Concerned about Expat Tax in South Africa? As a South African employed abroad, you could be liable for tax in South Africa on your worldwide income.

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Who can be taxed on their foreign employment income?

If you are a South African tax resident you will be taxed on your worldwide income, regardless of where that income was earned. You are considered a tax resident in South Africa by means of ordinary residence, or by way of physical presence.

What is the ordinary resident test?

Someone is an ‘ordinarily resident’ where they have their usual or primary residence – somewhere that can be described as their real home. The question asked here is, “where do you call home after you’re done wandering the world?”. Here are a few factors to be taken into consideration as a guideline:

– Your habitual home – the place where you stay most often, where you and your family have a life
– The location of your personal belongings
– Your nationality
– Family and social relations, factors like schools, places of worship and sports or social clubs

What is the physical presence test?

When you cease to be ordinarily resident in South Africa – for example, where you left South Africa to work abroad without the intention of returning, the physical presence test will be used to determine if you are a tax resident by SARS (South African Revenue Service). It is based on the number of days you spent in South Africa over a specific period. The test is only applicable to you if you are not an ordinary resident in South Africa for any portion of the tax year.

What are the consequences if you are a South African tax resident?

– You will be taxed on your worldwide income
– You may qualify for an exemption of R1.25 million on your foreign employment income.

Do you qualify for foreign employment income tax exemption?

If you’re working abroad as a South African tax resident, you may be eligible for relief in terms of the foreign employment income exemption as per Section 10(1)(o)(ii) of the South African Income Tax Act, if you meet its requirements.

– The exemption will only apply to certain types of employment services that you render abroad if you are outside of South Africa for longer than 183 days in aggregate during any twelve-month period, starting or ending in a tax year, 60 days of which must be continuous.
– The application of this exemption is limited from 1 March 2020 and is capped at the first R1.25 million earned abroad.

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