Are you earning abroad? In the 2020 Annual Budget speech held by the Minister of Finance it was stipulated that all taxpayers earning income from a foreign source (Most likely when you are contracted to perform work outside of the RSA by a Company registered in the foreign land) will experience a Tax-free portion of R1,25 million on the Total Foreign Income declared.
This benefit will only be applicable if all the criteria set out in section 10(1)(o)(ii) of the Income Tax Act no 58 of 1962 and finalised in the Interpretation note 16 (Issue 4) have been met and declared under this section, says Wian Van Wyk Accountant and Tax Consultant at CTV & Associates.
“We want to encourage South Africans abroad to keep their ties with the country. We will raise the exempt amount for foreign remuneration to R1.25 million. We will phase out the administratively burdensome process of emigration through the South Africa Reserve Bank.”
Key Insight
When you do earn income from abroad and taxes have been paid by you to the foreign revenue authorities, don’t worry this will not go unnoticed as the foreign taxes paid will also be considered against the tax liability that may arise within RSA.
The South African Revenue Services have also made it abundantly clear that all income must be declared on your yearly Income Tax Return (ITR12) that have been received from abroad, even when the limit has not been reached. This includes all dividends and interest that is a result of foreign investments.
Additional Insights
Furthermore Mr. Van Wyk says that in the case where you have decided to relocate your primary residence to a foreign country, but still have some original investments in the RSA, section 50B might be applicable to you, where the whole interest amounts earned are not taxed at the normal individual rates but rather at a withholding tax rate of 15%.
Should this be applicable to you, or you are unclear of what and when it will be applicable contact us and we will CTV your query!
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