Saffers to loose SA tax exemption status
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Saffers to loose SA tax exemption status
Just a heads up for all the South Africans in the Middle East. As part of the 2017 budget, the SA treasury is targeting expats living abroad that in the past have been tax exempt. The new draft legislation is mainly applicable to expats in this region, as it applies to expat earnings abroad in countries where there is no income tax.
This is not a joke. You can verify it by going to the treasury website and selecting the tab Budget 2017. You will find the explanation there under the amendments.
This is not a joke. You can verify it by going to the treasury website and selecting the tab Budget 2017. You will find the explanation there under the amendments.
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Welcome to the club. Taxing citizenship rather than residency. The U.S. has been doing that since forever. You will see more and more countries going in that direction. Easy way for politicians to get more money in the coffers to give away.
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Heritage 1,
I'm sorry, after going through everything, I don't see it????
I found this..........
Of course I am not a SA resident working abroad, so this does not apply........
Got anything more specific?
I'm sorry, after going through everything, I don't see it????
I found this..........
Amending foreign employment income-tax exemption in respect of South African residents
Currently, if a South African resident works in a foreign country for more than 183 days a year, foreign
employment income earned is exempt from tax, subject to certain conditions. This exemption is for
employees of private-sector companies. In terms of the residence-based system of taxation, South African
residents are taxed on their worldwide income. However, this exemption on foreign employment income
appears excessively generous. If a resident works in a foreign country for more than 183 days with no tax
payable in the foreign country, that foreign employment income will benefit from double non-taxation. It
is proposed that this exemption be adjusted so that foreign employment income will only be exempt from
tax if it is subject to tax in the foreign country.
Currently, if a South African resident works in a foreign country for more than 183 days a year, foreign
employment income earned is exempt from tax, subject to certain conditions. This exemption is for
employees of private-sector companies. In terms of the residence-based system of taxation, South African
residents are taxed on their worldwide income. However, this exemption on foreign employment income
appears excessively generous. If a resident works in a foreign country for more than 183 days with no tax
payable in the foreign country, that foreign employment income will benefit from double non-taxation. It
is proposed that this exemption be adjusted so that foreign employment income will only be exempt from
tax if it is subject to tax in the foreign country.
Got anything more specific?
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"It is proposed that this exemption be adjusted so that foreign employment income will only be exempt from tax if it is subject to tax in the foreign country"
Your post reads to me that you will be taxed by SA unless you are taxed by your foreign country of employment. That's how it is for the US.
You are not double taxed if you are paying foreign taxes as they are "applied" to your US tax bill.
If they (foreign country) don't charge you income tax then the US demands what it thinks you owe (after foreign earned income exemption +/- $100k) regardless of where it's earned.
Your post reads to me that you will be taxed by SA unless you are taxed by your foreign country of employment. That's how it is for the US.
You are not double taxed if you are paying foreign taxes as they are "applied" to your US tax bill.
If they (foreign country) don't charge you income tax then the US demands what it thinks you owe (after foreign earned income exemption +/- $100k) regardless of where it's earned.
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Bob,
That sentence has to be read in context.....SA has a residence-based income tax system.
This specific issue covers a situation where SA resident who spend significant time abroad(>183 days) have enjoyed tax savings on their foreign income.
There is a clear distinction between SA citizens and SA residents and in this case they are targeting the residents abroad, not citizens that are non-resident.
That sentence has to be read in context.....SA has a residence-based income tax system.
This specific issue covers a situation where SA resident who spend significant time abroad(>183 days) have enjoyed tax savings on their foreign income.
There is a clear distinction between SA citizens and SA residents and in this case they are targeting the residents abroad, not citizens that are non-resident.
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Might as well go back to South Africa then. Living costs are killing me here. Might as well let it be done to me back home. At least got a nice view, friendly people and Western norms surround me.
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Bob,
That sentence has to be read in context.....SA has a residence-based income tax system.
This specific issue covers a situation where SA resident who spend significant time abroad(>183 days) have enjoyed tax savings on their foreign income.
There is a clear distinction between SA citizens and SA residents and in this case they are targeting the residents abroad, not citizens that are non-resident.
That sentence has to be read in context.....SA has a residence-based income tax system.
This specific issue covers a situation where SA resident who spend significant time abroad(>183 days) have enjoyed tax savings on their foreign income.
There is a clear distinction between SA citizens and SA residents and in this case they are targeting the residents abroad, not citizens that are non-resident.
Just spoke to my taxman. Kenny's explanation to the letter. If it was a commuting contract, it would be totally different.
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I sincerely hope Kenny is right, but because it is an amendment to the current tax law, nobody knows for sure without seeing the draft legislation. I have been told the complete opposite by tax guys so it is a matter of opinion. However, this is what is in the Budget 2017 documents available on the SA treasury website:
" Amending foreign employment income-tax exemption in respect of South African residents
Currently, if a South African resident works in a foreign country for more than 183 days a year, foreign employment income earned is exempt from tax, subject to certain conditions. This exemption is for employees of private-sector companies. In terms of the residence-based system of taxation, South African residents are taxed on their worldwide income. However, this exemption on foreign employment income appears excessively generous. If a resident works in a foreign country for more than 183 days with no tax payable in the foreign country, that foreign employment income will benefit from double non-taxation. It is proposed that this exemption be adjusted so that foreign employment income will only be exempt from tax if it is subject to tax in the foreign country."
" Amending foreign employment income-tax exemption in respect of South African residents
Currently, if a South African resident works in a foreign country for more than 183 days a year, foreign employment income earned is exempt from tax, subject to certain conditions. This exemption is for employees of private-sector companies. In terms of the residence-based system of taxation, South African residents are taxed on their worldwide income. However, this exemption on foreign employment income appears excessively generous. If a resident works in a foreign country for more than 183 days with no tax payable in the foreign country, that foreign employment income will benefit from double non-taxation. It is proposed that this exemption be adjusted so that foreign employment income will only be exempt from tax if it is subject to tax in the foreign country."
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If this is the case i'm sure allot of South Africans will be leaving. Not only will they have to fly 105hrs every month, not get any leave and work horrendous fatiging rosters but now do it for half the salary. It will just not be worth living here anymore, it's not sustainable.
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Hi guys, I'm Trying to get info:
Has anyone formally emigrated? How long did the process take? Was it a straight forward process?
Has anyone been formally declared non- resident? Same questions as above.
Or just complying with the 180/60 rule like most And submitting nil tax returns every year
Any info will be appreciated. Send by pm if you don't want info on a public forum
Thanks and regards
J
Has anyone formally emigrated? How long did the process take? Was it a straight forward process?
Has anyone been formally declared non- resident? Same questions as above.
Or just complying with the 180/60 rule like most And submitting nil tax returns every year
Any info will be appreciated. Send by pm if you don't want info on a public forum
Thanks and regards
J
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Received this via email from a tax practioner in SA:
Dear Clients
This is important information for taxpayers who are remunerated for work outside SA. An amendment to the Income Tax Act, tucked away on page 138 of Annexure C, will significantly affect the taxation of foreign remuneration.
Amending foreign employment income-tax exemption in respect of South African residents Currently, if a South African resident works in a foreign country for more than 183 days a year, foreign employment income earned is exempt from tax, subject to certain conditions. This exemption is for employees of private-sector companies. In terms of the residence-based system of taxation, South African residents are taxed on their worldwide income. However, this exemption on foreign employment income appears excessively generous. If a resident works in a foreign country for more than 183 days with no tax payable in the foreign country, that foreign employment income will benefit from double non-taxation. It is proposed that this exemption be adjusted so that foreign employment income will only be exempt from tax if it is subject to tax in the foreign country.
The effect is that if you are a South African tax resident, and you earn foreign remuneration, that foreign remuneration will not be exempt unless it is already taxed in the country where the services are rendered. Effectively, the free ride is over. The amendment ensures that you will pay tax either in SA or abroad.
I'm very happy to field your questions in this regard. Due to the anticipated volume of emails, please allow me a few days to respond to you individually.
Please also take a moment to reflect on the proposed Government expenditure, as highlighted in my email last night. This will put you in a position to appreciate what Government propose to do with the tax they are going to withhold from you.
Regards
****
This is important information for taxpayers who are remunerated for work outside SA. An amendment to the Income Tax Act, tucked away on page 138 of Annexure C, will significantly affect the taxation of foreign remuneration.
Amending foreign employment income-tax exemption in respect of South African residents Currently, if a South African resident works in a foreign country for more than 183 days a year, foreign employment income earned is exempt from tax, subject to certain conditions. This exemption is for employees of private-sector companies. In terms of the residence-based system of taxation, South African residents are taxed on their worldwide income. However, this exemption on foreign employment income appears excessively generous. If a resident works in a foreign country for more than 183 days with no tax payable in the foreign country, that foreign employment income will benefit from double non-taxation. It is proposed that this exemption be adjusted so that foreign employment income will only be exempt from tax if it is subject to tax in the foreign country.
The effect is that if you are a South African tax resident, and you earn foreign remuneration, that foreign remuneration will not be exempt unless it is already taxed in the country where the services are rendered. Effectively, the free ride is over. The amendment ensures that you will pay tax either in SA or abroad.
I'm very happy to field your questions in this regard. Due to the anticipated volume of emails, please allow me a few days to respond to you individually.
Please also take a moment to reflect on the proposed Government expenditure, as highlighted in my email last night. This will put you in a position to appreciate what Government propose to do with the tax they are going to withhold from you.
Regards
****
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Here is the link to this full article
The Interpretation Note states further that a natural person may be resident in South Africa even if that person was not physically presenting South Africa during the relevant year of assessment, and that the purpose, nature, and intention of the taxpayer's absence must be established to determine whether the taxpayer is still ordinarily resident.
It also sets out a list of factors which SARS will take into account determining whether a person is ordinarily resident in South Africa as follows:
• most fixed and settled place of residence;
• habitual abode, i.e. present habits and mode of life;
• place of business and personal interest;
• status of individual in country,i.e. immigrant, work permit periods and conditions, etc.;
• location of personal belongings;
• nationality;
• family and social relations(schools, church, etc.);
• political, cultural, or other activities;
• application for permanent residence;
• period a broad; purpose and nature of visits; and
• frequency of (and reasons for)visits.
The above list is not intended to be exhaustive or specific—it is merely a guideline.
The Interpretation Note also states that the circumstances of the individual must be examined as a whole, and the personal acts of the individual must receive special attention.As stated in ITC 1170,34 SATC 76, one is entitled to look at the taxpayer's life beyond the particular period under consideration.
The ‘physical presence’ test As stated above, in terms of the definition of a ‘resident’ in Section 1 of the Act, a ‘resident’ includes any natural person who is not at anytime during the relevant year of assessment ordinarily resident in South Africa, if that person was physically present in South Africa:
•for a period or periods exceeding 91 days in aggregate during the relevant year of assessment, as well as
•for a period or periods exceeding 91 days in aggregate during each of the five years of assessment preceding such year of assessment, and
•for a period or periods exceeding 915 days in aggregate during those five preceding years of assessment.
It is important to note that in the year of assessment that a taxpayer either ceases to be ordinarily resident in South Africa or commences being ordinarily resident in South Africa, the physical presence test cannot be applied.This is because the physical presence test explicitly only applies if a person was not ordinarily resident in South Africa at any time during the relevant year of assessment.
The effect of the above definition is that a person who is not ordinarily resident in South Africa is, in terms of the physical presence test, a resident after physical presence in South Africa exceeding the above limits over a period of six consecutive years of assessment.
A person who becomes tax resident by virtue of this test will become a resident from the first day of the year of assessment during which all the requirements of the test are met.Accordingly, an individual would become tax resident in terms of this test from the beginning of the sixth consecutive year of assessment in which they have had a physical presence in South Africa exceeding the above limits.
For the purposes of determining the number of days during which a person is physically present in South Africa, a part of a day is included as a day.A day spent in transit through South Africa is not included as a day, provided that the person does not formally enter South Africa through a "port of entry" as contemplated in section 9(1) of the Immigration Act, 2002.
Where a person who is a resident in terms of the physical presence test is physically outside South Africa for a continuous period of at least 330 full days immediately after the day on which such person ceases to be physically present in South Africa, such person is deemed not to have been a resident from the day on which they ceased to be physically present in South Africa.Practical example for individuals wishing to lose their ‘resident’ status.
The Interpretation Note states further that a natural person may be resident in South Africa even if that person was not physically presenting South Africa during the relevant year of assessment, and that the purpose, nature, and intention of the taxpayer's absence must be established to determine whether the taxpayer is still ordinarily resident.
It also sets out a list of factors which SARS will take into account determining whether a person is ordinarily resident in South Africa as follows:
• most fixed and settled place of residence;
• habitual abode, i.e. present habits and mode of life;
• place of business and personal interest;
• status of individual in country,i.e. immigrant, work permit periods and conditions, etc.;
• location of personal belongings;
• nationality;
• family and social relations(schools, church, etc.);
• political, cultural, or other activities;
• application for permanent residence;
• period a broad; purpose and nature of visits; and
• frequency of (and reasons for)visits.
The above list is not intended to be exhaustive or specific—it is merely a guideline.
The Interpretation Note also states that the circumstances of the individual must be examined as a whole, and the personal acts of the individual must receive special attention.As stated in ITC 1170,34 SATC 76, one is entitled to look at the taxpayer's life beyond the particular period under consideration.
The ‘physical presence’ test As stated above, in terms of the definition of a ‘resident’ in Section 1 of the Act, a ‘resident’ includes any natural person who is not at anytime during the relevant year of assessment ordinarily resident in South Africa, if that person was physically present in South Africa:
•for a period or periods exceeding 91 days in aggregate during the relevant year of assessment, as well as
•for a period or periods exceeding 91 days in aggregate during each of the five years of assessment preceding such year of assessment, and
•for a period or periods exceeding 915 days in aggregate during those five preceding years of assessment.
It is important to note that in the year of assessment that a taxpayer either ceases to be ordinarily resident in South Africa or commences being ordinarily resident in South Africa, the physical presence test cannot be applied.This is because the physical presence test explicitly only applies if a person was not ordinarily resident in South Africa at any time during the relevant year of assessment.
The effect of the above definition is that a person who is not ordinarily resident in South Africa is, in terms of the physical presence test, a resident after physical presence in South Africa exceeding the above limits over a period of six consecutive years of assessment.
A person who becomes tax resident by virtue of this test will become a resident from the first day of the year of assessment during which all the requirements of the test are met.Accordingly, an individual would become tax resident in terms of this test from the beginning of the sixth consecutive year of assessment in which they have had a physical presence in South Africa exceeding the above limits.
For the purposes of determining the number of days during which a person is physically present in South Africa, a part of a day is included as a day.A day spent in transit through South Africa is not included as a day, provided that the person does not formally enter South Africa through a "port of entry" as contemplated in section 9(1) of the Immigration Act, 2002.
Where a person who is a resident in terms of the physical presence test is physically outside South Africa for a continuous period of at least 330 full days immediately after the day on which such person ceases to be physically present in South Africa, such person is deemed not to have been a resident from the day on which they ceased to be physically present in South Africa.Practical example for individuals wishing to lose their ‘resident’ status.
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FFS people, why is this so hard.............
South Africa has a residence-based tax system.......so SARS use 2 tests to determine if you are resident or not.
The first boils down to a court looking at your circumstances and rendering a verdict on where you live.....
The second requires your physical presence at least 91 days a year. Plus a couple of other time based criteria. I don't know who of you get 91 days leave to spend in SA each year!
Here is the text available for free from the SARS website.....
I have skipped the physical presence test because of the length of the text. Feel free to download it here.....
http://www.sars.gov.za/AllDocs/OpsDo...al%20Guide.pdf
You do not need to formally immigrate to become non-resident and if your tax advisor has you claiming nil tax returns on the basis of 183/60 absence from the country, fire him because he is useless.
Now I don't know where the f&ck you guys live but I live in Dubai. There is no court that is going to claim otherwise after looking at my circumstances.
I have had this argument several times with Customs and Excise in CT as they cannot get their heads around the fact that I am a non-resident tourist when I enter SA, even if I have a SA passport. This allows me to take my very expensive bicycle into the country without any VAT & Import duties......I have even had to take the matter up with the dept of legal interpretation to try and get a sensible answer. They have finally agreed and I carry his email with me everytime I go to SA as a visitor.
Humble Guy....
I'm sorry guys even without the facts that we have, I can never see them moving from their current system. It's going to be too expensive, onerous and impractical to enforce. But that is a lengthy discussion for later. They are hitting the soft target.....guys that they can reach out and touch if they need to. I feel for the contract guys cos this is going to hit them hard but it is a non-event for us.
South Africa has a residence-based tax system.......so SARS use 2 tests to determine if you are resident or not.
The first boils down to a court looking at your circumstances and rendering a verdict on where you live.....
The second requires your physical presence at least 91 days a year. Plus a couple of other time based criteria. I don't know who of you get 91 days leave to spend in SA each year!
Here is the text available for free from the SARS website.....
RESIDENT
In principle, the first step in determining the normal tax liability of any natural person
in South Africa is to establish whether or not that natural person is a “resident” as
defined in section 1.
Two separate tests are applicable to determine whether or not a natural person is a
resident, namely –
• the ordinarily resident test; and
• the physical presence test.
2.1 Ordinarily resident test
This concept means that a natural person is a resident if his or her permanent
home, to which he or she will normally return, is in South Africa. A continuous
physical presence is not a prerequisite to be ordinarily resident in South Africa.
The courts have held, in ascribing a meaning to the concept “ordinarily resident”, that
it refers to, for example –
• living in a place with some degree of continuity, apart from accidental or
temporary absence. If it is part of a person’s ordinary regular course of life to live
in a particular place with a degree of permanence, he or she must be regarded as
ordinarily resident;
• the place where his or her permanent place of abode is, where his or her
belongings are stored, which he or she leaves for temporary absences and to
which he or she regularly returns after these absences;
• a residence that is settled and certain and not temporary and casual; or
• where a person normally resides, apart from temporary or occasional absences.
In principle, the first step in determining the normal tax liability of any natural person
in South Africa is to establish whether or not that natural person is a “resident” as
defined in section 1.
Two separate tests are applicable to determine whether or not a natural person is a
resident, namely –
• the ordinarily resident test; and
• the physical presence test.
2.1 Ordinarily resident test
This concept means that a natural person is a resident if his or her permanent
home, to which he or she will normally return, is in South Africa. A continuous
physical presence is not a prerequisite to be ordinarily resident in South Africa.
The courts have held, in ascribing a meaning to the concept “ordinarily resident”, that
it refers to, for example –
• living in a place with some degree of continuity, apart from accidental or
temporary absence. If it is part of a person’s ordinary regular course of life to live
in a particular place with a degree of permanence, he or she must be regarded as
ordinarily resident;
• the place where his or her permanent place of abode is, where his or her
belongings are stored, which he or she leaves for temporary absences and to
which he or she regularly returns after these absences;
• a residence that is settled and certain and not temporary and casual; or
• where a person normally resides, apart from temporary or occasional absences.
http://www.sars.gov.za/AllDocs/OpsDo...al%20Guide.pdf
You do not need to formally immigrate to become non-resident and if your tax advisor has you claiming nil tax returns on the basis of 183/60 absence from the country, fire him because he is useless.
Now I don't know where the f&ck you guys live but I live in Dubai. There is no court that is going to claim otherwise after looking at my circumstances.
I have had this argument several times with Customs and Excise in CT as they cannot get their heads around the fact that I am a non-resident tourist when I enter SA, even if I have a SA passport. This allows me to take my very expensive bicycle into the country without any VAT & Import duties......I have even had to take the matter up with the dept of legal interpretation to try and get a sensible answer. They have finally agreed and I carry his email with me everytime I go to SA as a visitor.
Humble Guy....
The effect is that if you are a South African tax resident, and you earn foreign remuneration, that foreign remuneration will not be exempt unless it is already taxed in the country where the services are rendered. Effectively, the free ride is over. The amendment ensures that you will pay tax either in SA or abroad
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Hi guys,
Further to this topic.......
See this link
http://www.sars.gov.za/AllDocs/Legal...20presence.pdf
Of particular note is annexure B on page 10.......
I am crystal clear on the fact that we are non-resident.....and what is becoming clearer, is the fact that this is not quite as simple as claiming you are non-resident.
According to the Income Tax Act, when you become non-resident, you are considered to have disposed of your assets(to yourself), which triggers a potential capital gains tax issue.
Since I am no tax expert, I am trying to find a tame tax man who can help me formalise my non-residence as this will have the effect of lodging my status with SARS(also lodges a new valuation date for your assets).
Fortunately for me, I don't own anything of substance in SA so it should be fairly simple......but I know many of you may have extensive assets and you should seek advice from a professional, especially one who deals in CGT.
I will post further information when it is forthcoming......
Further to this topic.......
See this link
http://www.sars.gov.za/AllDocs/Legal...20presence.pdf
Of particular note is annexure B on page 10.......
I am crystal clear on the fact that we are non-resident.....and what is becoming clearer, is the fact that this is not quite as simple as claiming you are non-resident.
According to the Income Tax Act, when you become non-resident, you are considered to have disposed of your assets(to yourself), which triggers a potential capital gains tax issue.
Since I am no tax expert, I am trying to find a tame tax man who can help me formalise my non-residence as this will have the effect of lodging my status with SARS(also lodges a new valuation date for your assets).
Fortunately for me, I don't own anything of substance in SA so it should be fairly simple......but I know many of you may have extensive assets and you should seek advice from a professional, especially one who deals in CGT.
I will post further information when it is forthcoming......
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search this forum "UAE to implement joint disclosures"
I started a thread in January on how the UAE have started to make our income amounts available (upon request) to our home countries.
It seems that it will be done by providing them with essentially copies of our bank statements IE deposits, withdrawls etc.
The information will be provided through the bank not directly by our employer.
If you search this forum for " UAE to implement joint disclosures" you will find it.
This is part of the UAE adhering to a G20 standard even though they are not (yet) a member.
Just something to keep in mind as time moves on.
It seems that it will be done by providing them with essentially copies of our bank statements IE deposits, withdrawls etc.
The information will be provided through the bank not directly by our employer.
If you search this forum for " UAE to implement joint disclosures" you will find it.
This is part of the UAE adhering to a G20 standard even though they are not (yet) a member.
Just something to keep in mind as time moves on.
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@TangoUniform: Amen Brother! It would be a welcome sight to listen to the other expats b1tching at the club about how "taxation without representation" is bad sport, for a change. Us yanks are just used to it....
