Tax D-day looms in SA

EX­PAT TAX: AF­FECTS THOSE EARN­ING OVER R1M

The Citizen (KZN) - - Business - Ciaran Ryan The amend­ment does not ap­ply:

Any­one planning to break tax res­i­dency risks hav­ing to pay an exit cap­i­tal gains tax.

than the equiv­a­lent of R1 mil­lion a year are likely to fi­nan­cially em­i­grate.

The R1 mil­lion thresh­old in­cludes fringe ben­e­fits such as pen­sion pay­ments and hous­ing and travel al­lowances.

For South Africans work­ing in Saudi Ara­bia, hous­ing and sub­sis­tence al­lowances are typ­i­cally part of the to­tal re­mu­ner­a­tion pack­age, push­ing many of them over the R1 mil­lion thresh­old.

“We have had a surge in in­quiries from South African ex­pats and our sense is that many of the higher earn­ers are planning to fi­nan­cially em­i­grate.

“Lower-earn­ing ex­pats, such as nurses and ar­ti­sans, are prob­a­bly not earn­ing suf­fi­cient in­come abroad to be af­fected by the new ex­pat tax, so it is un­likely they will opt to fi­nan­cially em­i­grate.”

Mertens says there is likely to be a pe­riod of con­fu­sion as the new rules are bed­ded down and ex­pats de­cide which routes to pur­sue.

It re­mains to be seen whether the SA Rev­enue Ser­vice (Sars) suc­ceeds in rais­ing ad­di­tional tax rev­enue as a re­sult of the ex­pat tax. Some doubt it will make much difference, yet Sars is con­fi­dent it will rope in con­sid­er­able new tax rev­enue.

Sharon MacHutchon, tax con­sul­tant at Mazars, ad­vises that the amend­ment to the leg­is­la­tion that comes into ef­fect on 1 March only af­fects in­come re­ceived as a re­sult of em­ploy­ment.

If you are an in­de­pen­dent con­trac­tor work­ing abroad,

In cases where you earn for­eign in­vest­ment in­come, or

If you are no longer a res­i­dent of South Africa for tax pur­poses.

South African ex­pats work­ing abroad may al­ready be re­garded as non-res­i­dents for tax pur­poses, even though a for­mal dec­la­ra­tion was never made to Sars.

Any­one planning to break tax res­i­dency risks hav­ing to pay an exit cap­i­tal gains tax.

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