Foreign income

[duncan drennan]

I had a discussion today about doing work for foreign clients and how that income must be handled.

From the conversation there seem to be three cases (could anyone confirm?)

1. If the work is done by a South African company then the money must enter the country within 30 days.
2. If the work is done by a South African individual within South Africa (i.e. in an office here) then the money must enter the country within 30 days.
3. If the work is done by a South African individual outside of South Africa (e.g. at the client's offices) then the money may remain outside of the country.

Are these the only options? Is there any particular reason that SARS places this requirement on foreign income? If someone wanted to keep reserves offshore, what is the best way to do that?

[Dave A]

Is it only 30 days to repatriate the funds? I thought it was longer - like 3 or 6 months. I'll have to check where I got that notion from, though - so don't take that as gospel.

If you are looking at maintaining funds based in a foreign currency, that can be done with a foreign currency account held at a local bank.

As for holding funds offshore, a trust established offshore comes to mind. In the big money stakes, holding property overseas is surely allowable (but obviously that wouldn't be liquid) - so surely shares are OK too.

It'll be interesting to hear anything concrete.

[duncan drennan]

If you are looking at maintaining funds based in a foreign currency, that can be done with a foreign currency account held at a local bank.

When I was employed the company I worked for had one of these. I seem to remember the time for repatriating the funds being quite short (like 30 days), but it does seem quite a tight push. Will need to do some scratching.

[Dave A]

My memory on this is starting to yield something. I think it is foreign cash notes (normally from travelling) that has a very tight time limit. Trading income has a longer time allowance.

[duncan drennan]

My memory on this is starting to yield something. I think it is foreign cash notes (normally from travelling) that has a very tight time limit. Trading income has a longer time allowance.

Do you know what references I could look at? Not too sure where to find this type of info.

[Dave A]

The forex division of my bank has proved useful in the past.

[Karenwhe]

If you plan to make a lot of money (lets say in excess of 500 sterling a year). Then you might as well invest 16K (or around there), to open an offshore trust to which you are trustee and you do not have to repatriate anything. period.

You get a bank card type of thing from the bank that the trust has the account with, you draw the money. It will cost you 500 sterling a year management you can bank with Lloyds you get someone [i can refer you to that someone] that can create the trust for you in a cheap tax free zone (in other words not the isle on man for sure, that is considered expensive and you will need to pay some 2,000 sterling for management alone).

You consider your management fees [500 sterling] as a contribution to building your wealth and securing funds outside SA tax free (and of course in foreign currency). Problem solved.

Hope this helps.

[duncan drennan]

If you plan to make a lot of money (lets say in excess of 500 sterling a year). Then you might as well invest 16K (or around there), to open an offshore trust to which you are trustee and you do not have to repatriate anything. period.

Thanks Karen. Once I had confirmed the time for repatriation of funds, that was the next point I was going to raise.

I was wondering about the set up and management costs of this. 500 sterling doesn't seem like too big a fee for the management of this type of thing. What are the set up costs of an offshore trust in a tax haven?

[Karenwhe]

Depends with whom you do this with. But the guy I know is about 16K (in rands) last I heard, which was last year. It is not that much taking into consideration that it is a once off thingy and the benefits to it are pretty much endless.

Most people don't do it because they just can't get their heads around the concepts and think it is difficult and complex. Which is really not.

[Dave A]

That sounds Politically Correct.

[Karenwhe]

Ok, I am slow.... what sounds politically correct? And how did politics get involved in this anyway

[Dave A]

Cryptic clue 2 - Be bold!

[duncan drennan]

Dave is referring to a certain Mr Peter Carruthers who advocates that people set up this type of trust thing.

[Karenwhe]

Sorry guys, didn't think about him. You got me thinking with that PC thing. PC for me is a PC the one you type from.

[Dave A]

Duncan - you could always take a little detour in your travels later this year to set this up.