South Africa Case Study

750 Words3 Pages
A natural person who is a non-resident, the person is only liable for income tax on income from a source within (a true source) or deemed to be within South Africa (SARS, 2012:9)) A non-resident is only taxed on amounts received by or accrued to him or her from a source within South Africa. However, the non-resident’s tax position may be affected by an agreement for the avoidance of double taxation entered into between the Government of South Africa and the Government of the foreign country in which he or she resides. In terms of that agreement the non-resident’s remuneration earned in South Africa may not be subject to normal tax in South Africa where specific requirements are met. Income from investments and businesses Passive income (investment…show more content…
However, this exemption is not applicable if the non-resident – • was physically present in South Africa for a period exceeding 183 days in aggregate during the tax year; or • at any time during the tax year carried on a business through a permanent establishment in South Africa. Dividends Dividends received by or accrued to a non-resident from a source within South Africa (resident companies) are exempt from normal tax in South Africa. Dividends from collective investment schemes are also exempt from normal tax in the circumstances described above. Rental income The source of rental income is generally regarded to be where the property is used on a day-to-day basis. Rental income which arises in South Africa, received by or accrued to a non-resident will be subject to normal tax in South Africa. Expenses such as rates and taxes, bond interest, insurance and repairs may be claimed as deductions against such rental income, subject to certain conditions.…show more content…
Such payments, which have been subject to the final withholding tax of 12%, are exempt from normal tax in South Africa. Salary of non-residents temporarily working in South Africa Salary income earned in South Africa by a non-resident will be subject to normal tax in South Africa, unless the agreement for the avoidance of double taxation entered into between the Government of South Africa and the Government of the foreign country in which he or she resides, stipulates otherwise. Remuneration of employees of foreign governments working in South Africa The remuneration earned by an employee of a foreign diplomatic or consular mission in South Africa is exempt from normal tax in South Africa if – • the employee is stationed in South Africa for the sole purpose of holding office in South Africa as an official of a foreign government; and • the employee is not ordinarily resident in South Africa. • Employees in the domestic service of the above employees are also exempt from normal tax in South Africa provided they are not South African citizens and are not ordinarily resident in South
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