New tax implications for South Africans working abroad – taxed if over R1m p.a.

In broad terms South Africans are generally currently exempt from South African Income Tax if they spend more than 183 full days outside of South Africa during the tax year. More of that below. if you are classified as a South African resident you will be liable for tax on your overseas income.

However in terms of proposed changes the termination of this approach will be somewhat weakened by:

1. the inclusion of a R1 million per year exemption; and
2. the possible further reduction if a double tax agreement applies.

The expected start date is 1 March 2020. In other words only the first one million Rand earned by a person who meets the criteria for exemption, will actually be exempt from income tax. All income earned above the initial R1m will be taxed at the normal rates applicable to individuals. The individual may also be entitled to a reduction, or in practise a refund of their SA income tax actually paid, by offsetting all or part of foreign tax which they may pay on the income. This could take place if they paid tax on the income to a country whic his a party to a so called double tax treaty with South Africa.

Example – take a typical super yacht skipper from South Africa. He or she will be earning a minimum of say US$200,000 per year, equating ZAR3m at current rates. If the exemption applies, and is limited to R1m per year, then R2m of taxable income arises. Typically this will have not have been taxed anywhere, so SA personal tax of approximately R745,000 would arise leaving R 1,255,000 take home pay aftertax. A nasty shock indeed .

SA residents may exit the SA tax net by formally emigrating or ceasing to be tax resident. However there may be Capital Gains Tax implications. Under such circumstances the SA tax payer will be deemed to have sold all of their assets, with the exception of immovable property situated in South Africa, at market value on the date they ceased to be a resident and will accordingly be liable for pay the resultant tax applicable to the capital gain on those assets.

Carefully consider and take professional advice to guide your decisions regarding taxation – income tax, capital gain tax, tax in the countries where you maybe working as early as possible. Tax should not drive your overall decision making, but its best to get it under control, rather than find taxation becomes a nasty surprise and SARS demands it share of off-shore earnings.

Although some overseas income may be exempt in terms of the Income Tax Act, it must be remembered that a person will be treated as a resident for tax purposes if they are either ordinarily resident in South Africa, or if they meet the criteria of the physical presence test. A person will be an SA resident for tax purposes when they meet all of the following criteria regarding the number of days spent in South Africa:

91 days in total during the current year of assessment; and

91 days in total during each of the previous five years of assessment; and

915 or more days during the previous five years of assessment

When is income exempt from South African tax?

Foreign income earned by a tax resident will be exempt from South African tax if the person works as a crew member or officer of a ship which is engaged in the transport of passengers overseas, or in the prospecting, exploration or mining for any minerals from the seabed outside of South Africa. This exemption will only apply if the person was outside of SA for a total of more than 183 full days during the tax year.

In addition, any salary earned by a South African for services rendered outside of SA on behalf of an employer will be exempt – if that person was outside of SA for more than 183 full days (including a continuous period of 60 days) during any 12-month period that started or ended during the year of assessment. This exemption does not apply to income made through contracting, which would be fully taxable.

Treasury has been debating this exemption since 2017 with the initial aim being to repeal it fully. The main reason provided for this proposed amendment was to curb situations of double non-taxation of foreign income such as when an individual’s employment income was not being taxed in either SA or the foreign country. withdraws life support from flagship digital identity system. RIP Verify. Finally.

Reposted from the original source: By Andrew Orlowski 10 Oct 2018

It’s official: the UK state’s expensive-but-comatose digital identity system Verify has been taken off life support.
Identity disorder: Does UK govt need Verify more than we do?

The minister responsible confirmed to Parliament yesterday that it will halt funding for the project after cash has been exhausted – and it’s up to the private sector to decide whether to keep the vegetable alive.

But it’s an unenviable option. The government can no longer guarantee that Verify will be an exclusive or even preferred ID system for public services.

“The Government expects that commercial organisations will create and reuse digital identities, and accelerate the creation of an interoperable digital identity market,” said Oliver Dowden, Minister for the Implementation [sic] at the Cabinet Office. “This is therefore the last investment that the Government will provide to directly support the GOV.UK Verify programme. It will be the responsibility of the private sector to invest to ensure the delivery of this product beyond the [stated] period.”

It’s no surprise – Verify lost the confidence of Whitehall years ago. The project was launched in 2011 (as “Identity Assurance”) with the goal of providing a single sign-on ID for public services ranging from tax collection to benefits. The goal was to have 20 million users by 2020. Consultants and the Cabinet Office’s Nudge Unit dreamed (PDF) of it playing a role for consumers, too.

“The days of creating different user names and passwords for every new website are numbered, thank goodness,” promised GDS Maximum Leader Mike Bracken* in November 2011.

A successful identity framework would mean departments didn’t have to roll their own. But that’s exactly what happened. HMRC was obliged to extend the ageing Government Gateway itself, and the Department for Work and Pensions (DWP) decided Verify couldn’t cut the mustard for the Universal Credits system, as we exclusively revealed here. DWP also had to develop its own identity system. The other big service, the NHS, never took Identity Assurance/Verify serious in the first place.

People had problems too, as the BBC’s Rory Cellan-Jones found in 2014. Two years later, the success rate for creating new identity accounts was just 72 per cent.


What is the future direction of banking?

Articled first appeared at:

Still dealing with the damage to consumer confidence after the crisis of 2008 and the new opportunities being seized by FinTech businesses the big banks are caught in a perfect storm.

FinTech in 2018As Mark Carney, Governor of the Bank of England has said: “FinTech…will change the nature of money, shake the foundations of central banking and deliver nothing less than a democratic revolution for all who use financial services.”

Taking advantage of new technology and crowdfunding platforms, in 2016 Monzo raised an impressive £1 million in just 96 seconds via equity crowdfunding site Crowdcube, crashing their servers and setting the record for the fastest ever crowdfunding raise – writes Marc Hurr and Daniel Eduardo Suero, co-founders of iBAN Wallet.

Monzo went on to raise another £21 million in funding and secure itself as a challenger bank, putting the wind up long-established high street banks and proving the concept of a community-owned digital bank.

Similarly, alternative banking providers, such as iBAN, are using crowdfunding to fund the launch of new banking apps and features, such as peer-to-peer lending and free international transfers.

One thing these new banking providers promise is to put the customer at the centre of their business model, rather than treating customers like a commodity to be hoarded and exploited. In fact, a recent global PwC survey found that 61% of bankers thought a customer-centric business model is very important yet only 17% were very prepared for it.

It is this disparity that challenger banks are capitalising on by offering improved services based on technological innovation, something traditional banks are struggling to adopt due to their large size, complex infrastructure and existing business models.

The same PwC survey found that innovation within the banking industry was considered to be somewhat or very important by 87% of bankers, yet just 11% said that their organisation was very prepared for it.

With all this change, the direction banking is going means banking could be very different in ten years’ time. So, what can we look forward to?
Machine Learning and Predictive Analytics

Machine learning has been around for some years now, but it still hasn’t really come of age. Essentially, they are still in school – learning now to provide future benefits.

One of the main benefits to customers will be proactive assistance, not unhelpful hindsight. For example, challenger banks already offer balance warnings and advice, not a notification that you’re already over your overdraft limit.

In future, we will see these systems become even smarter, using behavioural pattern analysis and predictive analytics to find ways to help us save money and prepare for potential financial situations we might find ourselves in. In turn, this should help customers save money, providing more capital for these new banks to operate with.
Payment Systems

We are already getting used to new forms of payment, such as contactless cards and mobile payments. So, in a sense, the future is already here.

Yet these systems still have lots of room for improvement. While convenient, contactless cards still have spending limits to avoid excessive spending through theft and fraud. They can still be lost, stolen or damaged. And you will still need your PIN at certain retailers and to withdraw cash.

The future of payment systems, however, may lie in biometrics. There are many biological features that make us unique as individuals. Even identical twins have different fingerprints, iris and blood vessel patterns, for example. These can be scanned and used to help secure our money without the need for PINs or cards, simplifying everything from purchases to online banking.
Data Aggregation

Banks have access to far more data than any other business. They know where we shop, who we work for, where we’re going on holiday, and almost everything in between. They also have access to vast amounts of data from multiple other sources, such as businesses, credit agencies, investment houses and central banks.

These data sources will increasingly be aggregated to provide a clearer picture of the world – from the micro to the macro level – allowing faster, more accurate decisions and advice. In a sense, banks can act as digital value aggregators, providing real-time value for businesses and customers.
Collaborators not competitors

In the spirit of generating value, banks can form partnerships with a network of individuals, businesses and service providers, and can leverage their power to lower costs on behalf of customers.

This stands in stark contrast to today’s approach of building more complex solutions for a higher price in order to compete against other financial institutions. It is this approach that created the complex financial instruments that, ultimately, played a huge part in the global financial collapse.
Agile and Light

Technologies like blockchain are enabling a quiet revolution – invisible and seamless – to enable more direct and transparent transactions between users. What started as peer-to-peer trading has morphed into complex networks backed by a digital ledger.

Not only does blockchain cut out the middlemen, offering traditional financial services at a fraction of the cost, it can make financial transactions more transparent and secure. Technologies built on top of blockchain, such as Etherium, are enabling the use of digital smart-contracts which make it almost impossible for financial fraud, embezzlement and dodgy trading practices to continue.

Ultimately, this technology can put users in charge of finance, rather than being at the control and whim of global financial institutions.
AI assistants

We believe machine learning, data aggregation, blockchain and greater collaboration will converge to offer users a more personalised and tailored service. Combine that with ever-improving digital assistants and you end up with a network of services that can use data to get smarter and be more helpful to customers, not ‘selling’ products in an attempt to extract ever-increasing profit from them.

Banks of the future can use their privileged position to offer a personal experience and form closer relationships with their customers. We think AI assistants will be the new, personal face of these banking services.
AR and VR

The way things are trending augmented reality (AR) and virtual reality (VR) will become dominant in our everyday lives. We might interact with people and businesses via VR, gain real-time information in AR, and seamlessly switch between the two.

Imagine being able to gain a real visual understanding of your finances, where they are allocated, and what you may need to save for in the future. Almost like a time-traveller you’ll able to make highly-accurate predictions about your financial circumstances, providing unimagined confidence in your future financials.