Guide to Global Payroll Management - 2020 - C-56

Guide to Global Payroll Management
performed in South Africa, the dominant originating cause or source of the income is considered South African. If a nonresident is employed by a non-South African employer and the
employee performs services both in South Africa and abroad, only the portion of compensation attributable to services performed in South Africa will be taxable in South Africa.
Individuals working abroad are exempt from South Africa employment tax under certain
conditions. Specifically, any compensation paid to an individual for services performed outside South Africa for any employer in a 12-month period is exempt from tax in South Africa if
the individual was outside the country:
*

for more than 183 full days during a 12-month period starting or ending
during a tax year; and

*

for a continuous period exceeding 60 full days during the 12-month period.

Residence rules
Two tests are applied to determine residency:
1.

Individuals who are ordinarily resident in South Africa are automatically considered
residents. The place of a person's ordinary residence is regarded as the country to
which he/she would normally return after traveling.

2.

Individuals not ordinarily resident in South Africa will be considered residents if he/
she is:
a.

physically present in South Africa for more than 91 days during the
tax year (March 1 to February 28) as well as during each of the 5
immediately preceding tax years, and

b.

physically present in South Africa for a period(s) exceeding 915 days
during those 5 preceding tax years.

Taxable employment income
Taxable employment income includes all salaries, wages, bonuses, allowances for business travel and entertainment, pensions, certain commissions and annuities, gratuities, lump
sum payments, and the value (the cost to the employer to supply them) of fringe benefits
received or accrued for services rendered or for holding an office.
Taxable fringe benefits include assets acquired at less than full value, the private use of
assets such as cars, educational assistance, debts paid or waived by employers, accommodation benefits, interest-free or low interest loans, meals and refreshment, employee share
or stock schemes, reimbursement for taxes, home leave, and cost of living allowances, and
free or cheap services. The value of fringe benefits is reduced by any amount paid by the
employee for the benefit. Employer-provided insurance is also considered a taxable fringe
benefit.
Foreign employees are often paid an incentive bonus to work in South Africa and/or to
return to their home country. A foreign incentive bonus paid to work in South Africa is taxable in South Africa. A foreign incentive bonus paid to return home is generally not taxable
in South Africa provided the employee is not a tax resident in South Africa, the payment is
made under bona fide circumstances, and the cost is borne by a non-South African employer.

C-56
Guide to Global Payroll Management - 2020

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