Where will the foreign income of a recent immigrant (SA tax resident) be taxed?
03 March 2015
Posted by: Author: SAIT Technical
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.
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.