Updated: Mar 11, 2020
The amendment to the South African Income Tax Act No. 58 of 1962 has been fully enacted and forms part of the Taxation Laws Amendment Bill of 2017. Despite this, many South African expatriates are under the incorrect impression that the law has not been legally amended and will thus not affect them.
The new law states that, “There shall be exempt from normal tax — any form of remuneration — to the extent to which that remuneration does not exceed one million Rand in respect of a year of assessment and is received by or accrues to any employee during any year of assessment by way of any salary, leave pay, wage, overtime pay, bonus, gratuity, commission, fee, emolument or allowance, including any amount referred to in paragraph (i) of the definition of gross income in section 1 or an amount referred to in section 8, 8B or 8C, in respect of services rendered outside the Republic by that employee for or on behalf of any employer, if that employee was outside the Republic.”
The new law will come into effect on 1 March 2020, to afford South African Expatriates the opportunity to lobby Parliament and to allow them and their employers to get their ducks in a row.
The amendment will require that South African tax residents abroad will be
to pay South African tax of up to 45% of their foreign employment income, where it exceeds the R1 million threshold required (this has since been updated to R1.25 million after the Budget Speech in February 2020 - read more about it here).
What can you do if this affects you?
Financial Emigration, which is the South African Revenue Service (SARS) and South African Reserve Bank (SARB) formal process to have noted that you are no longer “ordinarily resident” in South Africa, remains the only formal route in law to permanently have a status change noted. This is also the formality which has been noted in the National Treasury Parliamentary response document, which ensures that the new R1 million tax rule does not apply to a South African abroad.
Mint Accounting specialises in Financial Emigration, Expat Tax and any other related tax options for South Africans living and working abroad. Contact us for more information on email firstname.lastname@example.org
FOOT NOTE: We have written two additional articles to explain this and the changes that might come into play after there budget speech in February 2020. Read the articles here: