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How much can I deduct for expenses from money I earned in Saudi Arabia?

Posted 16 November 2012 under Tax Questions


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Hi, I taught a two-week course in Saudi Arabia, and they paid me straight into my bank account. Do I have to pay taxes on the full amount, or is there some fixed amount per day I can deduct for expenses?

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TaxTimTaxTim says:
17 November 2012 at 10:49

Were you working for a company, or was this an independent activity you did to earn income?


Chri5 says:
17 November 2012 at 11:22

Hi,

It was just independent.

Chris


TaxTimTaxTim says:
17 November 2012 at 13:04

You will be able to claim the expenditure against earning this income provided you have documents to prove the expenses and proof that they only relate to the actual income earned and not to personal expenditure. So in effect you would only be taxed on the "profit" made from the course.


Chri5 says:
17 November 2012 at 15:06

Not personal expenditure? So I can't deduct my flight, hotel and restaurant bills? Surely those reduce the profit from the course? :-/

Also, when I go to a conference overseas I get a travel and subsistence allowance from my research grant, and it seems to be tax-deductible? (It shows up on my IRP5, and we have a list of how much you can deduct per day for each country.) Why is my current situation different? :-/


TaxTimTaxTim says:
18 November 2012 at 20:40

You can deduct any expense that you incurred in producing the income. So yes things like hotel bills and flights, but only as long as you can justify that if you had not spent that money you would not have earned that income.

If you are sent by your employer to a conference and you are paid a subsistence allowance then you can deduct a portion each day. If you decide to go overseas and do some work which earns you a profit and this is independent of your employment, as you mentioned above, then you will be allowed to deduct expenses which caused you to earn that income.


Chri5 says:
19 November 2012 at 16:22

Thanks Tim! And which section of the form should I fill this money in under? There's a question "Did you have any foreign business activity? i.e you own/run a business which earns income from outside of South Africa". I don't have a business (I mean, I don't have a company or anything), I just gave a course by myself. But should I answer yes?


Chri5 says:
19 November 2012 at 16:22

Or would it better be declared under "Did you have any other foreign earnings which have not been addressed by any previous questions?"?


TaxTimTaxTim says:
20 November 2012 at 0:56

Yes the latter question is better to enter this information. You don't own a business so it wouldn't go under the first one. If you were paid in a foreign currency then you must use the converted rate, if it was a once off. You weren't paid in Rands by your current employer?


Chri5 says:
20 November 2012 at 8:55

> You weren't paid in Rands by your current employer?

Sorry, I didn't understand this... :-/ do you mean for the Saudi job? No my current employer is UCT, and the Saudi course was just paid for by the Saudi government. They paid me straight into my South African bank account, and I think they paid in US dollars but it might have been in Saudi money.

Does it count as "foreign earnings" because I earned it by working there, or because it was in a foreign currency when they put it in my bank account? In other words, if the course had been here, would it still have been foreign earnings? (Or is it NOT foreign earnings because when I was paid it was into my South African bank account?) Sigh. This is hard.


Chri5 says:
20 November 2012 at 14:34

Also, could you explain the difference between these two questions on the SARS tax wizard for making my ITR12?

1. Did you receive remuneration for foreign services rendered?

and

2. Did you receive any foreign income apart from foreign interest and etc etc?

Should I be answering yes to both? Or else which one? And do I put the type of income under "Other"?


TaxTimTaxTim says:
20 November 2012 at 19:52

Foreign income/services is one of the harder types of incomes to account for. Apologies if I was not too clear. You have answered my question though, as you said you were paid by the government into your SA account in a foreign currency, this being an independent income to your employment income.

It would count as foreign earnings as you were out of SA at the time and were paid for this work. Given this was a short course and not a permanent position which kept you out of the country for an extended period of time, I would include the amount under foreign income and under business trade profit/loss depending which one is relevant.

Foreign service generally refers to actually working out of SA as your normal job for certain periods and has a whole set of tax consequences. I don't believe this is appropriate to your situation.

I hope that helps?


Chri5 says:
20 November 2012 at 21:02

Yes it does! Thanks! :-) By the way, I see I have to disclose my local and foreign assets now! Can I just guess how much my flat and possessions are worth, as long as I round up?

Also, am I right that I only have to do this by January because I'm a provisional tax payer?


TaxTimTaxTim says:
20 November 2012 at 21:07

Many people do not fill in their assets and liabilities, although it is required in most cases. I have not known anyone to be penalised for this. Yes your returns only need to be submitted by the end of January 2013.

Only a pleasure!


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Hi, I'm Tim!
I'll help you do your Tax Return with Confidence
Quickly, Easily
And Correctly
Do your Tax Online with Expert Help from Me, Step-by-Step.
LEARN MORE