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Tax on interest when abroad

Posted 7 July 2014 under Tax Questions



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Regarding the residency question - If you earn interest(South African source) with no other income, spend more than 183 days out of the country, will that interest be subject to tax. Lets assume the interest earned is R250 000 for the year. If this isn't tax free, would the opposite be true where by the interest is from a foreign source yet you are resident in SA but do spend more than 183 days out of the country.

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TaxTimTaxTim says:
7 July 2014 at 9:39

Are you a South African resident other than for that year in the first situation?


CASA says:
7 July 2014 at 10:18

Apologies - Yes a SA resident.

Regardless of the scenario above - is there a situation where by one wouldn't be liable to pay tax, based on only earning interest income for the year of assessment, be it foreign or local source, foreign or SA resident.

Much appreciated!


TaxTimTaxTim says:
7 July 2014 at 11:09

Foreign residents will not pay tax on interest earned in SA if they are not in SA for longer than 183 days of the year.

SA residents who have been out of SA or are even in SA will not pay any tax on their interest if they earn less than R91 500 in South Africa as the interest will be below the threshold. Unless the SA resident formally emigrates or after a few years becomes a non-tax resident of SA then the above 183 day rule will apply.

Foreign interest by an SA tax resident living in SA will always be subject to tax, however if tax is paid in the country where the interest was earned then this will be used as a credit against that tax.

South Africans who are no longer tax residents will not be subject to tax on foreign interest.


CASA says:
7 July 2014 at 11:11

Apologies - Yes a SA resident.

Regardless of the scenario above - is there a situation where by one wouldn't be liable to pay tax, based on only earning interest income for the year of assessment, be it foreign or local source, foreign or SA resident.

Much appreciated!


TaxTimTaxTim says:
7 July 2014 at 11:13

Foreign residents will not pay tax on interest earned in SA if they are not in SA for longer than 183 days of the year.

SA residents who have been out of SA or are even in SA will not pay any tax on their interest if they earn less than R91 500 in South Africa as the interest will be below the threshold. Unless the SA resident formally emigrates or after a few years becomes a non-tax resident of SA then the above 183 day rule will apply.

Foreign interest by an SA tax resident living in SA will always be subject to tax, however if tax is paid in the country where the interest was earned then this will be used as a credit against that tax.

South Africans who are no longer tax residents will not be subject to tax on foreign interest.


CASA says:
7 July 2014 at 11:53

Based on the first sentence:

"Foreign residents will not pay tax on interest earned in SA if they are not in SA for longer than 183 days of the year. "

Lets say I'm a European resident, money is invested in a SA bank account, was not in SA for longer than 183 days PLUS I was in say USA for the remaining 182/183 days of the year and not in Europe/Resident country.

Would I be liable for tax based on the assumptions most countries have similar residency tests(183 days etc).


TaxTimTaxTim says:
7 July 2014 at 16:06

As long as you are not in SA for 183 days and you are not an SA tax resident you will not pay tax here in SA regardless of where you are in the world.


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