Following reforms to the income tax treatment of South African tax residents who receive remuneration abroad (section 10(1)(o) of the Income Tax Act), government proposes to remove the exchange control treatment for individuals, while strengthening the tax treatment.
The intention is to allow individuals who work abroad additional flexibility, provided funds are legitimately sourced and the individual
is in good standing with the SARS. Individuals who transfer more than R10 million offshore will be subjected to a more rigorous verification process. Such transfers will also trigger a risk management test that will include certification of tax status and the source
of funds, and assurance that the individual complies with anti-money laundering and countering terror financing requirements prescribed in the Financial Intelligence Centre Act (2001). This will be phased in by 1 March 2021.
Under the new system, natural person emigrants and natural person residents will be treated identically. Additional restrictions on emigrants – such as the restrictions on emigrants being allowed to invest, and the requirement to only operate blocked accounts–
are being repealed. The concept of emigration as recognised by the Reserve Bank will be phased out, to be replaced by a verification process based on the requirements above. Tax residency for individuals will continue to be determined by the ordinarily resident and physically present tests as set out in the Income Tax Act (1962). Under existing international standards, South Africa participates in the automatic sharing of information between tax authorities on individuals’ financial accounts and investments.
These cooperative practices will remain in place to ensure that South African tax residents who have offshore income and
investments pay the appropriate level of tax.
(Source: National Treasury, Budget Review, annexure E)
Feel free to contact our Professional Team directly if you require any advice, assistance or more information and we can set up a Zoom, Teams, WhatsApp or traditional call meeting:
Email: hello@omne.co.za/new
Landline (087 802 7811)
Landline (087 802 7811)
Sign up our newsletter
to stay up to date
Make it Possible
Engage with us to professionally take care of your accounting, tax and administrative requirements. Partner with us to bring your business to life and make it the best it can be.