In terms of section 25 of the Tax Administration Act, 2011, the South African Revenue Service requires that the persons, as specified in the Schedule of the Government Gazette on the 3rd of July, must submit returns for the 2020 year of assessment, within the periods specified in the Schedule.
This Government Gazette confirms who must and must not file tax returns. It specifically states that people earning under 500k do not need to, based on certain requirements, however in section 3(2)(c) it is stated that this exemption to not file a tax return does not apply to people earning income outside of SA.
This means that every South African tax resident must file a tax return in SA declaring foreign earnings. It clearly shows that expats are on the radar and that SARS wants to know exactly what income they are earning abroad.
Many South Africans living and working abroad may need to consider what their tax treatment legally should be when taking into account the Double Taxation Agreement (“DTA”) between South Africa and the country they are now residing in.
While there is a great possibility that a taxpayer may need to pay tax on their foreign income in South Africa, utilising a DTA may be the silver lining needed for tax relief. However, very specific requirements must be met and a DTA does not apply automatically.
Please Note: Not all countries have a DTA with South Africa.
Our multidisciplinary team of tax and legal specialists have assisted many clients in this area of expatriate tax. We assess a client’s circumstances as well as the DTA that would apply to them and thereafter draft a legal tax opinion in terms of section 233 of the Tax Administration Act which provides clarity on where a taxpayer is taxable.
This opinion provides protection from SARS penalties and sets out clearly the taxpayers situation and the law to ensure the correct tax treatment by SARS.