Treasury will not repeal a six-month tax exemption on foreign income earned abroad, said Chris Axelson, Treasury director for personal income taxes and saving. Instead, a one million rand threshold will be introduced before taxes are imposed. This means, in terms of the new proposal, that the first million rands’ worth of foreign remuneration will not be subject to tax in South Africa. However, it is important to note that this only applies if the person earning this foreign income is out of South Africa for a total of more than 6 months per year, part of which must be for a continuous period of longer than 60 days within that year.
South African tax will be applied to foreign-earned income over-and-above the first million rand.
This threshold is designed to lower the effect of the amendment on South Africans in the lower- and middle-income brackets who earn money overseas and should address the concerns of people such as nurses and teachers who go overseas looking for work. Also, this exemption will likely mean that South African tax residents in high-income tax countries should not be required to pay any additional top-up payments to SARS.
The proposed date for this new threshold to be implemented is 1 March 2020, however, the proposed amendments must still be approved by Finance Minister Malusi Gigaba.
Should you have any queries about how these amendments will affect you, feel free to contact one of IGrow’s professional accountants to discuss your concerns or to find out more.
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