As a South African working abroad, one of your obligations as a taxpayer is to ensure you’re up-to-date on the latest changes the South African Revenue Service (SARS) rolled out. The revenue authority is hard at work modernising our exchange control and tax systems in partnership with the South African Reserve Bank, and change is frequent. Fortunately for you, at FinGlobal we’ve got our finger on the pulse of all things South African expat tax and exchange control, and we’re here to break it all down for you, step by step.

Updates to SARS eFiling procedures for South African expats working abroad

SARS has recently revamped the ITR12 form in response to feedback from expats. The previous version was known for its complexity, often leading to confusion and errors in completing tax returns. The updated ITR12 form is designed to streamline your experience when identifying and claiming the appropriate income, exemptions, and foreign tax credits on your tax return. This is especially helpful for South Africans working overseas, who might need clarification on international tax regulations.

You can expect to benefit from the following improvements when filing your tax return as a South African living abroad:

• Simplified questionnaire: The sections related to Foreign Employment Income Exemption (sections 10(1)(o)(i) and 10(1)(o)(ii)) have been simplified to make it easier for you to identify and claim the correct exemptions.
• Enhanced user experience: The overall design and layout of the form have been improved to make it more user-friendly.
• Online resources: SARS has provided step-by-step instructions, FAQs, and online tutorials to assist expats like you in completing tax returns accurately.

With these changes, SARS is working to reduce the administrative burden on expats and South Africans working abroad to improve the accuracy of their tax returns.

What is expat tax in South Africa?

Expat tax in South Africa refers to the tax obligations of South African citizens or residents who work or live abroad. Generally, South African residents are subject to South African tax on their worldwide income, including income earned from foreign employment. However, there are certain exemptions and deductions available to South African tax residents working abroad, such as:

• Foreign tax credit: South Africans who pay foreign tax on their foreign employment income may be able to claim a foreign tax credit against their South African tax liability. This can reduce their overall South African tax burden.
• Exemptions under section 10(1)(o) of the Income Tax Act: This section provides an exemption from South African tax for certain foreign employment income, subject to specific conditions. This exemption is capped at R1.25 million per year.

The main things to know about expat tax in South Africa:

• Resident vs. non-resident status: Your tax obligation as a South African working abroad depends on whether you are considered resident or non-resident for tax purposes. Residents are taxed on worldwide income, which includes foreign employment income.
• Foreign tax credit: This can be valuable for reducing South African tax liability when working abroad.
• Specific exemptions: Section 10(1)(o) of the Income Tax Act makes certain types of foreign employment income exempt to those who meet the criteria.

Read more: South African expat tax explained – maximising foreign income and minimising tax burdens.

What is the tax on foreign employment income in South Africa?

As mentioned, South African residents are taxed on their worldwide income, including foreign employment income. However, you may be eligible for a foreign tax credit to reduce your South African tax liability. Tax on foreign employment income in South Africa depends on several factors, including:

• Residency status: Whether you’re a South African resident or non-resident.
• Foreign tax credit: If you’ve already paid foreign taxes on your income.
• Exemptions: If you qualify for any exemptions under the Income Tax Act, such as those provided by sections 10(1)(o)(i) and 10(1)(o)(ii).

How to declare foreign employment income on tax return to SARS

To declare foreign income on your tax return with SARS, you’ll need to follow these basic steps:

1. Determine your residency status: If you’re a South African resident, you must declare your worldwide income, including foreign income. If you’re a non-resident, you only need to declare income from South African sources.
2. Identify relevant sections: For foreign employment income, refer to sections 10(1)(o)(i) and 10(1)(o)(ii) of the Income Tax Act. For other types of foreign income, consult the relevant sections of the Act.
3. Gather necessary documents: Collect all relevant documents, such as payslips, employment contracts, bank statements, and foreign tax returns.
4. Complete the ITR12 form: Use the ITR12 form to declare your foreign income. Follow the instructions on the form and ensure you accurately report all relevant information.
5. Claim any available exemptions or deductions: If you qualify for any exemptions or deductions related to foreign income, claim them on your tax return.
6. Pay any applicable taxes: Your tax liability is calculated on your declared income and offset by any applicable exemptions or deductions. This amount must be paid to SARS.
7. Keep records: Retain copies of all documents related to your foreign income declaration for future reference.

When is the 2024 tax season?

The 2024 South African tax season began with the distribution of auto-assessment notices between July 1 and July 14. Here are the critical deadlines:

• Non-provisional individual taxpayers: July 15 to October 21, 2024
• Provisional taxpayers: July 15, 2024 to January 20, 2025
• Trusts: September 16 to January 20, 2025

If you disagree with a SARS assessment, you can file an objection within 80 business days from the assessment date.

What are the foreign employment income exemptions available to South Africans living abroad?

If you’re a South African tax resident currently working abroad, you can potentially benefit from the following foreign employment income exemptions:

1. Section 10(1)(o)(i): This exemption applies to remuneration derived as an officer or crew member of a ship. To qualify, you must be employed outside South Africa for a period or periods exceeding 183 days in aggregate during the year of assessment.
2. Section 10(1)(o)(ii): This exemption applies to foreign employment income derived by a South African tax resident employed by a foreign employer. To qualify, you must be absent from South Africa for a period or periods exceeding 183 days in aggregate during any period of 12 months, and at least 60 of these days must be continuous or unbroken.

Important things to know about the foreign employment income exemption:

• The exemption does not apply automatically: it must be sought from SARS, and you must declare the total amount of your foreign employment income.
• Residency status: The exemption is only available to you if you are a South African tax resident.
• Foreign employment: Your income must be derived from employment services rendered outside South Africa and must not be excluded (i.e: work as a contractor or freelancer).
• Duration of absence: You must meet the specified absence requirements.
• Tax treaties: South Africa’s tax treaties with other countries may influence the availability and terms of the exemption.

Read more: What is exempt foreign employment income in South Africa?

FinGlobal: tax specialists for South Africans abroad

Don’t let expat tax and eFiling stress you out. FinGlobal offers expert tax guidance to South Africans working and living abroad. Our cross-border financial expertise can help you with everything from claiming foreign income exemptions to obtaining tax clearance or tax refunds and, eventually, tax emigration when ready. So what are you waiting for? Hand your tax headaches over, and let us handle the complexities so you can focus on what matters: living your life.

Contact FinGlobal today for a free, no-obligation consultation to see how we can help.