You have left your native country. Your home. Your family and friends. To work abroad and earn a better income. You are an expat (expatriate) or colloquially known as a “Saffa”.
Naturally, I tried to find out what it was about and became inundated by all the academic technical information out there. I was more confused and intimidated than I had been before attempting to gain an understanding thereof.
Eventually, after hours of internet searches, headaches and reading up on tax law, I was left feeling reasonably optimistic about the whole situation. Here is what I learnt:
What is expat tax?
What many of us do not know is that, even if you work abroad earning an income from a foreign employer, you still have to file a tax return with SARS and declare your income. Queue my anxiety. However, I learned that filing a tax return does not automatically result in a liability for a payment to SARS – your income may be exempt. Breathing deeply.
The Income Tax Act 58 of 1962 was amended, and as of 1 March 2020, expats earning above R1.25 million will be taxed. What this means is that SARS must tax you on your salary, benefits, accommodation allowance, bonus, commission, and flight/travel allowance etc. Basically, if it puts you over R1.25 million, SARS wants their percentage. Your first R1.25 million is exempt from tax, but thereafter you can be taxed as much as 45% on the excess amount. Jaw dropped.
I am an expat. What are my SARS deadlines for the tax year 1 March 2020 – 28 February 2021?
As an expat you do not benefit from PAYE (Pay As You Earn; where your employer makes monthly deductions from your earnings for your tax payments on your behalf) through your foreign employer and you will have to take full responsibility for filing tax returns and making tax payments within the SARS deadlines. Increased heart rate.
If you are an expat who earned less than R1.25 million you will only have had to file a tax return between 1 September – 16 November 2020 (E-filing online) or by appointment at SARS between 1 September – 22 October 2020. This filing season has closed.
If you are an expat earning more than R1.25 million you have until 29 January 2021 to file your tax return electronically via E-filing online. Great news. You are also a provisional taxpayer which makes you liable for 2 -3 provisional payments between 1 March 2020 – 29 February 2021.
Less great news. Queue the heart palpitations and hot flushes.
Your first payment had to be made by 31 August 2020. And the second one is the looming, much publicised, 28 February 2021. An optional “top up” third payment may be made available 7 months after the end of the tax year if you require.
I missed a deadline. What now?
Penalties. SARS does not play nice and they never forget. They go for the jugular from the get-go. Teary eyed.
If you only made a partial payment or failed to make a payment, then SARS immediately issues a penalty and adds simple interest to the amount outstanding. The total amount is calculated from the date the payment was due up until the date on which the subsequent payment is made. You thus have to pay the outstanding amount as well as the calculated interest. An overwhelming, potentially expensive, mathematical dilemma. Failure to pay your provisional taxes and any penalties (and interest) is a criminal offence and SARS will come for their percentages.
If for you, like me, this has been a confusing journey to understand, it may bode well to seek the help of a tax consultant to ensure compliance and meeting the February 2021 deadline.