Contract flying and Taxes???

[corkscrew]

I never seem to get the same answer from 2 different people about this issue. If you away from S.A for more than 182 days in a year, with at least 2 month consecutive, can you or can you not claim all your taxes back?

[flyboy2]

As I understood the taxman, your +182 days absence from SA + the 2 months/year qualifies for a nil tax situation, but your Passport exit/arrival dates better show that clearly-probably required to support your tax return.

I've never tried claiming back tax, so cannot comment.
Have you gone into the sars website to look for that answer ?

[skyvan]

Recommend you go direct to your tax advisor on this one, if you get it wrong, you could get badly burnt.

The brochure from SARS is at this link http://www.sars.gov.za/it/Brochures/Other%20Brochures/Tax%20for%20Non-Residents%20-%20Brochure%20-%202%20September%202005.pdf

Good luck.

[cavortingcheetah]

:hmm:

What taxes to claim back?
If you are non resident for tax purposes there shouldn't be any taxes on income arising outside SA.
I think that you will find that it is The Revenue who will determine your residency. You need to make application to them for such a determination and each year will be assessed individually. As a non resident, you will not, in any event, escape South African tax on monies arising within the republic, such as rents.:)

ps: skyvan is right. Do not mess with the little weasels.

[SKYTORT]

Hi there,

I am pretty 100% sure of what I am about to say with regards to days out of the country required. So I hope this will help with your question.

First of all, residency has to do with non-citizens who work in SA. SARS does not determine this on a "thumb suck" basis, but rather, the requirements for being considered a residence is written down. Think about it,when a foreigner starts using our wonderful roads, medical services and police services, they must pay their dues as well.

With regards to you tax claim as a contract pilot, here are the requirements, and please don't even try and suggest something else than what I am about to say since I have just gone through the ordeal to get a rather hefty some of money from them. Here are the requirements:

1.) You have to be OUTSIDE of South Africa for a total (aggregate as the SARS puts it) of 183 days or more. These days spent outside the country MUST be on behalf of your employer, so no, your little holidays abroad will not count.

2.) WITHIN the 183 day aggregate, AT LEAST 60 DAYS will be CONSECUTIVE.

Its good to keep airline boarding passes, but your only chances to disprove them when they get obstinate, is to have passport copies clearly indicating travel dates.

Like I said, I just went through the whole process of gathering evidence. But for those paranoid blokes, go and visit their website. Unless it has changed, I will put my :mad: on a block to corroborate what I have just said - guess I just really want to save somebody time and money, but not when it comes to flying jobs:}

Hope all the info helps gents!:ok:

[Miragepilote]

The 60 days does not include the night you leave or the night on that day you arrive, in essence 62 days consecutively.:hmm:

Don't screw with SARS, you cannot win, even for living in Africa, their system is one of the best in the world and improving daily!:8

Ask Highway Hennie, he tried... hehehehe:)

[cavortingcheetah]

:(

One of the reaons why the SARS is so efficient is that over the recent years it has become increasingly staffed with ex UK IR tax inspectors.
If you examine recent SA tax legislation with regard to residence, domicile, CGT and inheritance tax, it practically mirrors that which is in place in England. By that token, care must be taken, once deemed by the revenue to be non resident, that visits to South Africa do not follow a regular pattern.
You do not have to be employed to obtain non resident status but the beady eye will be aimed more carefully upon you if you are not and you may have initially to be absent from SA for a full tax year to qualify for non residence. Of course it is perfectly possible to be a retired South Arican who resides elsewhere than in the Republic.
As I have said before on this thread, Divaris and Stein used to produce an excellent guide to South African income tax. It was published by Butterworths and available trough CNA. I thought that the latest edition was due for publication in either December last year or January of this year.
Have a care about interpreting such books yourself. So much of what really happens in the tax world is based on case law and that changes with each judgement. There is no substitute for a few thousand rands of professional advice and if you deal with a large and expensive firm, you will at least have the benefit of their updated ex patriate news letters to keep you posted.:D

[corkscrew]

Thanx for all the info guys. Have to agree that its probably well worth a few thousands to get some firm to take care of it. If a professional firm manages to get your tax back through perfectly legal means then I dont see how you could end up in too much trouble. At least it seems like its possible, bank account is starting to look good again! :}

[SKYTORT]

Well worth a few thousand???? Who the hell does your taxes? Shouldn't cost you more than a couple of hundred bucks....

It's not up to the firm, it up to you to get the money back - they just fill in the papers, but you have to make it happen.

Enjoy the money:ok:

[cavortingcheetah]

:hmm:

If it's only a couple of hundred rands you're talking about; I'd rather like to know who does your taxes?:D

[SKYTORT]

Well at this moment I have a very attractive young lady doing my taxes - maybe it's my charm, I don't know?:}

I will send her an email and get the normal rates:} , after which I will mention the company's name. I must add that they do not seem to to this on a frequent basis, but if it means good business - why not?

[Updraught]

There is a specific portion on your tax return form, Section 6, on the last page, for this reason.
Then if you read Part 6 (Art 10(1)(0)(ii)) Exemptions, in the information leaflet that comes with your tax return, it states that:
:) You have to be out of the country for at least 183 full days or more in the year of taxation, and
:) for a continuous period of 60 full days within 12 month period.
Then you add an addendum to your return to show the income you regard as tax free.
I have been doing it for several years and have had no problems:) .
I also fill in my own form at no cost.

[EagleWings]

Updraught is spot on!

During 2004/2005 tax year I worked 7 months in SA and the rest out of the country. I submitted the form with the IRP5 for the time worked in SA and a letter to say that I had been working outside the contry for the rest of the time. They sent me a letter requesting IRP5's for the rest of the year. So I sent another letter explaining that I had been employed out of the country for the last 5 months of the year with dates and details. A few months later I got what I paid in back.

Yip filled in the form myself too for free.
If I remember correctly it says on the form that you could be asked to prove your claim of having worked outside the country for the required amount of time.
So Don't chance your arm!!!! :ok:

[Vertical_Reference]

This is the first time I'm getting paid for work in Africa.

What happens if you are paid a salary in SA Rand, taxed on it and ontop of that paid a daily rate in US$.
Do you get taxed on that S&T as well? Because what I have been told, is that you shouldn't get taxed on it.

Does anyone know how this situation works?

[Updraught]

In 2003 I did some work in Shanghai, China. I was paid an extra S&T above my normal salary. This was paid in US $'s, but converted to SA Rands, and paid directly into my SA bank account. I was out of the country for 60 days, and paid no tax on this "extra" received. I do not have the documentation at hand, so am not able to confirm whether the taxes paid for the two months on my normal salary were returned. So, all salaries, S&T's and other monies earned and received while you are employed outside of SA, whether being paid in ZAR or any other currency, the rule as stated in Art 10 holds true.:)

[Vertical_Reference]

OK, well I've been out of the country for 55 days now and only to return middle June.
So I take it then they can't tax me on that "extra" S&T then.
Thanks, that clears alot for me as well.
:ok:

[SKYTORT]

As far as S&T is concerned, it is non taxable - that is why some companies pay a crappy basic, but reasonable S&T( Provided it does not exceed the daily limit stipulated by SARS - I don't know this amount).

As for "normal salaries" , you should not get taxed even if it is in ZAR because it is income received outside South Africa.

[Vertical_Reference]

Ok, so what you're trying to say is that I shouldn't get taxed on my normal salary that's apart from my S&T?
But how can that be if I am to return to SA and then earning money by flying in SA? :confused:
This is why I never became an accountant. Flying is much easier! :)

[SKYTORT]

VR, here is my interpretation to it, but just kow that it is open for scrutiny...

Assume you work for a company that pays $1500 basic , and an S&T of $100 a day. Let's further assume that you have worked for 3 months cosecutive in one instance, and only 1 month in the other instance.

Obviously you will be exempted from tax based on you period outside of the country based on the fact that you have been outside SA for more than 60 day (remember you must be outside for 183 days in on 12 month assessment period).

As for the one moth example, you will now only get taxed on the basic salary of $1500 dollars because you do not have tax exemption , however, SARS stipulates that S&T is non-taxable provided it does not exceed a daily limit (I think, I THINK this amount is $165 a day). When your salary gets paid in ZAR, the only difference is that you need to meet the 60day/183 day requirements. So the guys that get paid an S&T have the benefit of not doing "extended" tours in order to get tax relief.

At the end of the day, it really gets complicated because of other legal aspects involved, as well as the paper work too. I reckon the best would be to phone an accountant firm and have them send you the latest SARS regulations regarding this matter - that was the only thing that gave me confidence in claiming back tax...

Cheers:ok:

[Vertical_Reference]

Thanks ST. I understand this whole situation much better now.

I understand your point made about pilots gettin S&T (below the max amount) to qualify for tax exemption and then they don't need to be out of the country for such long periods of time. But this way you don't get taxed by your company at all, if I understand it correctly.

But if you qualify for for the 183 days in 12 months, then they tax you on your basic and that way you only claim back your tax at the end of the financial year. Not that this part is too important to me, because I now I know that I won't get taxed on my S&T because I get taxed on my basic.

It's good to know this because I know alot of pilots always asking and not knowing if they are getting out what they should.

I mean... why would anyone work in Africa for the same amount that you could get in SA?

Thanks ST for the info.:ok:

[SKYTORT]

"Not that this part is too important to me, because I now I know that I won't get taxed on my S&T because I get taxed on my basic."

That is quite correct, but just remember that the fact that you get taxed on your basic is not the deciding factor with regards to your S&T. The mere fact that you get paid S&T alone is good enough grounds for tax relief because S&T below the maximum is non taxable. If you want further tax relief on your basic you need to spend all that time out of the country.

Glad I could help, but like I said, better get a second opinion on this because there is always some other loop hole we don't know about! I am pretty sure though, that if you follow the basic guidelines you should be able to claim all your tax back - see, contract flying is actually GREAT!!!:}

Cheers

[SAT_BOSS]

To understand tax is like well "hard" for me: Now who is a great tax Guru that KNOWS the laws regarding contract flying etc etc .... Hey give us names please. One bright Guru must stand out ....

[SKYTORT]

There is no law regarding contract flying buddy. Tax law is tax law, and contract flying is nothing more than a South African citizen working abroad, and earning an income for services rendered outside of South Africa.

Any tax consultant or accountant should be sufficient to provide one with all the necessary information required to understand the basics. The details are only required if you end up in court!!

[Updraught]

The 183/60 day thing is only for income earned outside of SA. Read the tax return form!:ugh: Any income generated inside of SA is liable to be taxed. There is, however, a minimum. If you earn less than that (:hmm: ) amount, it will also not be taxable. Contact Casper Vos on +27834502282, he will definately be of help.