South African residents who work for international companies inside South Africa need to be sure they have a clear understanding of their tax situation or risk losing out, says Thomas Lobban, Legal Manager for Cross-Border Taxation at Tax Consulting South Africa. “A growing number of South Africans are electing to work abroad, but there is also a substantial group that is working here for foreign companies,” he says. “While these individuals’ tax situation might seem straightforward, there are permutations to watch out for. As always, when it comes to cross-border tax, it’s best to get things clear from the get-go or risk negative consequences later.”
South Africans have always been keen to work and live abroad, and this trend looks set to strengthen as the country’s political and economic fortunes remain precarious.
A recent study shows that even with the rise of digital working, 59% of South Africans (56% of young people and 61% of highly educated people) are willing to relocate. But, says
Thomas Lobban, Legal Manager for Cross-Border Taxation at Tax Consulting South Africa, working abroad creates a host of potential tax challenges for which a strategy must be developed.
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“Most taxation challenges related to the expatriate life can be satisfactorily resolved but the right steps need to be taken from the beginning,” he says. “It’s never too early to speak to a tax consultant who understands the intricacies of expatriate taxation it may be too late if you leave things to filing season.”
Along with the rest of the world, South Africans have shown an appetite for cryptocurrencies. While the size of the market remains unclear, Coinmarketcap gives a figure of $210-billion for the global market, and approximately R6.5-billion for the South African market.
While the true figures remain unclear, what is clear is that SARS has cryptocurrency trading very much in its sights, says
Thomas Lobban, Legal Manager, Cross-Border Taxation at Tax Consulting South Africa.
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“Bitcoin and other cryptocurrencies have notched up huge gains in past year and more Bitcoin gained approximately 224% in 2020, for example. Given these returns, it’s unsurprising that South Africans are looking at crypto as an investment opportunity, but few realise the tax implications of such a move,” Mr Lobban says.
SARS is starting to audit cryptocurrency traders in South Africa – here’s what you should know
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When a taxpayer files a tax return, SARS may send a request for verification or “audit request” in which it seeks clarification and/or supporting documentation from a taxpayer.
The information sought by SARS is inevitably linked to the disclosures made by the taxpayer in that return. This is a preliminary step taken by SARS in audit proceedings, and it is crucial that taxpayers prepare themselves accordingly for this ahead of time.
Specialist firm Tax Consulting South Africa says it has recently been approached by taxpayers who were presented with a SARS audit request. These requests posed standard questions as would be expected on the taxpayers’ returns, but also went further to request the following: