You have just been told by the tax authority in your new home country they intend taxing you on the SA sourced pension and it is for you to obtain a refund and exemption in SA.
You asked your accountant in and he says the SA tax law and Schedule 4 to the Income Tax act does not provide for such a directive? You devastated and have no idea where to start?
Don’t despair Hugo van Zyl has seen and heard it all and their solution, custom made for your circumstances could be in hand within a few weeks. Yes, that includes, in most cases, the refund of double tax your suffered.
In most cases, so there are a few known issues?
Yes, there is. Expats living in Ireland and the Netherlands for example, will have to continue paying taxes in SA and claim an appropriate tax refund in their home country against their taxes in that country.
Expats in New Zealand, Australia, England, the USA and few other have reason to smile as the lump sum they received may be taxed in both countries but the monthly benefit may only be taxable in the said countries i.e. SARS in SA will need to exempt you.
For clients where there is uncertainty on the taxation of their SA lump sums, we suggest you page to the end of this article for the quote on addressing your tax issues. This article deals mainly with monthly or annual pension or annuity income.
Often there is has been highly technical articles published but where does one go to find practical solution? SARS procedures fails one and their EXPAT page’s email address bounces back as over loaded – great, typical SARS we hear the expats shout.
The tax benefits on monthly or annual retirement fund income from SA, which we are about to discuss, applies to most South Africans living abroad and formal SARB or Reserve Bank emigration or formal exit is not a pre-requisite to befit form the local pension exemption. It is important to understand that South Africans living abroad can be tax non-resident despite not having formally emigrated can be tax non-resident, yet each client needs to consider his or her tax residency position in terms of the applicable Double Tax Agreement (DTA or treaty). In Australia work permit resident are normally SA tax resident and not Australia tax resident, because of the unique provisions in the specific treaty. Expats living in the UK despite not having ILR (indefinite leave to remain status) may be SA tax non-resident and ordinarily UK tax resident. Confused? Make contact with our tax dream team and they will assist your to determine your correct tax status.
For now, we assume the tax treaty tie-breaker rules classified you tax non-resident in South Africa, with the result that you may suffer SA withholding taxes, SA taxes on immovable property and then local SA tax on so called SA sourced or deemed to be from a SA source, income. South African rental income, local pension and other retirement fund income such as living annuity and retirement annuity income, will be taxed by SARS – unless the treaty with your home country reduces or sometime removes the SARS taxing rights.
To summarise then, the SA Income Tax Act 1961, as amended (SAIT) provides, in dealing with non-residents, that they are taxed on so called SA sourced income unless there is a DTA or treaty restriction applicable.
We will review your personal position and revert to you with a clear indication on the taxes you may have overpaid in the past. Not only will they then assist to legally avoid this being repeated, they will, as the dream tax team, assist you to object to past assessments and collect a handsome refund from SARS. S, despite the technical explanation following, Hugo is ready to provide with a client specific easy to understand post tax emigration tax position.
In terms of many, but not all tax treaties, non-resident recipients of South African sourced pension income duly tax exempt in SA, are required to submit annual income tax returns. For this reason we suggest you cannot waive SARS goodbye despite the formal emigration and the perception that your now rid yourselves of the SARS shackles. Expats receiving SA pension, rental, and dividend or interest income need to carefully consider the option to keep their SARS tax number active, not only to benefit form a treaty but also to remain tax complaint in South Africa and you new home country.
Despite South Africa’s taxing rights being limited in terms of certain tax treaties, SARS is entitled to expect non-resident pension and other income recipients, filing IT12 income returns annual claiming tax exemption or tax reductions (where the latter is more applicable to dividend, interested and royalty income).
In terms of the treaty, the tax exemption is absolute and one would think that a tax residency certificate (TRC) sent to the fund’s payroll office should suffice, as there is no treaty requirement to obtain a tax deduction directive not to deduct PAYE (monthly tax withheld on your regular income, aka pay as you earn or payroll tax). Sadly, most clients discovered the tax man is not that accommodating and the fund manager’s refuse to be left making a tax residency call exempting certain but not all foreign resident pension beneficiaries.
In fact, the SARS processes totally lacks to accommodate treaty rules and in an effort to assist frustrated clients. Cashkows.Com will now launch a tax campaign to claim the tax exemption not on assessment but annual in advance. Expat or non-resident clients residing in Australia, England, New Zealand and America, now find the tax authorities in those countries refusing to allow a tax credit for taxes incorrectly or over paid in South Africa.
Don’t despair, we have heard you plea and sending your request and a short fact sheet on your personal circumstances, to Hugo van Zyl and the tax dream team will not only assist you in obtaining a PAYE or tax exempt status for the February 2014 year, they will also assist you in obtaining a refund of the immediate past two or three tax years where you perhaps overpaid taxes in South Africa.
Most important is to immediately request your new tax accountant or taxing authority for a tax residency certificate (TRC) covering the period or part of the period covered by the SA tax year 2014, which commences on 1 March 2013 and ends on the last day of February 2014.
General or other tax questions can be sent to Hugo van Zyl and you will find our 6 minute units, make specialist cross border tax advice most affordable as we will not charge you an hour for a quick five minute advisory note.
In short, never accept this mediocre treatment and email reply:
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