National Treasury has proposed that the exemption on income earned by South Africans working abroad be repealed. If this proposal comes to fruition it will be effective from 1 March 2019. Where SA has a double taxation agreement in place with a foreign country a credit will be allowed for tax paid in that country but the onus will be on the taxpayer to provide the necessary evidence.
With the current “tax season” underway, taxpayers face new hurdles in submitting their returns. More detailed information is required regarding retirement fund contributions, medical expenses and travel allowances. Invariably supporting documentation for the latter is required in particular. The amount of paperwork required appears to have increased substantially.
In March this year the transfer of assets to trusts by way of interest free or low interest loans was curbed by the implementation of donations tax on loans where interest is below the official rate of 7.75%. The practice of advancing loans to a company, whose shares are held by a trust, thus avoiding the new measures, is now firmly in Treasury’s sights!
Acquiring approval for transferring money abroad (over the R1m annual discretionary allowance) has become more onerous. Previously SARS required a recent back statement, a statement of assets and liabilities and proof of source of money to be transferred. Now documents going back three years are required. This has slowed the process considerably.
The window of opportunity to declare previously undisclosed offshore assets is about to close on 31 August (Special Voluntary Disclosure Programme). It is certainly recommended that SA residents who have undisclosed foreign assets, take advantage of the window over the next few weeks. During the course of this year CRS (Common Reporting Standard) is coming into force whereby many countries globally are obliged to share account and financial information. This will make it a great deal more difficult to hide offshore income and assets.