Working abroad? Treasury rethinks exemption on foreign earnings
The Treasury has agreed to withdraw its controversial proposal to repeal a six-month tax exemption on foreign income earned abroad. Instead, it plans to introduce a R1-million threshold before taxes are imposed, in specified circumstances.
Implementation of the new set-up will be postponed to March 1 2020, instead of the initially proposed March 1 2019 for the old plan. This will give people more time to adjust their contracts or circumstances, or formalise their tax status. Finance Minister Malusi Gigaba has still to approve of the proposed amendments.
Treasury director for personal income taxes and saving Chris Axelson made the announcements at a meeting of parliament's standing committee on finance when presenting the Treasury's response to public submissions on the draft Taxation Laws Amendment Bill and the draft Tax Administration Laws Amendment Bill.
In terms of the proposal, the first R1-million of foreign remuneration will be exempt from tax in South Africa "if the individual is outside the Republic for more than 183 days, as well as for a continuous period of longer than 60 days during a 12-month period", Axelson said.
South African tax would be applied for foreign-earned income greater than R1-million.
"The exemption threshold should reduce the impact of the amendment for lower- to middle-class South African residents who are earning remuneration abroad. The effect of the exemption will also be that South African tax residents in high income tax countries are unlikely to be required to pay any additional top-up payments to the South African Revenue Service."
Axelson said the amendment would address most of the concerns of individuals such as nurses and teachers who go overseas looking for work. - BusinessLIVE