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IT12 Foreign Income

FOREIGN INCOME IN TERMS OF S10(1)(o(ii) WHERE THE EXEMPTION IS TO BE CLAIMED
From the income tab on the ITR12 enter the necessary source codes and the amounts involved as per the screen below.
         
 
If the taxpayer has foreign income that does not appear on an IRP5 this needs to be captured under source code 4259 in the source code area. Codes 4260 and 4111 relate to tax credits.
 
The next step is to select section 10 deductions from the deductions tab and complete the bottom left hand block in its entirety as indicated in the screen below. Please note that you must enter the amount indicated by code 4041 as we do not calculate it. If it is less you should enter it as currently this is a manual calculation. The amount will be limited to a maximum of R1,250,000.
 
 
After completing the block Calculate the tax return on the tax calculation page, select the income tab and the following screen will show.
 
 
From the tax calculations screen click on the tax credits and you will see that the credits as entered into the system will display.
 
 
You should store your documents under the documents tab in case SARS calls for them.
 
In order to claim the full exemption of R1,250 million the taxpayer has to be out of the country for more than 183 days as well as being out of the country for a continuous period of 60 days. Owing to the situation with Covid SARS has granted some temporary relief as taxpayers could not work for some periods during the pandemic So in this case the taxpayer has to be out of the country for more than 117 days. – See below.
 
 
Temporary relief in respect of the 2020 and 2021 years of assessment  
The Taxation Laws Amendment Act, 2020 relaxed the days requirement to qualify for the foreign employment income exemption. In terms of the current provisions, individuals who spent more than 183 days in aggregate and a continuous 60 days working outside South Africa would have qualified for exemption in respect of their remuneration. However, due to travel bans during the COVID 19 pandemic, these individuals could not travel in order to work outside South Africa, and therefore could not qualify for the above-mentioned 183-day requirement.  
The 183-days in aggregate requirement is reduced to an aggregate of 117 days. An individual is still required to comply with more than 60 consecutive days requirement in the same period that the 117 days have been met.  
The amendment does not provide permanent relief and only applies to any 12-month period for the years of assessment ending from 29 February 2020 to 28 February 2021. This temporary relief is therefore only applicable to the 2020 and 2021 years of assessment.
 
 
 
 
30 November 2021