Relief options for SA expats

CHECK YOUR STATUS: FIND OUT WHETHER YOU ARE CONSIDERED A TAX RESIDENT OR NOT

- John-Paul Fraser and Chavaughn Phillips

Meet Peter X. He is living the good life abroad, but only because he works hard for his money. With tax filing season upon him, he will do well to determine what tax relief is available to him on his foreign-earned income because it can make all the difference in rands and cents.

Based on Peter's income and the country he resides in, expatriate tax specialists calculate he can either expect a refund of close to R47,000 for the current tax year, or a whopping R184,984.04. The calculations depend on which of the two different exemptions available to him, he applies.

The first amount will be realised if he uses exemptions applicable to tax residents, by virtue of section 10(1)(o)(ii) of the Income Tax Act. This is also referred to as the expat exemption. According to the calculations he will benefit from eliminating his tax burden in South Africa of almost R185,000 if he applies tax relief applicable to an expatriate residing abroad, where a Double Taxation Agreement (DTA) is in place between SA and the foreign tax jurisdiction.

These calculations are nothing to be sneezed at. It shows how important it is to consider the different tax relief options available to South African expatriates to protect their foreign income.