Comments on the 2017 Draft Taxation Laws Amendment Bill (TLAB) and the 2017 Draft Tax Administration Laws Amendment Bill (TALAB) which were published by National Treasury earlier this month, is due by the 18th of August.
One of the more controversial changes to be made to taxation laws is the foreign employment income tax exemption in respect of South African residents, which will be removed from 1 March 2019. This will affect thousands of South African residents who work outside of the country and currently only have to pay the tax applicable in their host country, on condition that they work a total of at least 184 days outside of South Africa, of which 61 days must be continuous.
If the Act comes into force, this exemption will fall away and and residents may be taxed on their foreign income, less the tax they pay in their host country.
However, there seems to be some confusion about the definition of the term “resident”.
According to SARS, under South African law there are different types of residents, for example a resident defined by the Income Tax Act, 1962 in terms of the so-called “physical presence test” and an ordinary resident defined in terms of South African common law.
- 91 days in total during the year of assessment under consideration;
- 91 days in total during each of the five years of assessment preceding the year of assessment under consideration; and
- 915 days in total during those five preceding years of assessment.
The draft legislation and the draft explanatory memorandum containing a comprehensive description of the draft amendments can be found on the National Treasury (www.treasury.gov.za) and SARS (www.sars.gov.za) websites.
Forward written comments to Nombasa Langeni at: Nombasa.Langeni@treasury.gov.za and Adele Collins at email@example.com by close of business on 18 August 2017.