Many South Africans thrive on the fact that they if they are out of the country for 184 days or more in a given year, they don’t have to pay tax here at home.

When former minister of finance Pravin Gordhan issued his new plans for the country’s budget earlier this year, however, many missed the part of his speech where he touched on changing those tax-related rules.

It went a little something like this, from BizNews:

Currently, if a South African resident works in a foreign country for more than 184 days a year, the foreign employment income earned is exempt from tax, subject to certain conditions. This exemption is for employees of private-sector companies.

In terms of the residence-based system of taxation, South African residents are taxed on their worldwide income. However, the government, in the 2017-2018 budget, states that this exemption on foreign employment income appears excessively generous.

If a resident works in a foreign country for more than 184 days with no tax payable in the foreign country, that foreign employment income will benefit from double non-taxation. It is proposed that this exemption be adjusted so that foreign employment income will only be exempt from tax if it is subject to tax in the foreign country.

You remember now, don’t you? Yes, well we have good news for you: there is a way around it.

Called “financial immigration”, you can apply to the South African Reserve Bank to have your residency status changed to non-resident.

Serious.

BizNews explains:

This is a legitimate way to avoid paying South African tax on your earnings in the UAE, or any other tax-free country.

Your tax affairs will also need to be put in order, and you will need all the required documentation for your financial emigration application to the SARB.

This can be a complicated and difficult procedure. What makes it even more challenging is that, when you are not living in South Africa, you may find it difficult to locate and submit the relevant documentation needed for your financial emigration application.

But it is possible, and your financial advisor can help you through the process.

Galbraith | Rushby is our local choice when it comes to solid financial advice, and can help you with any concerns over this 184-day issue.

Oh, and one more thing: although you won’t be able to live in South Africa for more than the number of days allowed in terms of the “time-based residence test to keep your non-resident status,” your status can be reversed as your citizenship and resident status are “independent from one another,” explains BizNews.

Chill breezy.

[source:biznews]