Author Topic: Tax  (Read 266912 times)

Delusionsofgrandeur

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Re: Tax
« Reply #225 on: April 15, 2014, 07:14:28 am »
This is a little confusing.

1) So this means no tax on dividends in S.A,but I should pay tax on the dividends(and any other profits) in the country I am in?

2)Is it possible to claim back dividend taxes I was already charged with?

I just changed my status to non-resident with SARS.However,My broker account is still a local account,even though I opened it overseas.

3)So I still have to submit everything to SARS and they will know not to tax me on foreign income,correct?
« Last Edit: April 15, 2014, 09:16:52 am by Delusionsofgrandeur »

Orca

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Re: Tax
« Reply #226 on: April 15, 2014, 12:17:27 pm »
My case is likely to be the same as yours as most DTT's are standard. I will pay normal tax on the sale of shares in SA to SARS and get Credit for this in Portugal. As Portuguese tax is a bit higher, I will pay some tax in Portugal.
Once my shares are held for 3 years, then as a non resident in SA, I will pay no CGT in SA but will pay it in Portugal.

Non residents do not pay dividend tax in SA but are liable to pay it in the country of residency.
So whether you paid here makes little diffs as you would have paid it there.
I started here with nothing and still have most of it left.

gcr

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Re: Tax
« Reply #227 on: April 15, 2014, 12:25:29 pm »
My case is likely to be the same as yours as most DTT's are standard. I will pay normal tax on the sale of shares in SA to SARS and get Credit for this in Portugal. As Portuguese tax is a bit higher, I will pay some tax in Portugal.
Once my shares are held for 3 years, then as a non resident in SA, I will pay no CGT in SA but will pay it in Portugal.

Non residents do not pay dividend tax in SA but are liable to pay it in the country of residency.
So whether you paid here makes little diffs as you would have paid it there.
Orca - I and I am sure a number of other people would be most interested in once you have set yourself up in Portugal as to what the real tax implications really are, whether you do end up paying double tax etc. I am sure that you will also look at the European or even London markets and dabble a bit in shares when resident in Portugal, so I would hope that you will continue to post once you have left these shores
Not everything that counts, can be counted, and, not everything that can be counted counts - Albert Einstein

Orca

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Re: Tax
« Reply #228 on: April 15, 2014, 06:08:20 pm »
I surely will gcr. My stocks will stay in SA so I will keep irritating you guys here.

As a general rule with DTT's, you may not be subjected to more tax than the locals in your country of residency would pay and this includes any taxes paid in any other country. ie. Your TOTAL tax for the year CANNOT be more than what the locals would pay for the same amounts as it will be discriminating.

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Re: Tax
« Reply #229 on: April 15, 2014, 07:31:22 pm »
A couple of points on residents/non-residents, dividends and DTA's

1. Any dividend is exempt from South African income tax (normal tax), whether resident or not.
2. Dividends received by a non-resident, would still be subject to a dividends withholding tax.  The following being the notable exceptions
       a) any dividend declared by a foreign company listed on the JSE  (i.e. the dividend is paid from a non-resident to a non-resident).  BHP is an example.
       b) where via a DTA, the dividend withholdings tax has been reduced to below the 15% withholding tax rate.  For example, the DTA with the UK, allows the withholding tax to be reduced to 10%.  Having a quick look at the SA-Portugal DTA, the rate stays at 15%
3. To qualify for the exemption/reduction referred to 2(a) or 2(b) above, one needs to apply for exemption with the withholding agent, typically your stock broker.
4. Note that when your residency status (via either the "ordinarily residence" test or "physical presence test"), changes from resident to not resident, you have a deemed capital gain (at current market value) on any shares held for investment purposes.
5. Thereafter,  any capital gains on the RSA shares are exempt from South African Capital gains tax.  But may, depending on local rules, be subject to tax in any other tax jurisdiction.
6. The effect of DTA, is to clear up source rules (i.e. where taxed), and attempt to eliminate any possible double taxation.  Similar rules, also exist in the RSA income tax act which may assist in ensuring you aren't taxed in two countries.
7.  The general underlying principles that exist with DTA, is that you only get taxed once, and that any withholding tax paid in the other country, could be set off against the tax that you pay in the 1st country.  I.e. should you be resident in Portugal, and receive a dividend from a South African company, any withholding tax withhold in South Africa, may (depending on the provisions of the DTA and the Portuguese tax legislation), be set off against your Portuguese tax liability.
8.  Do not assume that a DTA exists between the two countries.  Check - they are all listed on the SARS website.  Individual provisions can differ between DTA's.
9.  Also do not assume South Africa principles apply in other juridicitions, i.e, dividends may be taxed as ordinary income, and the tax rate be higher than the 15% you effectively pay in SA.
10.  If in doubt, consult a tax expert who deals with DTA's.  Tt might save you money.

Hope all the above makes sense

« Last Edit: April 15, 2014, 07:50:00 pm by XXXXX »

Delusionsofgrandeur

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Re: Tax
« Reply #230 on: April 17, 2014, 07:43:31 am »
Thank you .That is  informative.

Could you or anyone else please paraphrase point 4,especially the second half of it?I'm unclear on it.

Secondly,I am a non-resident,which means that I do not have to pay CGT in S.A.What would happen if after a few years I have to be classified as a resident in SARS eyes?Will I have to pay back that CGT I hadn't paid in previous years?

Or must this CGT tax be paid in the country of residence?
« Last Edit: April 17, 2014, 08:28:59 am by Delusionsofgrandeur »

Orca

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Re: Tax
« Reply #231 on: April 17, 2014, 04:10:21 pm »
You have to declare it there and see what happens.
Point 4. When you cease to be a SA resident then all your assets will be deemed as sold at closing price the day before you exit. This will be CGT even if you had not yet held for 3 years. Called Exit Tax.
This is not bad as you now will have a higher Base Cost if you had gains or a loss that can be offset against future gains.
In my case, I will score as my CML made massive gains and I will pay CGT instead of normal tax and I get the R30k exclusion.
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Re: Tax
« Reply #232 on: April 17, 2014, 06:05:19 pm »
Thank you .That is  informative.

Could you or anyone else please paraphrase point 4,especially the second half of it?I'm unclear on it.

Orca covered this aspect.  Let me know if you need more detail.
Secondly,I am a non-resident,which means that I do not have to pay CGT in S.A.What would happen if after a few years I have to be classified as a resident in SARS eyes?Will I have to pay back that CGT I hadn't paid in previous years?

Or must this CGT tax be paid in the country of residence?

1.  The day you become a resident (or deemed to be a resident), the market value of your assets (world wide) are deemed to be the base cost for SA CGT tax purposes.  You only pay SA CGT tax on any subsequent increase in value from this point in time.
2.  If you are a non-resident, you may be subject to tax (on world wide income) in your country of residence - but this all depends on local tax legislation. 
3. Also note that the differing countries have differing rules on taxation and residence. 
4.  For example, there are countries, that tax you on your world wide income, irrespective of residence.  An example of this, is the US, where if you are a US citizen, you are taxed on your worldwide income, irrespective of residence or location.  Reliance would then have to be placed on DTA and legislation that may reduce the effect of double taxation.

Hope that all makes sense.



« Last Edit: April 17, 2014, 06:07:00 pm by XXXXX »

Orca

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Re: Tax
« Reply #233 on: April 18, 2014, 06:24:35 pm »
I must still get clarity on if a non resident still pays CGT after paying the Exit Tax in SA. Different websites state that you do and some state that you don't. Perhaps some of the websites/blogs are dated.
I will ask SARS when I go sign the exit "permission" forms.
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Re: Tax
« Reply #234 on: April 18, 2014, 07:17:25 pm »
Hi Orca.  The legislation is pretty clear, and is covered in para 2 of the 8th schedule, which reads as follows

"Subject to paragraph 97, this Schedule applies to the disposal on or after valuation date of—
a)any asset of a resident; and
b)the following assets of a person who is not a resident, namely –
i)immovable property situated in the Republic held by that person or  any interest or right of whatever nature of that person to or in immovable property situated in the Republic; or
ii)any asset which is attributable to a permanent establishment of that person in the Republic"


Effectively the 8th schedule (which contains our capital gains tax legislation), simply does not apply to non-residents (as defined by the income tax act.)  (however note the exclusion of immovable property and business establishments from this general rule).

You need however to look very closely at the definition of a "resident" in the income tax act.  For example, it is possible that you fall within the definition of a "resident" after you formally immigrate, in which case you would be subject to further capital gains.   I'd however argue that the "exit tax" or deemed capital gain is only triggered when you fall outside of the definition of a a resident for income tax purposes.

Orca

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Re: Tax
« Reply #235 on: April 18, 2014, 07:54:09 pm »
Here is a good read from SARS website.http://www.sars.gov.za/ClientSegments/Individuals/Learn-About-Taxes/Pages/Non-Residents.aspx

Seems like if you are non resident in SA, your CGT is not taxed in SA.
« Last Edit: April 18, 2014, 07:57:09 pm by Orca »
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Orca

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Re: Tax
« Reply #236 on: April 18, 2014, 08:08:46 pm »
Thanks for your input XXXX. But if you don't comply with the "Physical Residence" test, you will be considered a Non Resident??
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Re: Tax
« Reply #237 on: April 18, 2014, 08:12:35 pm »
Hi,

its a two fold test.  To be regarded as a SA resident, you need to be either ordinarily resident OR meet the physical presence test.  Meet either one of those tests, then you are a SA resident.  In your case, i'd argue that when you formally immigrate AND move your household, you'd meet the ordinarily resident test (to be a non-resident), then you just need to be outside of the requirements of the physical presence test and you'll be outside the SA resident net.
« Last Edit: April 18, 2014, 08:28:04 pm by XXXXX »

Orca

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Re: Tax
« Reply #238 on: April 21, 2014, 08:18:19 pm »
XXXX seems very knowledgeable on this so Delusion, take note.
Once you have completed the MP336b and the IT21a successfully, you will be considered as formally emigrated and will not pay tax on your sale of SA investments.
I only have one hurdle and that is this. Once these are completed, then my bank account will be blocked and my investments will be in the control of my bank. All my bank cards will be frozen as will my internet banking.
This week, I will get more clarification on this. 
I started here with nothing and still have most of it left.

Delusionsofgrandeur

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Re: Tax
« Reply #239 on: April 30, 2014, 05:06:27 am »
I just want to be clear.

1-As a non-resident am I still supposed to file my foreign earnings on e-filing along with my stock sales profit together(in the same entry) as voluntary disclosure or ITR12?

2-I am not emigrating.I am just a non-resident.Am I correct in assuming that as a non-resident I do not have to submit anything except change my adress?

3-Is it possible to subtract Forex loss's from any gains.For example,lets say I send some money to S.A from a foreign country,and then the Rand drops even furthur significantly.Could that be seen as a loss?