EXPAT TAX COMES INTO EFFECT 1 MARCH 2020
The amendments to the Income Tax Act come into effect on 1 March 2020. Currently, South African tax residents working abroad do not pay income tax in South Africa on foreign income earned. This applies if they have spent 183 days during a 12-month period abroad, with 60 of these days being consecutive. The latest amendments to the Act stipulate that only R1.25 million of foreign income will be exempt from income tax in South Africa and all foreign income exceeding this amount will be taxed.
One of the ways in which South African expats can avoid being affected by the new Income Tax Act is through financial emigration. Financial emigration is the process whereby individuals earning mostly/only foreign income financially emigrate from South Africa for foreign exchange control and taxation purposes, without giving up their South African citizenship. By financially emigrating from South Africa and living in another country, you will not be classified as a South African tax resident and, therefore, will only be taxed on income earned within South African and not on any foreign income going forward.
For more information on expat tax and financial emigration, read Fin24’s article here.
The financial emigration process is complex and triggers capital gains tax, as well as foreign exchange controls consequences, and sound guidance and advice are crucial in determining if this is the right process to undertake. CMV can assist with the entire financial emigration process, with a customised solution, based on your specific needs. Contact us today for assistance, or to find out whether this is the right step for you.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)