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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
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
First publisched by: http://www.bcbadvisory.com/formal-emigration-not-advisable-for-all/
“BRS: AEOI” means Business Requirement Specification: Automatic Exchange of Information
There is so many new tax acronyms, one can’t be blamed for not always knowing the full phrase behind the tax acronym.
To guide you, we add a few new once, all from an SA perspective yet they are all well-known international acronyms or abbreviations.
Here they are, but it is not an exhaustive list:
- AEOI – Automatic Exchange of Information aka AEFAI as per SARS press release on BRS
- AEFAI – Automatic Exchange of Financial Account Information
- ATO – Australian Tax Office www.ato.gov.au
- BRS – Business Requirement Specification or Direct Data Flow Channel Guide aka SARS Modernised 3rd Party Reporting platform, used to report inter alia PAYE, VAT, Investment Income (IT3’s).
- CRA – Canadian Revenue Authority – http://www.cra-arc.gc.ca/menu-eng.html
- eFile – the South African online tax filing portal www.sarsefiling.co.za
- Excon – Exchange Control aka FinSurv- SA monetary laws administered by SARB
- FATCA – Foreign Account Tax Compliance Act – FFI and other tax offices dotted over the word reports on you to the IRS. An USA Act see http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-FATCA
- FBAR – Report on Foreign Bank Account reporting – you tell IRS
- FFI – foreign (non-USA) financial institutions – FATCA terminology compare with USFI or FI that is USA based
- FinSurv – Financial Surveillance, previously known as Control or SARB’s Exchange Control watchdog
- HMRC – Her Majesty’s Revenue & Customs – UK tax office http://www.hmrc.gov.uk/
- IGA – Model 1 and Model 2 intergovernmental agreements (IGA) or FATCA agreement between IRS and SA on the AEOI process using the BRS designed and implemented in the various IGA jurisdictions
- IRD – Inland Revenue – New Zealand aka Maori as Te Tari Taake
- IRS – Inland Revenue Services in the USA www.irs.gov
- MTP (SA) – Master Tax Practitioner in SA – the Who’s Who in SA tax environment
- PR – Tax practitioner registered with SARS
- SARB – South African Reserve Bank, equivalent to the Central Bank in international terms www.resbank.co.za
- SARS – South African Revenue Service – www.sars.gov.za
- TAA – Tax Administration Act – South African Act dealing with C:SARS rights to administer tax acts
- USFI – U.S. financial institutions the internal US hold Co aka as lead FI reporting for all FFI’s in the FI Group
OK, you still lost? Need some more info on all the buzz words and your compliance risk and obligation? Feel free to ask the questions:
Note the comment on PR status for South African born nationals. Walvis Bay was South Africa for a long while!
Hugo van Zyl
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