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Monthly Archives: July 2018

Tax free salary does not equate to tax non-resident

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South Africans living in the UAE (Dubai) or Quatar (Doha) not paying South African tax on their foreign earned salary,  in most cases will remain tax resident in SA.

The 183/+60-day rule only speaks to the (partial) exemption of remuneration from employment. South Africans will continue to pay SA tax on worldwide income from all other income, including most retirement fund income albeit that the retirement fund is foreign based.  Immigrant South African may enjoy some limited tax exemption on foreign pension, yet the SA retirement funds will indeed pay SA taxable retirement benefits, albeit that contirbutions were made from tax exempt foreign employment income.

Because of the 2020 tax year changes, allowing SA taxpayers residing and working in say UAE, Germany, USA and most other countires, will no longer enjoy full tax exemption on all their foreign sourced salary. In fact, as of 1 March 2019, the taxpayer’s tax exemption will be capped at R1m per tax year. This aligns the SA system with that of the USA.

Many expats now rush to tax emigrate from South Africa, all in an attempt to save the SA tax on the foreign income. in doing so the taxpayers may indeed trigger capital gains taxes on the tax exit placed on record, so late in the relocation process.

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26 July 2018

USA celebrates 4th of July! Aliens funds the party

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As Americans recover from their 4th of July parties, it is indeed time to consider the tax cost and consequence for aliens investing with Uncle Sam

Yes, South Africans are aliens. President Trump may or may not have referred to people from South Africa as living in a s’hole country, who am I to say!

The IRS and USA tax laws most certainly labels us South Africans without an USA passport or green card as non-resident aliens.

We may not be from Mars nor Jupiter yet we are, upon death to pay FET (Federal Estate Tax) on our USA situs assets.

FET’s maximum rate is 40% and there is no spousal roll over. The exempt amount is a mere $60 000. No further SA estate duty is payable on the said USA assets, as there is a treaty in place

No spousal roll-over you ask? Yes, no roll over and the take home is that USA stock and cash held by you USA stock broker, should NOT be bequeathed to your spouse!

No, not to the offshore trust either as your wife will be taxed, upon her death assuming she is the surviving spouse, on the USA situs assets held within the offshore trust.

Who then, should be nominated as the named legatee in your will, as the person to inherit eBay, Facebook and all other USA equities?

Indeed an interesting question and one best addressed during a one-on-one meeting, with your SA accountant, duly present.

Need an appointment? Feel free to make contact on

 

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