SARS has lodged a Five Year Compliance Drive this month on all South Africans residents working in foreign countries. Pravin Gordhan mentioned in his Budget Speech that SARS is going to target all South Africans working abroad. Since these announcements various changes has been brought about regarding the responsibilities of the South African individual, company, trust and/or cc with foreign interests.
So as a South African resident working abroad, how will the changes affect you directly and immediately? You have to be informed to be able to make informed decisions.
TWO key factors you have to comply with;
You must be registered for Income Tax in South Africa or have an existing income tax reference number
You are compelled to submit an Income Tax Return EVERY tax year to SARS in which you have to declare your ‘worldwide’ income.
The above TWO key factors apply even though:
Your earnings qualify for the section 10(1)(o) exemption (>183 days abroad of which 60 days are continuous working days at a time). Your income will still NOT be taxed in South Africa, however, you are compelled by South African Law to have an Income Tax Number, submit a return to SARS every year and declare your WORLDWIDE income.
Your income is subject to Income Tax in the foreign country
You created a Trust/CC/Company in a foreign country into which the earnings are paid. The Commissioner released Five Year Compliance Plan this month. Quote: “We are aware of your foreign accounts”.
Should you be an EMPLOYER who employs South African residents abroad, there are significant changes affection your EMP501 (Employees Tax Reconciliation) which is due at the end of the month.
The Commissioner’s quote in the first week of April 2012: “Call us or we will call you”
Visit www.capitax.co.za for more details and feel free to contact them should you need any information or assistance.
Important Questions from the Editorial Team:
1. If you are resident abroad but have business interests or income in South Africa, does this mean you have to comply and declare all your WORLDWIDE income?
2. If you have a property in South Africa that you are renting out, does that count as an SA income and are you also required to comply?
3. If you don’t have any income in South Africa and you are resident abroad, how long before they will require you to comply?
4. What defines you as a resident and non-resident?
Desperation or justified tax collection?