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Foreign service income exemption

Posted 13 November 2015 under Tax Questions



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Roger says:
13 November 2015 at 10:06

I was hoping to pick your big tax brain before I submit my tax return and cause chaos at SARS.... I qualify for S10(1)(o) in terms of foreign services rendered as I meet the requirements in this regard. My dilemma is I don't know which part of my income I can use to claim the applicable portion of this exemption i.e. Income (3601); Annual payment (3605) etc. To further complicate the situation I had share options exercised in the same tax year!

Would you mind confirming which source codes I can use in the claim?

He has the following: 3601; 3605; 3701; 3707; 3714; 3715; 3801; 3808 & 3810

I really appreciate your time and consideration.

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TaxTimTaxTim says:
13 November 2015 at 10:23

In order to claim this exemption you will need the following:

1. Letter from your employer stating that you work outside SA and the income earned during that period and what the period was. Or the contract of employment with the foreign employer.

2. Schedule of days in and out of South Africa.

3. Copies of your passport demonstrating the movements in and out of SA.

The income claimable is generally all the income attributable to the period outside SA - share options are different because they are as a result of previous working periods so would not necessarily apply. You can use the income earned during the year. SARS will apply their own calculation anyway in all likelihood.

You would need to complete the residency section and the other deduction section (there is a question for 10(1)(o)(ii) as well because your employer has used the wrong source code, they should have used 3651 for foreign services.

To ensure you do meet the criterion answer our questions on Can I claim a portion of my foreign income as exempt?


Roger says:
13 November 2015 at 10:36

Thanks for your help Tim!

So just to confirm I can include fringe benefits and allowances in arriving at a total in which I can claim against? i.e. series 37 & 38?


TaxTimTaxTim says:
13 November 2015 at 13:53

Yes, SARS may come back and not accept these, but we can deal with that if they do.


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