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Where will the foreign income of a recent immigrant (SA tax resident) be taxed?

03 March 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: I got a new client who immigrated to SA in January 2015. She is now a resident of SA. Every second month, she is still going to either Dubai or the UK, and will be there for one month at a time. She is receiving income in Dubai/UK for lessons that she presents there. Will this be taxable in Dubai/UK or in SA? Do we need to disclose this anywhere on her SA tax return? Does she needs to register in Dubai/UK for tax, and disclose it there? Every other month, she presents lessons in SA, which we will disclose on her income tax return in SA. 

A: We assume the taxpayer became tax resident in SA when she immigrated in January 2015 and that you have already registered her for income tax. If she is a tax resident of SA she will become liable to declare her total worldwide income as from January 15 and any income from a SA source or deemed source (i.e section 9 of the Income Tax Act [ITA]) for the period that she was not a SA tax resident.

The amounts earned as SA tax resident from foreign services will be disclosed in the ITR12 as foreign income (see ITR12 Guide 2014 at 5.2). You would also have to determine whether the foreign employment income exemption in s10(1)(o)(ii) ITA may apply to the foreign service income depending on how long she has been outside SA rendering the services.

http://www.sars.gov.za/AllDocs/OpsDocs/Guides/IT-AE-36-G05%20-%20Comprehensive%20Guide%20to%20the%20ITR12%20Return%20for%20Individuals%20-%20External%20Guide.pdf

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 decision.


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