A taxpayer earned remuneration (salary) from a foreign employer in Congo and performed the services for that employer in Congo for the majority of 2020 tax year (exceeding 183 days and 60 days continuously), meaning the income is exempt per section 10(1)(o)(ii). As the employer is a company operating in Congo, no IRP5 was issued, no tax withheld and the total income was paid to the taxpayer’s account monthly. Due to there being no IRP5, none of the questions relating to foreign remuneration appear on the form wizard for his ITR12 return. How would he declare this income on his ITR12 return?
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
The exemption, or relief from double tax, is found in the RSA Income Tax – principally because it appears from the facts that the individual will be someone “… who is deemed to be exclusively a resident of” the RSA “for purposes of the application of any agreement entered into between the governments of the Republic (the RSA) and that other country (the Government of the Democratic Republic of Congo) for the avoidance of double taxation…” The next important issue is what the nature of the ‘income’ is. From the facts we assume that it is “salaries, wages and other similar remuneration derived by a resident of a Contracting State (the RSA) in respect of an employment”. In essence we accept that it is not in respect of “the performance of professional services and of other activities of an independent character”. Article 14 then applies and the Congo gets a right to tax the income – which it appears they have done (rightly so). We accept that the employer is not registered as an employer with SARS. There would then not be an IRP5 or IT3. We agree with your suggestion on how it must be treated in the ITR12, to declare the income under 'Amounts received/accrued considered non-taxable' section under 'other' and put in a description that it's 'foreign remuneration from foreign employer qualifying as exempt under section 10(1)(o)(ii)'.