A Closer Look at Tax on Foreign Income in South Africa

Managing foreign income and South African tax laws can feel overwhelming, but it doesn’t have to be. We’re here to clarify the process and ensure you’re well-informed about your obligations and entitlements.

Are you a South African citizen earning income in a foreign currency? Here’s what you need to know:

1. The R1.25 Million Exemption

As of 1 March 2020, if you earn foreign employment income and spend more than 183 days (including at least 60 consecutive days) outside of South Africa in any 12-month period, the first R1.25 million of that income is exempt from tax in South Africa. Before this date, foreign income was fully exempt, provided the same days requirement was met.

2. Key Documents You’ll Need

To claim this exemption, you’ll need to provide:

– Payslips or Bank Statements: Proof of your foreign income.

– Stamped Passport: To verify the dates you were outside South Africa.

– Proof of Tax Paid in Another Country: If applicable, to avoid double taxation.

3. What About Double Taxation?

Double Taxation Agreements (DTAs) are in place to ensure you aren’t taxed twice on the same income in South Africa and the country where you’re earning. If you’re earning income abroad or are a tax resident in South Africa with foreign income, the DTA might help you avoid paying double taxes.

It’s crucial to assess your tax status and understand how the DTA between South Africa and the country you’re working in affects you.

4. When Does Foreign Income Apply?

Foreign income applies when you are a South African citizen but receive an income in a different currency. Whether you’re working as an expatriate, a digital nomad, or in any other capacity abroad, this is relevant to you.

Why This Matters

Getting a clear picture of how foreign income is taxed can help you manage your finances better, avoid unexpected tax liabilities, and ensure compliance with SARS regulations. At TTT, we’re committed to helping our clients navigate these complexities with ease and confidence.

Have questions or need guidance on your foreign income? Reach out to us—we’re here to help you through every step of the process.