Immigration is a complicated enough affair, however a recent amendment to the South African Income Tax Act will target those who are living and earning abroad. This will have fairly wide-reaching implications for those who have already immigrated, or are planning to do so. But you do have options to help protect your standard of living in the face of this questionable amendment.
What is Expat Tax?
The amendment is due to be enforced in 2020 and will subject all South Africans living abroad to pay tax on foreign earnings should they continue to work outside of the country for more than 183 days, with 60 of them being consecutive.
Wherever annual income exceeds over R1 million (which is surprisingly easily done), that individual will be liable for income tax of up to 45% of their earnings.
That sounds like quite a threshold to hit, but this amount won’t only include earnings, but also housing allowance, retirement benefits and other expenses afforded to international employees such as travel allowance.
Considering the difference in exchange rates in countries like the USA and the United Kingdom, this threshold will be all too easily hit for many South Africans working abroad.
Still, the law is the law and must be complied with, but you do have options, albeit some of them unpleasant.
You Could Repatriate Yourself
The clearest answer to this conundrum, for many, is the simplest one. Come back to South Africa and earn a living here. Of course, for many, that isn’t even an option. If you have spent years building up a life abroad, you can attest to how difficult it is to dump everything and come back.
Set up Funds to Cover Your Assets
With the right approach (and of course subject to the laws of the country) you may be in a position to set up financial structures that limit the liability you face while protecting your foreign income. This shouldn’t be done without care however, and should be done alongside a financial adviser and an immigration law specialist.
Consider Financial Immigration
Financial immigration is also a step that should be taken with absolute care, and should only be considered if you are wholly settled in a foreign country, and have been for a long time. It basically involves informing SARS and the Reserve Bank that you are no longer an ordinary South African citizen. This will, however, class you as a non-resident to South Africa, so it should be carefully considered before you commit to it.
Looking for Assistance with Immigration?
There is a lot involved in the process of immigration. With the right assistance, however, there is no reason why the process should move slowly. For assistance from a team of experienced immigration specialists, be sure to get into contact with a representative from PM Immigration today.