You are Here > Home > My Money > Tips for expats to get tax ready

Tips for expats to get tax ready

Jul 7, 2021

Tanya Tosen, Master Mobility Specialist at Tax Consulting SA, has some tips for expats to make sure they have all their ducks in a row when it’s time to file their tax return.

Tips for expats to get tax readyAdding to the challenges of 2020, the South African Revenue Services (SARS) announced that it did not make its annual budget. In addition, SARS amended the tax laws for South African expats, now drawing them into this diminishing tax net.

Previously all income for services rendered abroad were exempt from tax, as long as certain criteria were met by the South African expat.

SARS has recently changed the legislation, with a maximum of R1.25 million now possibly being exempt from tax. From 1 March 2020, any taxable income above that amount will become fully taxable.

Bearing this in mind, South African expats should consider the following tips to get tax ready when tax filing season opens:

Travel Calendar

When working abroad, it’s easy to jumble up days and dates. The Section 10 (1)(o)(ii) requirements state that you must be outside of South Africa for at least 183 days in any 12-month period, while 60 of those must be consecutive days.

To ensure you don’t fall short of this requirement by a mere day or two, you should prepare a tax travelling calendar to keep record of your movements which should correlate directly with your passport stamps.

Statement of Gross Earnings

The perception of many expats is that they must only disclose what has been deposited into their bank accounts. This is not accurate. Expats must disclose all their gross earnings when submitting their tax returns.

If your employer does not provide you with a detailed statement which summarises your gross earnings, you must request a complete breakdown of your remuneration for the period of 1 March 2020 to 28 February 2021. This statement serves the purpose of a country-specific equivalent of our IRP5 document.

Disclosure of Benefits

The onus of proof lies with expats to enquire from employers what benefits were paid on their behalf. This is not as obvious as it sounds. Generally, as a rule of thumb, any benefit which has a private component attached to it, should be disclosed as part of your taxable income.

If you compare relocation flights to a host country versus home leave flights to visit family, you will pay tax on the latter but not necessarily on the former due to certain exemptions available in the Income Tax Act of 1962.

Similarly, you should incorporate medical insurance, transportation, accommodation benefits paid by your employer, to name but a few.

Expats should disclose all benefits received while on assignment, to mitigate understating their taxable income with grave penalty and interest consequences.

Foreign Tax Credits

Global tax laws are not meant to prejudice employees by paying taxes in two jurisdictions. Therefore, South African tax residents have the right to claim back a portion of foreign taxes paid which were deducted from their gross remuneration in the host country.

To prove that foreign taxes were indeed paid in the host country, it’s vital to obtain an official document or tax certificate from your employer (or relevant host tax authority) that clearly depicts what taxes were deducted, and when.

Additional Deductions

You will still qualify for tax deductions from your taxable income in the form of retirement annuity contributions, medical aid contributions in SA, or similar schemes or expenses.

In Closing

One of the biggest challenges facing expats, is that most taxable benefits are processed by the company finance departments, which neither the expat, nor their direct line management, may have immediate access to.

Further complicating the matter is that many benefits are not necessarily seen as taxable in the host country.

SARS aims to deal harshly with transgressions and will not tolerate any form of negligence. You will still be held accountable for any omissions which may be treated  as a criminal offence.

Expats must tend to their finance matters with care and should seek guidance from a tax professional. With the right help, they can submit their tax returns knowing that they haven’t overlooked anything pertinent.

This post was based on a press release issued on behalf of Tax Consulting SA.


Submit a Comment

Your email address will not be published. Required fields are marked *

Maya Fisher-French author of Money Questions Answered

Previous Articles

Video: Your money behaviour

Have you ever wondered how your money behaviour compares to that of your peers? Where do they save? What do they spend their money on and how much debt do they have? On this edition of Money Matters, we chat to Akash Dowra, Head of Client Insights at Discovery Bank,...

Nothing shocking about new retirement fund emigration rules

South Africans seem to live in constant fear of the government going after their savings. New tax rules for emigrants' retirement funds is just the latest development to fuel this anxiety. Andre Tuck, Senior Investment Consultant at 10X Investments, has a close look...

Listen: Juggling motherhood in the gig economy

Mapalo Makhu (@womanandfinance) rejoins Maya (@mayaonmoney) on the My Money, My Lifestyle podcast after taking a break to have her second child. She shares her experiences of having a child while having to meet client deadlines, and emphasises the importance of having...

Proposed additional exit tax leaves industry experts confused

Tax Consulting SA gives the lowdown on a new draft tax bill which essentially proposes an additional exit tax on retirement funds. It is not uncommon for National Treasury and the South African Revenue Services (SARS) to propose, and subsequently gazette, amendments...

Video: Five tax myths

Many employees don't understand the complex tax calculations made by their companies and they often question these deductions. According to tax specialist Tanya Tosen, there are five key things an employee needs to understand when it comes to their tax. Myth one:...

Video: Money is different for women

Did you know that 80% of women will manage their own finances during their lifetime, either because they have remained single, gotten divorced, or been widowed? And the reality is that money and finances are different for women. Why? We know from South African salary...

What does a financial plan look like?

I often write about the importance of having a financial plan – knowing your goals and how you are going to achieve them. But it is about more than just a financial plan. It is also about how you want to live your life and whether that plan reflects your values. I...

More households supporting unemployed family

For many working South Africans, the pressure of financially supporting friends and family is unrelenting. Most of us have either experienced a job loss or have a family member who lost an income due to the extended Covid-19 lockdown. It is not surprising then that...

Video: How to change your money habits

We know from studying history, that entire generations can share a similar money attitude or behaviour based on a major financial event that their generation experienced. People who grew up during the great depression of the 1930s, and those who grew up during World...

What is screen scraping and is it safe?

Screen scraping can be used by criminals to steal data, but financial services companies are increasingly making legitimate use of this too. Angelique Ruzicka investigates what the process entails and how consumers can protect themselves. Screen scraping can be hugely...

Pin It on Pinterest

Share This