Expats and Employers: Plan Now For the New Expat Tax Changes

Expats and Employers: Plan Now For the New Expat Tax Changes

“An income tax form is like a laundry list – either way you lose your shirt” (Comedian Fred Allen)

This article is important to you if you are either a South African working abroad or an employer of one. If you don’t fall into either of those categories, but know someone who does, please think of passing this on.

As an employee earning foreign remuneration (salary, leave pay, bonuses, allowances, commission etc), you currently enjoy an uncapped tax exemption (on that remuneration only, not on other foreign income) provided that you work overseas –

  • For more than a total of 183 days during any 12 month period, and
  • More than 60 of those days are consecutive.

That however is set to change from 1 March 2020, when only the first R1m p.a. of your earnings will be exempt – you will pay tax on anything over that. With the Rand’s weakness showing little sign of abating, a lot of expats and their employers are going to be affected. 

Are you a “tax resident”? 

Only “tax residents” are affected, so the first thing you should establish is whether you are still a tax resident or not. That’s not always easy, so take professional advice in any doubt.

To illustrate some of the complexities involved, both physical emigration/relocation and “financial emigration” are different concepts to “tax emigration”. Moreover the Income Tax Act’s tests for tax residency are hardly a model of clarity – you are a “resident for tax purposes” if you are either an “ordinary resident” or a resident in terms of the “physical presence test” –

  1. You are, says SARS, an “ordinary resident” if South Africa is the country to which you “will naturally and as a matter of course return after [your] wanderings’, your “usual or principal residence”, or your “real home”.
  2. Even if you aren’t an “ordinary resident”, you will still be a resident under the “physical presence test” if you are physically present in South Africa for more than –
    1. “91 days in total during the year of assessment under consideration; and
    2. 91 days in total during each of the five years of assessment preceding the year of assessment under consideration; and
    3. 915 days in total during those five preceding years of assessment.”       

      Under the physical presence test however if you are outside the country for a continuous period of at least 330 days you are not regarded as a tax resident.

Should you “tax emigrate”?

If you are indeed a tax resident, don’t think of changing that status without taking full advice. “Tax emigration” and “financial emigration” are complicated processes and full of pitfalls. For example you could be entitled to foreign tax rebates or other relief on your taxable (i.e. +R1m) foreign earnings, or there may be other benefits to remaining a tax resident. So it is important to have an expert look at your specific situation and determine what is best for you overall.

The big thing is to be aware that change is coming. Some long-range planning is the only way to be certain that there are no unpleasant surprises waiting to spring out on you down the line.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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Your Website of the Month: Music for Productive Work

Your Website of the Month: Music for Productive Work

“If I were not a physicist, I would probably be a musician. I often think in music. I live my daydreams in music. I see my life in terms of music.” (Albert Einstein)

Music, science tells us, really can help us work, and learn, and be creative. 

Earphones mean you can listen to your favourite tunes all day with zero disruption to your fellow employees (and clients waiting in Reception!), and you’ll never be short of new music with a streaming service and a high-memory smartphone. But what should you listen to? 

“Create the perfect playlist for productive work” on Quartz discusses how music can enhance workplace performance (employers take note!), and what musical tempo (beats per minute) can help induce the alpha state in your brain so that your mind becomes calm and alert, with heightened concentration. 

Different types of music, it turns out, are ideal for particular tasks in four categories –

  • Simple tasks
  • Learning
  • Work you love
  • Creative work.

Happy (and productive) listening!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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Your Website of the Month: 5 Steps to Business Success

Your Website of the Month: 5 Steps to Business Success

Perhaps you are an employee, dreaming of starting up your own business. Or an entrepreneur looking to leverage your practical experience into another successful start-up. Or perhaps you are the CEO of a multinational planning to launch a new venture. 

Small business or big, here’s a quick, practical read for you covering “what many spend fortunes hoping to learn in business schools” in a few bullet points. 

“Johann Rupert’s 5 steps to business success” on Moneyweb is a short and insightful summary of the multi-billionaire’s recipe for successfully launching your new business or venture. 

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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Paternity Leave and Minimum Wages – How Will The New Laws Affect You?

Paternity Leave and Minimum Wages – How Will The New Laws Affect You?

Employers and employees need to know about four new Acts which will usher in  important changes to our labour laws.

The summary below is a short one of only those changes likely to affect a significant number of people and businesses, so take advice on your specific circumstances. 

In a nutshell –

Parental leave extended

Until now, mothers have been entitled to unpaid leave when welcoming a new child into the world, in the form of 4 consecutive months’ “maternity leave”. Plus they can claim maternity benefits from the UIF if they are contributors. New fathers however have been limited to at most 3 days’ family responsibility leave.

That will now be extended to – 

  • “Parental leave”: “Parents” (i.e. including fathers and same-sex partners) – 10 consecutive days’ parental leave.
  • “Adoption leave”: Adoptive parents of a child under 2 years old – either 10 consecutive weeks’ adoption leave or 10 consecutive days’ parental leave (where there are two adoptive parents, they decide between them who gets 10 weeks and who gets 10 days).
  • Commissioning parent leave”: Commissioning parents in a surrogacy agreement – same provisions as for adoptive parents. 

Parents taking unpaid leave as above also become eligible for UIF benefits.

Employers with maternity leave policies, and those who offer paid as opposed to unpaid maternity leave, should take advice on reviewing these policies.

Minimum wages introduced

The new national minimum wage is set as follows – 

  • Farm workers – R18 per hour
  • Domestic workers – R15 per hour
  • Workers in an ‘expanded public works programme’ – R11 per hour
  • Other employees – R20 per hour.

Separate allowances apply to those in learnership agreements.

Employers who cannot pay the minimum wage will be able to apply for exemption for up to a year, but draft (at time of writing) regulations allow for only a 10% exemption.

Failure to pay the minimum wage will expose employers to fines of the greater of 2x the value of the underpayment, or 2x the employee’s monthly wage (going up to 3x for second or further non-compliances).

Strikes, lockouts and picketing

An “advisory arbitration panel” can be (and presumably will be) appointed to help resolve protracted or violent strikes or lockouts, and those causing or exacerbating an acute national or local crisis. 

New picketing regulations are also in the wind.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Victims of Corruption Take Heart – “Big Chief” Gets 15 Years Behind Bars

Victims of Corruption Take Heart – “Big Chief” Gets 15 Years Behind Bars

“… it is necessary for an unequivocal message to be sent out that corruption on the part of politicians, especially those holding high office, will not be tolerated and that punishment for those who act as Mr Block has done in this case will be severe” (extract from SCA case below)

We are all of us tired of reading about the rampant corruption in our society, and even if you aren’t one of the many businesses or individuals directly affected, everyone is ultimately a victim.

Let’s take heart then from two recent Supreme Court of Appeal (SCA) decisions. 

Firstly, to set the scene…

Minimum sentences for corruption
  • Corruption in terms of the Prevention and Combating of Corrupt Activities Act is an offence which, when more than R500,000 is involved, carries a minimum sentence of 15 years’ imprisonment, even for first offenders, “unless there are substantial and compelling reasons justifying a lesser sentence”. 
  • The R500k threshold is reduced to R100k where a “common conspiracy” is at play and to only R10k where a law enforcement officer is involved.
  • Confiscation orders are also common, being designed to deprive criminals of the benefits of their corruption. In the case below for example, a R60m confiscation order (and +R1m fines) accompanied the jail sentences.
“Big Chief” gets 15 years for a corrupt relationship
  • The first SCA case involved a former high ranking politician and provincial Finance MEC (known to at least one of his subordinates as “Big Chief”) on the one hand, and on the other a businessman with interests in a property group. 
  • Both were convicted of corruption relating to “gratifications” paid to the politician for using his “considerable political clout” to help the property group lease premises to government departments on favourable terms and at inflated rentals, without following proper tender procedures. 
  • It was irrelevant, held the Court, that the gratifications were only paid after the event, they were “paid and received as part of an on-going corrupt relationship where it was accepted by both sides that one hand would wash the other, so to speak, in respect of other favours already made or anticipated in the future.”  
  • Neither did claiming that the payments were made for “consultancy services” and “business assistance” cut any ice at all with the Court.
  • An attempt to appeal to the Constitutional Court having failed, the 15 year sentences must now be served.
Beyond the grave: Still payback time

The second SCA case involves the same matter but another politician and former provincial Head of Department, who faced much the same charges as the others but died before her trial ended.

That didn’t stop the state from obtaining a High Court order forfeiting to the state both the shares given to the deceased in one of the property-owning companies (worth R28m at the time), and her R2m house. 

On appeal the SCA upheld the share forfeiture order but, on the principle that forfeiture is designed to remove the incentive for crime rather than to punish it, set aside the forfeiture of the entire property and instead ordered the executor of the deceased estate to pay R758k to the state’s criminal assets recovery account. 

Victims of corruption – what to do

Whether you have lost out on a tender, are on the wrong end of a bribe solicitation, or are in any other way a direct victim of corruption, report it! 

Our laws and our courts are behind you.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Your Website of the Month: “Ready, Steady, Loadshed!”

Your Website of the Month: “Ready, Steady, Loadshed!”

Media reports suggest that loadshedding is likely to be with us for some time yet, and whether you happen to be at work or at home when one of the dreaded blackouts strikes, there’s nothing worse than being caught off guard. 

Avoid unpleasant surprises by knowing exactly when your area will go down. At least then you can get your office/factory/home-sweet-home ready beforehand.

First step is to download one of the apps developed to help South Africans navigate the minefield of daily announcements and loadshedding schedules. Read about some of the best in “Be prepared for loadshedding with these apps” on IOL, and if you happen to live in an area that has enough of its own generating capacity to lessen the incidence and severity of loadshedding (Cape Town being one example), make sure that your chosen app incorporates that.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

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