As a South African seafarer, understanding your tax obligations and potential exemptions is crucial. The South African Revenue Service (SARS) recognizes that seafarers often earn foreign income without paying taxes elsewhere, potentially maintaining their South African residency status. This unique situation requires a clear understanding of the applicable tax laws and exemptions.
South African
Tax Exemption Categories for Seafarers
SARS provides three distinct categories of exemption for foreign income earned by seafarers.
Your eligibility for these exemptions depends on various factors, including your position, vessel type, and nature of work.
The First Seafarer Exemption
Section 10(1)(o)(i)(aa) of the Act
Applies to: Officers or crew members on vessels engaged in international transportation.
Covers: Foreign employment income for transporting passengers or goods for reward.
Benefit: Full exemption from South African tax on qualifying foreing employment income.
The Second Seafarer Exemption
Section 10(1)(o)(i)(bb) of the Act
Applies to: Officers or crew members on vessels involved in offshore mineral activities.
Covers: Employment solely for safe passage or navigation of the vessel.
Activities: Prospecting, exploration, mining, or production of minerals from the seabed outside South Africa.
Benefit: Full exemption from South African tax on qualifying foreign employment income.
Note: Not applicable to superyacht crew.
The Expat Exemption
Section 10(1)(o)(ii) of the Act
Applies to: South African tax residents must provide the relevant services as an employee ( employment contract), and these services must be rendered outside South Africa.
Covers: Exemption exclusively applies to remuneration received for foreign services. South African tax residents must be physically present outside South Africa for a total period exceeding 183 days within any 12-month span, with at least 60 of those days being consecutive.
Benefit: Exemption on the first R1.25 million of foreign employment income.
Note: Income exceeding R1.25 million is taxable in South Africa.
Tax Compliance Rules for South African Seafarers
To simplify the process of claiming tax exemptions, follow these essential guidelines:
Register for tax with SARS
Maintain tax compliance (separate from tax liability)
Keep your tax status up-to-date
Retain copies of important documents:
Passport
Employment contract
Vessel registration
Accurately declare worldwide income, not just South African-sourced income
The Importance of Your Employment Contract
Your employment contract plays a crucial role in successfully claiming tax exemptions.
Consider having it professionally reviewed to ensure it meets the necessary requirements.
Given the complexity of navigating these exemption categories and SARS scrutiny, it's essential to organise your tax affairs promptly.
Start by addressing the rules outlined above to ensure a smooth tax compliance journey.
By understanding these exemptions and following the guidelines, South African seafarers can better protect their foreign-earned income and maintain proper tax compliance.
Trusted by 10,000+ South Africans Locally and Abroad
