Taxation of Foreign Employment Income

Taxation of Foreign Employment Income


Editor’s Note: HRTorQue is able to assist both employers and employees in managing this far-reaching change. Feel free to contact us.

In April 2020, the taxation of foreign employment income will come into action. This amendment brings into remuneration (taxable income) all foreign employment income for South African resident tax payers subject to an exemption of one million Rand. This amendment will have significant implications for employers who have South African employees on their international payrolls. Treasury is already consulting with the Payroll Authors Group and other entities to consider whether the s(6)quat deduction for foreign employment tax can be practically applied in payrolls.

We would strongly recommend employers consider the impact of this amendment on their employees in advance of implementation. This will likely have an impact on both the employer and employee.

The amendment reads as follows:

“There shall be exempt from normal tax any form of remuneration to the extent to which that remuneration does not exceed one million Rand in respect of a year of assessment is received or accrues to any employee during a year of assessment by way of salary, leave pay, wage, overtime pay, bonus, gratuity, commission, fee, emolument or allowance including any income referred to in paragraph (i) in the definition of gross income in section one or an amount referred to in section 8, 8B or 8C, in respect of services rendered outside the Republic by that employee for or on behalf of any employer if that employee was outside the Republic.”