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A Fin24 user plans to live in Australia permanently and is not sure about the tax implications regarding his salary from an SA company. He writes:
I have moved over to Australia on a 457 visa (under my wife) and plan on living here permanently.
I still work for a South African company based in Cape Town and, therefore, still earn my salary from there.
My company still deducts my PAYE and UIF from my salary before I can move it over here, so I am still paying all my taxes in South Africa.
My questing is that I have been out of the country continuously for nearly a year now, so will I be exempt from the taxes and can I claim them all back?
Or do I have to continue paying the tax in South Africa as the company where my salary comes from is in South Africa? And if I am exempt and can have my tax paid back to me, will I then have to pay it over here instead?
I do not earn any other monies at all.
READ: Tax on earnings while working abroad
The technical department at the SA Institute of Tax Professionals (Sait) responds:
The tax consequences on your salary income must be determined with due regard of where you are ordinarily resident. If you permanently move to Australia, you will be ordinarily resident there.
For the period you rendered services in Australia, while you were still not permanently moving, your salary will be included in your worldwide income on which you will be taxed unless an exemption applies.
A special foreign employment income exemption (s10(1)(o)(ii)) exists that exempts such income if the person is working outside SA for at least 183 days, of which 60 days must be continuous in any 12 month period.
Note that it only applies to the foreign employment income and not to other income or salary earned for periods working in SA. Your employer would have to indicate on the IRP5 that such income was from foreign employment.
READ: Taxing South Africans working overseas
Once you become resident in Australia, you will only be taxed in SA on your SA sourced income, namely from services rendered in SA. Should you render services to the SA company from Australia, then the source of the employment income would be in Australia - not SA.
Note that, once your SA residence terminates, there are other tax consequences (s9H of the ITA) that needs to be considered. You may also need to take advice as to whether your services are now subject to any current or future withholding taxes.
You would also have to file a tax return for the period up and till the change in residence via Sars e-filing, which can be accessed prior to the start of filing season by requesting a return and indicating that the reason for the early filing is a change in residence.
Should you receive any SA sourced income going forward, you will also need to submit tax returns in SA for those tax years.
ALSO READ: Tax rules for South Africans working abroad
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