‘EXPAT TAX’: Expert Answers for South Africans Living and Working Abroad – June 2019

Thanks to popular demand, here are more ‘Expat Tax’ questions submitted by SAPeople members, with answers kindly provided by the expert tax team at Tax Consulting South Africa.

Dear SAPeople Members,

Thank you for your questions on South African tax and exchange control. We will give each answer a specific response, answering the question posed. This will not only benefit the person who asked the question but hopefully, also serve as a reference to many South Africans abroad who may have similar facts. There are two generic items which are critical for good order and to avoid repetition –

1. Legal Privilege, Confidentiality and Liability

When we operate in our practice, our advice comes with legal privilege (as admitted attorneys, which are the only tax advisors given such privilege under the Tax Administration Act), confidentiality as per our professional association rules (we are bound by the rules of various professional bodies including law society, SAICA, SAIBA, SAIPA, FSB (now FSCA), SAIT, FPI, SARA and SAPA etc.), and we also accept liability for our professional guidance where explicitly required by clients and stated as such. As this is general guidance given on limited facts, we note that these rules do not apply to the responses we provide.

2. Tax and Exchange Control Law

There are some fundamental rules of tax and exchange control, which applies to all South African residents or persons otherwise with a South African source of income. No response is proper where these rules are not referenced. Hence, we noted below some of the most general items applicable to all questions, thus avoiding repetition and ensuring everyone has access to the same tax technical information –

• Before one can decide on how to proceed, one needs to determine if they are a tax resident of South Africa by applying our two tax residency tests, being the Ordinarily Resident test and the Physical Presence test. You can also be non-resident somewhere else, but this is more complex process and will need specific guidance on a case-by-case basis.
• If one is a tax resident of South Africa, then they will be liable for tax on their worldwide
  income and the amended expat exemption will apply. If one is a non-tax resident of South Africa, they will be taxable only on South African sourced income. Thus, it is imperative that these tests are applied correctly, and a determination is made.

Both of the above-mentioned tests are set out in the links below for your ease of reference:

2.1 Ordinarily resident test – click here

2.2 Physical presence test – click here

We have also set out further information below, which will assist in understanding the pros and cons of the solutions you have in regard to tax residency and the amended expat exemption.

Expat tax compliance brochure: Click here

Article on Expat tax law: Changes to law for South Africans working abroad

Conclusion

We will refer to these sources in each response and please just let us know if you need more personalised attention. There is always someone willing to have a call with you to assist and there are no hidden cost implications. Also, we really enjoy unique situations and/or high net worth cases, where the answer and optimally compliant position are more complex.

For more information, please contact Roger Aires, Financial Emigration Tax Specialist at roger@financialemigration.co.za

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Questions and Answers about South Africa’s ‘Expat Tax’

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If you have any ‘expat tax’ questions pertinent to your situation, write to us – anonymously if you prefer – at admin@sapeople.com, or write directly to roger@financialemigration.co.za or nicolas@financialemigration.co.za.