I have been living overseas for over three years but will be moving home in April. I will be joining the South African branch of the company I currently work for.
My question is, will I be liable to pay tax on earnings in March 2013? Also, what are the tax restrictions for repatriating savings made during my overseas work?
An expert from PwC responds:
It is not clear whether you will be regarded as tax resident in South Africa or not.
If you are tax resident, there is an exemption provided in the SA tax legislation in respect of earnings abroad provided you have met certain tests regarding the time spent outside the country (ie more than 183 days in a 12-month period, of which more than 60 are consecutive days spent outside South Africa).
If you are not regarded as tax resident in South Africa, you are taxable in South Africa only on earnings sourced in South Africa. Savings from earnings while working abroad are permitted to remain abroad.
If you are tax resident in South Africa, you are taxable on your worldwide income, which would include income generated from the foreign savings.
As previously mentioned, if you are not tax resident in South Africa, you are only taxable on South African-sourced income, which would exclude earnings from foreign savings.
If you repatriate your savings to South Africa, you will not be taxed on the amount repatriated, but you will be taxed on any income generated from the investment of those funds.
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