-residents are not subject to it on SA bank-account interest. How non-bank interest that already suffered withholding tax should appear against an account on the 2026 non-resident return is unverified.
How does section 10(1)(h) compare with other interest reliefs?
Section 10(1)(h) is a full exemption for qualifying non-residents, whereas the section 10(1)(i) exemption is an annual Rand cap, the DTA line allocates taxing rights, and withholding tax on interest is a separate final tax.
- Section 10(1)(h): Who or what it covers: Non-residents, subject to 183-day and PE exceptions; 2026 ITR12 status: Must claim per account
- DTA exclusive deemed-resident line: Who or what it covers: Treaty tie-breaker cases; 2026 ITR12 status: No SARS guidance on use
- Section 10(1)(i) exemption: Who or what it covers: R23 800 under 65, R34 500 at 65+; 2026 ITR12 status: Annual cap
- Tax-free savings account: Who or what it covers: TFSA interest; 2026 ITR12 status: Fully exempt
- Withholding tax on interest: Who or what it covers: 15% final tax, non-bank interest; 2026 ITR12 status: Declaration unclear
- Interest expenses (s11G): Who or what it covers: Capped at interest income; 2026 ITR12 status: Per account, no loss
The DTA line and the section 10(1)(h) line can overlap on the same account, which is why we deal with that choice separately below. For TFSA interest, see our article on tax-free savings accounts.
Do non-residents still need to file an ITR12 in 2026?
A non-resident generally only has to file a 2026 ITR12 if they carried on a trade in South Africa other than solely as an employee, or had South African-source interest that is not exempt under section 10(1)(h). That is how KPMG summarises Notice 7422, and the SARS FAQ says non-residents normally do not have to declare exempt interest. Anyone who files for another reason must declare the interest and now claim the exemption per account.
Auto-assessments ran from 1 to 12 July 2026. What SARS does with a non-resident’s auto-assessment built on IT3(b) data is not published. If one arrived with your interest taxed, our guide on disputing a SARS auto-assessment sets out the routes.
How do I claim section 10(1)(h) on the ITR12 2026, step by step?
You claim section 10(1)(h) by keeping each prepopulated interest line under source code 4201 and recording the exempt amount against that same institution and account number, before submitting by 23 October 2026 if you are non-provisional. The exact on-screen labels of the new fields are unverified in our research, so open your 2026 ITR12 on eFiling or check the IT-AE-36-G05 guide before relying on field names.
- Check your residency record. Confirm that SARS’s RAV01 record shows the correct date you ceased residency. It decides whether you see the resident or non-resident ITR12, and section 10(1)(h) is only available to non-residents.
- Collect IT3(b) certificates and statements. Get the IT3(b) for every SA account, plus statements showing each interest credit and its date. Our list of documents needed to file in 2026 helps here.
- Do a day count where needed. If you visited South Africa, count days present in the 12 months before each interest credit.
- Open the Investment Income container. Under local interest (4201), match each prepopulated line to an IT3(b) by institution name, account number and amount.
- Keep the prepopulated lines. Do not delete them. Use “Add” (institution name, account number, amount) only for an account missing from the prefill.
- Claim section 10(1)(h) on the same line. Enter the qualifying interest in that account’s exemption field. In a split year, this is only interest accruing after the cessation date.
- Complete the DTA field only if it applies. Use it where you rely on treaty residence elsewhere, as a separate entry from section 10(1)(h).
- Enter interest expenses separately. The 2026 estates guide confirms bank charges are excluded and expenses “cannot create a loss”.
- Check the container totals. For interest expenses, the container field is prepopulated with the total of the account-level entries. We expect the same for section 10(1)(h) and DTA amounts, though that is unverified.
- Use the spouse sub-section where relevant. See our article on marriage in community of property.
- Submit and keep records. Answer any Declaration Questionnaire rather than declining it, and keep supporting documents for five years from submission.
How do split-year emigrants handle one IT3(b) figure?
SARS has not published how a single annual IT3(b) figure for one account should be split between the resident and non-resident parts of a split-year ITR12, so emigrants need to rebuild the interest by date and treat the allocation as unsettled. Interest before cessation is resident interest, where only section 10(1)(i) applies, and interest after it falls under section 10(1)(h).
Which part of the return does the prefilled line land in?
This is unverified. Moving amounts between the resident and non-resident parts may look like deleting prepopulated data, which SARS says can route a return for verification. Whatever approach you take, keep a dated schedule of each interest credit that ties back to the IT3(b) total.
What if you visited South Africa after emigrating?
A four-month visit is under 183 days on its own, but the test counts days in aggregate over the 12 months before each credit. Earlier visits in that window count too, so some credits may pass and others fail.
Should I use the DTA line or the section 10(1)(h) line for SA interest?
SARS has published no guidance on when to use the DTA “exclusive deemed-resident” line rather than the section 10(1)(h) line for the same South African account, so the choice depends on your residency records and is worth confirming against your own facts. The DTA line decides who may tax, while for SA bank interest section 10(1)(h) usually exempts it anyway.
Position one: the DTA line as a stop-gap
Some practitioners use the DTA line where SARS still codes the person as resident because RAV01 has not been updated, so the non-resident return is not issued.
Position two: update RAV01 first
Others prefer getting SARS’s records changed to ceased residency so the non-resident return is issued. That brings the deemed disposal of worldwide assets into play, and KPMG warns that correcting residency records can delay filing.
What about residents with foreign interest?
Residents normally get relief on foreign interest through foreign tax credits, not the DTA line. The guide’s separate section 6quat(1C) item is for SA-sourced trade income, and the correct 2026 field for foreign interest tax credits is unverified. Our article on offshore investments gives the wider picture.
What does SARS already hold, and how does a mismatch show up?
SARS already holds your bank’s IT3(b) interest figure for each account, your RAV01 residency indicators and WT002 returns from withholding tax payors, so a per-account claim that does not line up with those records can lead to an unapplied exemption, a questionnaire or verification.
- IT3(b) data: gross interest per account for the full year, submitted by banks and other institutions between 1 April and 31 May. Nothing on it says “non-resident”.
- WT002 returns: monthly summaries of interest paid and tax withheld.
- RAV01 indicators: ceased or reinstated dates and Nature of Entity.
- CRS/FATCA: foreign account information received under exchange agreements. Whether it is used on the 2026 ITR12 is unverified.
The risk is not theoretical. A Tax Faculty query for the 2021 year described a UK-resident taxpayer whose prefilled SA interest was taxed automatically. Without a claim, our analysis is that only the section 10(1)(i) exemption would plausibly apply, with the excess taxed, though SARS has not said so.
What is the Declaration Questionnaire?
If a submitted return is flagged, SARS shows a Declaration Questionnaire. If your answers resolve the query, the return is processed; declining sends it to verification.
What happens at verification?
If you do not respond, SARS may issue an estimated assessment under section 95(1)(c) of the Tax Administration Act. Documents may be submitted within 40 business days under section 95(6), with an extension requested under section 95(7). Our guide to SARS verification covers the process.
What are the most common section 10(1)(h) ITR12 2026 mistakes?
The most common mistakes are deleting the prepopulated interest instead of claiming the exemption against it, adding an account twice, filing on the wrong return type and misusing the interest-expense field.
Deleting the prefilled interest line
SARS warns that if prepopulated investment income is deleted, “the return may be routed for verification”. Keep the line and claim against it.
Adding the account a second time
Claiming against a hand-added account that SARS already holds from the IT3(b) creates a duplicate, and the locked 4201 total counts both.
Filing on the resident return
If your RAV01 indicators are out of date, you receive the resident ITR12, where section 10(1)(h) is not available.
Putting bank charges or exempt interest in the expense field
Bank charges are excluded, and expenses above the interest are capped. Entering exempt interest as an expense is a misstatement.
Filing early without the third-party data
Emigrants may file early, but the guide warns that other early returns are selected for verification because third-party data has not been authenticated. Your IT3(b) may not yet be on SARS’s system.
What if I miss 23 October 2026 while fixing section 10(1)(h)?
A late return can attract an administrative penalty of R250 to R16,000 per month, depending on prior-year taxable income, for up to 35 months, so filing on time matters more than a perfect first submission. Provisional taxpayers have until 22 January 2027. Remission can be requested via RFR1 on eFiling, though SARS decides each request. See our Filing Season 2026 deadlines and our guide on missing the tax deadline.
Do You Need Help With Section 10(1)(h) on Your 2026 ITR12?
If you have emigrated, split your tax year or live abroad with SA accounts, we can reconcile your IT3(b) interest, check your residency record and complete the per-account claims with you. Book a call to talk through your own circumstances, or email info@chconsulting.co.za with your questions.
