2012 SARS Tax returns and declaring of foreign income

[schnappi]

Hi

I'm quite confused at the moment about how to complete my SARS e-filing tax return for 2011/2012 in regards to the new regulations. Anybody had a look at the SARS e-filing form yet? I am not sure under wich source code to enter my Austalian income or what is expected of me? I landed in Brisbane Oct 2011 so I will have South African an Australian income for the year. I don't own a bussiness, farm or any else; I am just a normal office worker earning a salary.

CHANGES AFFECTING THE EMPLOYEE WHO WORKS OUTSIDE THE SOUTH AFRICAN BORDERS: www.sars.gov.za

• ALL South African citizens must declare their WORLDWIDE income to SARS.
  

• You must have an Income Tax Number. If not, do so IMMEDIATELY to avoid extremely harsh penalties.
  

• If you work outside the borders of South Africa AND you are a South African citizen, you must complete and submit an Income Tax Return to SARS. This ruling is irrespective of how much you earn, where you work, the period you worked, whether you paid tax in the foreign country or whether there is a Double Taxation Agreement in place between South Africa and the foreign country.
  

• If you earn your income in foreign currency, SARS has made a table (methods) available to convert the foreign currency to rand.
  

• SARS can now identify you as a foreign income earner by means of the changes brought about to the employer PAYE reconciliation for 2012. Irrespective of tax was deducted from your income or not.
  

Any help would be appreciated!

[AfriAus]

See this post: http://www.saaustralia.org/index.php/topic/33790-foreign-income-on-sars-tax-return/

[MadMother]

Hi

If I declare our Australian earnings - do I fill it in at the section for 'Amounts accrued to you as an exclusive deemed resident o another country in terms of a double taxation agreement between RSA and that country'? I found a table on the SARS website for averaged exchange rate to use to convert dollars to rands.

What about interest earned on our Australian savings account? Must I included that in the double taxation amount, or declare it as foreign interest?

I have stated on our last two returns that we have not been employed - which I interpreted as meaning that we didn't earn a salary in SA. If I suddenly mention earning an Australian salary, won't SARS get suspicious? Should I contact SARS and tell them that my last two returns were incorrect and face penalties and interest?

Any advice would be immensely appreciated!

[Deon]

The first thing you have to determine is from which country you are a TAX RESIDENT. You will then have to declare your world-wide income in the country of which you are a tax resident.

The section in the SARS tax return refers to individuals that are tax resident in RSA and working offshore or in a foreign country. For example if your family (wife and children) stay in RSA and you work offshore or foreign country from time to time the foreign country can tax you on the income derived in the foreign country and you still have to declare that foreign income in your SARS tax return. Normally the tax treaty between the two countries will have a clause to allow you to offset the foreign tax against your tax liability in the country of residence.

If you are in Australia on a 457 visa, you will only declare your Australian income in your Australian tax return. If you earn foreign income (RSA), you don’t need to declare it in Australia. That income will only be taxable in that foreign country (RSA) and there is no need to declare your Australian income in that foreign country (RSA).

The opposite is true when you are in Australia on a PR visa. From the day that you arrive in Australia on a PR visa or your PR visa was granted while living in Australia, you have to declare your world-wide income in Australia. Foreign income earned in a foreign country will still be taxable in that foreign country and any tax paid in that foreign country will be available for offset against the Australian tax liability.

[JDJoburg]

The first thing you have to determine is from which country you are a TAX RESIDENT. You will then have to declare your world-wide income in the country of which you are a tax resident.

The section in the SARS tax return refers to individuals that are tax resident in RSA and working offshore or in a foreign country. For example if your family (wife and children) stay in RSA and you work offshore or foreign country from time to time the foreign country can tax you on the income derived in the foreign country and you still have to declare that foreign income in your SARS tax return. Normally the tax treaty between the two countries will have a clause to allow you to offset the foreign tax against your tax liability in the country of residence.

If you are in Australia on a 457 visa, you will only declare your Australian income in your Australian tax return. If you earn foreign income (RSA), you don’t need to declare it in Australia. That income will only be taxable in that foreign country (RSA) and there is no need to declare your Australian income in that foreign country (RSA).

The opposite is true when you are in Australia on a PR visa. From the day that you arrive in Australia on a PR visa or your PR visa was granted while living in Australia, you have to declare your world-wide income in Australia. Foreign income earned in a foreign country will still be taxable in that foreign country and any tax paid in that foreign country will be available for offset against the Australian tax liability.

Tax residency in Australia is not determined by your visa status, so 457 visa holders are not exempted from having to declare their worldwide income simply by virtue of them not holding a PR visa.

I've commented on this issue in more detail here: http://www.saaustralia.org/index.php/topic/34738-rsa-tax-re-oz-earnings-days-out-of-country/#entry315450

[Deon]

Tax residency in Australia is not determined by your visa status, so 457 visa holders are not exempted from having to declare their worldwide income simply by virtue of them not holding a PR visa.

I've commented on this issue in more detail here: http://www.saaustral...ry/#entry315450

Refer to my comments here: http://www.saaustralia.org/index.php/topic/34738-rsa-tax-re-oz-earnings-days-out-of-country/#entry315450

[MadMother]

I have Australian permanent residency and I don't intend returning to SA (i.e. an Australian resident for tax purposes). So therefore I need to declare my South African dividends on my ATO return (oops, haven't declared this on my 2010 or 2011 returns) right?

I sent SARS a letter in 2010 requesting them to deregister me, but eish they thought I wanted tax clearance and said I needed to send them form 336b. I think that I should try again, maybe I'll be able to finally get rid of SARS.

In the mean time, I have been sent my 2012 SARS return to complete on e-filing. As I consider myself to be an Australian tax resident, does this mean that I don't have to declare Australian income to SARS and just declare my dividends as this is my only SA income?

[MadMother]

Hi

I'm quite confused at the moment about how to complete my SARS e-filing tax return for 2011/2012 in regards to the new regulations. Anybody had a look at the SARS e-filing form yet? I am not sure under wich source code to enter my Austalian income or what is expected of me? I landed in Brisbane Oct 2011 so I will have South African an Australian income for the year. I don't own a bussiness, farm or any else; I am just a normal office worker earning a salary.

CHANGES AFFECTING THE EMPLOYEE WHO WORKS OUTSIDE THE SOUTH AFRICAN BORDERS: www.sars.gov.za

• ALL South African citizens must declare their WORLDWIDE income to SARS.
  

• You must have an Income Tax Number. If not, do so IMMEDIATELY to avoid extremely harsh penalties.
  

• If you work outside the borders of South Africa AND you are a South African citizen, you must complete and submit an Income Tax Return to SARS. This ruling is irrespective of how much you earn, where you work, the period you worked, whether you paid tax in the foreign country or whether there is a Double Taxation Agreement in place between South Africa and the foreign country.
  

• If you earn your income in foreign currency, SARS has made a table (methods) available to convert the foreign currency to rand.
  

• SARS can now identify you as a foreign income earner by means of the changes brought about to the employer PAYE reconciliation for 2012. Irrespective of tax was deducted from your income or not.
  

Any help would be appreciated!

The article on the Capitax website (http://www.capitax.c...frican-borders/) is the ONLY one I that I can find online that uses the term 'citizen'. All the other related articles use the term 'resident' eg http://www.sapromo.c...ompliance-drive. There is a huge difference between being a South African citizen and a South African tax resident.

I think that Capitax is trying to freak people with foreign residency out by using the term 'citizen' and hoping to generate extra business. If this is the case, shame on them! I know that they have ruined my weekend as I have spent the past 3 days researching residency and tax.

Edited July 9, 2012 by MadMother

[schnappi]

I agree with you MadMother,

It spoiled our Sunday a week ago and I also get the feeling that Capitax are trying to scare people. The whole way they've got everything highlighted and written in bold and red on their website along with the flash animation glowing red, telling us we're being 'targeted' is just a bit too much.

So can someone please tell me if my summary is correct for someone on a PR visa who sold everything in SA and has no money/assests/income left there:

1. I need to complete a SARS tax return for the part of the year that I was still earning income in SA

2. NB - I do not need to declare any income I earned in Australia on my SARS tax return because I'm now an Australian tax resident

3. I need to declare my SA income (and the tax I paid on that) on my ATO return

Much appreciated!

Edited July 9, 2012 by schnappi

[MadMother]

I agree with you MadMother,

It spoiled our Sunday a week ago and I also get the feeling that Capitax are trying to scare people. The whole way they've got everything highlighted and written in bold and red on their website along with the flash animation glowing red, telling us we're being 'targeted' is just a bit too much.

So can someone please tell me if my summary is correct for someone on a PR visa who sold everything in SA and has no money/assests/income left there:

1. I need to complete a SARS tax return for the part of the year that I was still earning income in SA

2. NB - I do not need to declare any income I earned in Australia on my SARS tax return because I'm now an Australian tax resident

3. I need to declare my SA income (and the tax I paid on that) on my ATO return

Much appreciated!

Hi

I think that your summary is correct from what I've found online and on this forum. You might find the comments on these discussions relevant:

http://www.saaustralia.org/index.php/topic/34738-rsa-tax-re-oz-earnings-days-out-of-country/

http://www.saaustralia.org/index.php/topic/33790-foreign-income-on-sars-tax-return/