Is there a tax disclosure obligation in RSA for a non-resident earning income
21 November 2014
Posted by: Author: SAIT Technical
Author: SAIT Technical
Is there a tax
disclosure obligation in RSA for a non-resident earning income from RSA company
for services rendered abroad?
Q: I have to
submit a client’s income tax return for 2014 and I’m not sure if this income
should be included or not. By this
income I mean the income he is generating from the company registered in
RSA. I am not sure as the client is not
an RSA resident, but a Canadian resident. Therefore should the income (salary)
be declared to RSA authorities or Canadian authorities?
Secondly, the company deducts PAYE every month on this
salary. So should the answer for the
question above be that she should declare the income in Canada and not in RSA; does
she still have to pay PAYE on the remuneration or will she take the gross
amount to Canada and get taxed on it there.
PS: by foreign income
I mean that he is a resident of Canada and generating income in RSA. So this would be foreign (not Canadian)
A: In the
additional information provided you have confirmed that the client is a
resident of Canada. You also confirmed
that the income, earned after the client emigrated from the RSA, is in respect
of services rendered outside the RSA. On
that basis, the income (salary) will not be gross income in the RSA. It is an accrual to a non-resident that is
not from a source in the RSA. The source
of income from services is where the services are rendered.
The RSA employer (company) does not have to deduct
employees’ tax from this as it is not income (as defined in the Income Tax
As indicated we can’t comment on the foreign tax laws, but
we submit that Canada will be taxing this income. The client should contact a tax practitioner
in Canada to find out what her obligations are to report this income.
The position may well not change when the withholding tax on
services becomes effective in the RSA.
Disclaimer: Nothing in
this query and answer should be construed as constituting tax advice or a tax
opinion. An expert should be consulted for advice based on the facts and
circumstances of each transaction/case. Even though great care has been taken
to ensure the accuracy of the answer, SAIT do not accept any responsibility for
consequences of decisions taken based on this query and answer. It remains your
own responsibility to consult the relevant primary resources when taking a