Sunday, 14 December 2014

South Africa: SARS clarifies tax exemptions on foreign pensions

PF 6Dec pensiontax ioliYou will not be taxed in South Africa on a pension that you accumulated while you worked outside the country, although this exemption is subject to several qualifications.
In November, the South African Revenue Service (SARS) issued Binding General Ruling 25, which aims to resolve the disputes that have arisen between SARS and some taxpayers whose pensions are partly or entirely the result of employment outside the country.
The ruling means that a pension that accrues for services rendered outside South Africa by a South African resident will generally not be subject to tax in this country, the South African Institute of Chartered Accountants (Saica) says in a statement. If the services were rendered both in South Africa and abroad, the portion of the pension to qualify for the exemption will be calculated using a formula where the period of employment abroad is a ratio of the total period of employment.
Marika Muller, the deputy spokesperson for SARS, says existing disputes over pensions from foreign employment will be dealt with according to the ruling.
A section of the Income Tax Act exempts from tax any pension received by or accrued to a resident from a source outside South Africa for past employment outside the country, Jenny Klein, a tax manager at ENSAfrica, says.