Dockwalk - South African Crew to Pay Big Dockwalk - The Essential Site For Superyacht Captains and Crew - News


South African Crew to Pay Big

Apr 23rd 19
By Laura Dunn

South African yacht crew can expect to pay a hefty tax come March 1, 2020, thanks to the South African Revenue Service (SARS) who will impose a severe new law — known as expat tax — on all tax residents working abroad.

“The tax will be levied against all amounts earned in excess of R1 million annually, and the tax could range from twenty percent to an eye-watering forty-five percent of those earnings,” explains Jame Skuse, director and chief investment officer for Southern Cross Wealth (SCW). The British Virgin Islands- and South African-based wealth management firm specializes in providing wealth management advice to yachties worldwide. “South Africans have been weathering wave after wave of new taxes,” says Skuse, who lists PAYE (Pay As You Earn) and an increased VAT that went from 14 percent to 15 percent last April. So why the new one? Skuse says this is the latest bid for more money in order to help run the State. “It has been proposed by SARS to counter the sheer number of South Africans who emigrate without clearing up their tax matters first,” he says.

Richard Davis, specialist, international tax for Southern Cross Wealth, provides insight into how SA yachties can protect themselves. “The expat tax will only target earnings. If you work for a company that provides you with benefits like accommodation or other additional benefits, this can’t be taxed. It comes down to what an individual is earning,” he says. “To make life easier for any expat, the simplest course of action is to emigrate financially.” He warns, however, that this could trigger some expensive “exit costs” in the form of capital-gains tax on worldwide assets. By doing this, Davis says, an expat will become a non-resident of South Africa, but for tax purposes only. “The income will then be taxed by the country in which the earnings are generated. But just a warning,” he says, “expats will still have to declare any taxable South African-sourced income you make. This could be from work completed in South Africa or if expats are renting out a property that they own.” Of course, since everyone’s situation is different, it’s best to obtain advice from qualified tax and wealth managers.

Mia Steenkamp — a former stewardess on M/Y Bad Girl and M/Y Kogo, now COO and wealth manager at SCW — explains that while there are positives (the expat tax may help shore up the finances of one of the most unequal societies in the world), in the short term, it’s hard to see any pros for yacht professionals or other expats earning above R1 million offshore. “In the long term, this tax will push more skilled and higher earning expats into financial emigration, which makes them more unlikely to return to South Africa with their skills and capital,” she says.

SA citizens should understand that SARS is already prosecuting non-compliant taxpayers. The law has further implications, such as the 18 percent tax on assets and money that’s already been accrued overseas. And even for those who have permanently left South Africa, you need to formalize tax affairs. Most importantly, consult a tax professional ASAP who is aware of your situation and this new tax law.




0 Comments

Add Comment

Text Only 2000 character limit