The new expat tax legislations

The new legislative amendment states that if South African tax residents who live and work overseas earn foreign income that exceeds R1.25 million, they are obligated to pay tax to South Africa of up to 45% of their total worldwide income. However, if you earn less than R1.25 million a year in foreign employment income, you’re exempt from paying expat tax if you meet the day's test (183/61). 

What does the Double Tax Agreement mean for South African expats? 

South Africa holds Double Tax Agreements with many other countries, which is good news for South African taxpayers who receive income in both South Africa and a foreign country. Simply put, if you pay tax in a foreign country, that tax can either be deducted against South African tax payable, or that income is excluded from South African income tax, depending on the terms of the Double Tax Agreement. It must be noted though, that the application of a Double Tax Agreement is not automatic - it must be applied on an annual basis, and foreign earned income declared to SARS, proving that you meet the requirements for that income to be non-taxable. 

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