Client received salary from Switzerland, he has been working abroad for two months on and a few week of. There is a treaty with Swiss and he has been taxed by Swiss. He's wife and home is still in SA. How does his tax on the foreign income be calculated i
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
For purposes of the guidance that follows we accepted, based on the information provided, that the individual is someone who is deemed to be exclusively a resident of the RSA for purposes of the application of the agreement entered into between the governments of the Republic (the RSA) and that other country (Switzerland) for the avoidance of double taxation …”
There is NO exemption, from normal tax, in respect of the foreign tax. The taxpayer is entitled to a rebate under section 6quat of our Act in respect of the foreign taxes or would be able to elect to deduct same.
The remuneration, will be gross income in the RSA and will only be exempt from normal tax if the section 10(1)(o)(ii) exemption applies – 183 full days absence and a consecutive 60 full days absence is required.
We are not sure why the remuneration was taxed in Switzerland – see paragraph 2 of Article 14 of the treaty.