Know Your Tax Liability South African Expatriates

SARS have also shown very little mercy to South Africans abroad, and we have seen more aggressiveness in expatriate audits, revenue collection and penalties for non-compliance.

The questions often raised by many South Africans working abroad is “How will SARS find me?” However, SARS started a dedicated ‘Foreign Employment’ unit to execute on the mandate to target expats and this, in most cases, triggers an audit on the taxpayers affairs.

As part of our wider service offering, we will conduct a comprehensive tax calculation to ensure you know your exact tax liability and plan effectively for your upcoming tax returns.

CONTACT US FOR PERSONAL CALCULATION

LEARN MORE

Know Your Tax Liability South African Expatriates

SARS have also shown very little mercy to South Africans abroad, and we have seen more aggressiveness in expatriate audits, revenue collection and penalties for non-compliance.

The questions often raised by many South Africans working abroad is “How will SARS find me?” However, SARS started a dedicated ‘Foreign Employment’ unit to execute on the mandate to target expats and this, in most cases, triggers an audit on the taxpayers affairs.

As part of our wider service offering, we will conduct a comprehensive tax calculation to ensure you know your exact tax liability and plan effectively for your upcoming tax returns.

CONTACT US FOR PERSONAL CALCULATION

LEARN MORE

COMMON MISCONCEPTIONS

Only “take-home” salary is considered for tax purposes.
One does not need to submit a tax return if they feel they “tax-exempt” under the physical presence test (known as the “days test”) and ordinarily resident test.
Fringe benefits such as housing allowance and school fees are not taken into consideration in one’s total package.
You are automatically “tax-exempt” if there is a DTA in place between South Africa and the host country.

PERSONALISED CALCULATOR TO SUIT YOUR SITUATION

The implementation of the amendment to Section 10(1)(o)(ii) (Known as the Expatriate Tax Law Amendment) of the Income Tax Act finally came into effect on 1 March 2020. With much uncertainty around the change, we have consulted with both individual expats and some of the larger corporate groups employing SA expats in places such as Africa and the Middle East to raise a corporate awareness therefrom.

The most common request arising from these consultations is the need to assess one’s tax obligations, taking into account salary, fringe benefits, and tax paid in the host country. The most common request arising from these consultations is the need to assess one’s tax obligations, taking into account salary, fringe benefits, and tax paid in the host country. The value of this exercise is being able to compute the possible tax liability and thus allowing for in-depth planning to mitigate / nullify the impact of any exposures, especially where one’s income exceeds the R1.250 million threshold.

As such, we have developed a bespoke baseline calculator that is:

Fully customised to each individual’s circumstances; and
Can be adopted by corporates to allow for their expatriates to plan their tax affairs more efficiently post 1 March 2020; and
A customised tool to be utilised for future appointments of South African expatriates being seconded abroad.

With the necessary planning and adjustments, you as an employer can prevent the devastation of losing key resources as a consequence of the coming law changes. As an individual, you can plan your affairs and apply various tax relief mechanisms such as applying a DTA, financially emigrating (FE) or advanced tax planning in cases where DTA and FE is not possible and whether a foreign tax credit can assist in reducing this ultimate liability for the affected expatriate.

CONTACT US FOR PERSONAL CALCULATION

With the current economic climate and the South African “expat tax” law in full effect, there is no better time than now to exercise due diligence on one’s tax affairs and mitigate any risks associated to one’s current tax position and potential future tax liability in South Africa.

Mariana Stander, Managing Partner of Tax Consulting SA.

SARS AUDIT

Anyone who has been sharply following the SARS expatriate tax law change will know that expatriates are being earmarked for aggressive targeting.

They would also know SARS started a dedicated ‘Foreign Employment’ unit to execute on this mandate, but what happens when you are on their radar and the audit commences?

The evidence

On an audit request dated 02 November 2020 from SARS, the following questions/requests were posed to the expatriate filing the return:

Submit 12 months bank statement with all income and a description which reconciles with what was declared to SARS.
Submit a copy of the tax clearance application and approval for immigration.
Submit a copy of your residency certificate.
On the unsold property in South Africa, what is the intention of holding this property?
Date of departure from OR Tambo airport.

The questions speak for themselves and will be a reality check for those who have been putting off dealing with their tax obligations decisively, or who followed the ‘quick and easy’ solutions, which leave room for maximum risk and little protection in the long run.

Unfortunately, expatriates were forewarned on being compliant, and with SARS’ recent inclusion of the words ‘willfully or negligently’ in the Tax Administration Act, one cannot take these questions lightly when responding nor plead ignorance after the fact; the consequence of which include imprisonment or a hefty fine.

OTHER USEFUL INFORMATION

Expatriate Tax

EXPATRIATE TAX TEXTBOOK

Expatriate Tax deals with all the various tax implications for South Africans working overseas, and for foreign nationals working in South Africa – regardless of how short or permanent the work period.

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South African rotational workers in Africa and Middle East

NEWS |SOUTH AFRICAN ROTATIONAL WORKERS IN AFRICA AND MIDDLE EAST – NO SARS MERCY

Having just returned from visiting South Africans in remote locations in the Democratic Republic of Congo, Zambia, Oman, Qatar, Saudi Arabia and the UAE, one gains an appreciation for expatriates living in these locations.

LEARN MORE

National Treasury Takes a view on Financial Emigration

NEWS | NATIONAL TREASURY TAKES A VIEW ON FINANCIAL EMIGRATION

Having just returned from visiting South Africans in remote locations in the Democratic Republic of Congo, Zambia, Oman, Qatar, Saudi Arabia and the UAE, one gains an appreciation for expatriates living in these locations.

LEARN MORE

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