With the beginning of the 2020-21 tax year South African expatriates have had to come to terms with the abolition of the Section 10 exemption of overseas employment income and its replacement with a R1.25m allowance with income in excess of this taxable in South Africa.
Whilst the increase in the allowance from R1m to R1.25m (S$86,718 at current exchange rates at the time of writing) announced in the budget is welcome, this still leaves South African expats subject to tax in South Africa on any amount over this. The definition of income includes all fringe benefits as well as salary and bonuses.
Less welcome was the announcement that Financial Emigration will be phased out by 1st March 2021.
This coupled with the statement in the budget that “Some advisers have recommended emigration, as recognised by the Reserve Bank, as a way to break tax residency. However, this is only one factor considered by SARS (South African Revenue Service),” once again introduces further uncertainty for South African expatriates.
Considering the changes announced in the budget, it may be that DTA (Deferred Tax Asset) relief will become the sole route to prevent South African Tax applying as Ordinary Resident status is very difficult to lose given the vague nature of its definition.
After the measures announced in the budget, it seems to be more important than ever to seek professional advice on your situation. AAM can introduce you to professional tax advisers in South Africa who can help you achieve clarity on your position and the options open to you.
Whatever your plans, you should seek advice on how you structure your overseas wealth to minimize the impact of South African taxation and to preserve an offshore, hard currency portfolio should you return to South Africa.
Speak to your AAM Wealth Manager or email [email protected] to arrange a complimentary consultation.
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