Finance

What is it and how do I obey the law?

You have left your native nation. Your dwelling. Your household and pals. To work overseas and earn a greater revenue. You are an expat (expatriate) or colloquially generally known as a “Saffa”. 

Naturally, I tried to seek out out what it was about and grew to become inundated by all the educational technical info on the market. I was extra confused and intimidated than I had been earlier than making an attempt to realize an understanding thereof.

Eventually, after hours of web searches, complications and studying up on tax legislation, I was left feeling fairly optimistic about the complete state of affairs. Here is what I learnt:

What is expat tax?

What many people do not know is that, even if you happen to work overseas incomes an revenue from a overseas employer, you continue to need to file a tax return with SARS and declare your revenue. Queue my anxiousness. However, I realized that submitting a tax return doesn’t routinely lead to a legal responsibility for a fee to SARS – your revenue could also be exempt. Breathing deeply

The Income Tax Act 58 of 1962 was amended, and as of 1 March 2020, expats incomes above R1.25 million shall be taxed. What this implies is that SARS should tax you in your wage, advantages, lodging allowance, bonus, fee, and flight/journey allowance and so forth. Basically, if it places you over R1.25 million, SARS needs their proportion. Your first R1.25 million is exempt from tax, however thereafter you will be taxed as a lot as 45% on the extra quantity. Jaw dropped.   

I am an expat. What are my SARS deadlines for the tax year 1 March 2020 – 28 February 2021?

As an expat you do not profit from PAYE (Pay As You Earn; the place your employer makes month-to-month deductions out of your earnings to your tax funds in your behalf) via your overseas employer and you’ll have to take full accountability for submitting tax returns and making tax funds inside the SARS deadlines. Increased coronary heart rate.

If you might be an expat who earned lower than R1.25 million you’ll solely have needed to file a tax return between 1 September – 16 November 2020 (E-filing on-line) or by appointment at SARS between 1 September – 22 October 2020. This submitting season has closed. 

If you might be an expat incomes greater than R1.25 million you will have till 29 January 2021 to file your tax return electronically through E-filing on-line. Great information. You are additionally a provisional taxpayer which makes you liable for two -3 provisional funds between 1 March 2020 – 29 February 2021. 

Less nice information. Queue the coronary heart palpitations and sizzling flushes

Your first fee needed to be made by 31 August 2020. And the second one is the looming, a lot publicised, 28 February 2021. An non-compulsory “top up” third fee could also be made accessible 7 months after the finish of the tax year if you happen to require. 

I missed a deadline. What now? 

Penalties. SARS doesn’t play good and they always remember. They go for the jugular from the get-go. Teary eyed

If you solely made a partial fee or didn’t make a fee, then SARS instantly points a penalty and provides easy curiosity to the quantity excellent. The whole quantity is calculated from the date the fee was due up till the date on which the subsequent fee is made. You thus need to pay the excellent quantity in addition to the calculated curiosity. An overwhelming, doubtlessly costly, mathematical dilemma. Failure to pay your provisional taxes and any penalties (and curiosity) is a felony offence and SARS will come for his or her percentages. 

If for you, like me, this has been a complicated journey to grasp, it might bode properly to hunt the assist of a tax guide to make sure compliance and meeting the February 2021 deadline. 

If you might be searching for recommendation in your South African tax affairs, please be happy to contact Dr Dylan Price at Tax Consulting South Africa through electronic mail on [email protected] or name +27 11 467 0810. Tax Consulting SA is the largest unbiased tax observe in South Africa, go to www.taxconsulting.co.za for extra info.

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