Money
Governing: Income Tax Act s10(1)(o)(i) and (ii); SARS Interpretation Notes 4 (Issue 5, 2018) and 34 (Issue 2, 2017). Builds on: L4.2.
CAUTION - General information only This lesson explains the rules as SARS publishes them. It is not tax advice. Your contract, residence and the yacht's operation all matter.
Step one: are you resident?
South Africa taxes residents on worldwide income and non-residents on SA-source income. For individuals, SARS applies two tests in order:
- Ordinary residence. Where is your real home, the place you return to? This is tested first.
- Physical presence. Only if you are not ordinarily resident. You are resident if physically present in SA for more than 91 days in the current tax year and in each of the five previous years, and more than 915 days in total over those five years.
Residence gained under the physical presence test ends if you are outside SA for a continuous period of at least 330 full days. Most young crew leaving home for their first season are still ordinarily resident, so the exemptions below are what matter.
The foreign employment income exemption: s10(1)(o)(ii)
This is the exemption most SA crew rely on. SARS states that, for years of assessment starting on or after 1 March 2020, only the first R1.25 million of qualifying foreign employment income is exempt. To qualify you must be outside SA for:
| Test | Requirement |
|---|---|
| Aggregate | More than 183 days in any 12-month period |
| Continuous | Including a period of more than 60 days in a row |
Income above R1.25 million is taxable in SA, with credit for foreign tax paid on it where applicable.
Worked example
A chief stew, SA resident, earns the equivalent of €5,500 a month for 12 months and spends 250 days outside SA, including 120 continuous days. At an illustrative R20 to the euro:
| Step | Rand |
|---|---|
| €5,500 x 12 | €66,000 |
| x R20 | R1,320,000 |
| Less exempt cap | R1,250,000 |
| Above the cap | R70,000 |
The day tests are met, so R1,250,000 is exempt and R70,000 falls into taxable income. Use the actual exchange rates SARS accepts, not this illustrative one.
The seafarers' exemption: s10(1)(o)(i)
A separate exemption covers the remuneration of an officer or crew member of a ship engaged in international transportation of passengers or goods for reward, or in offshore mineral exploration or production, who is outside SA for more than 183 full days. It has no rand cap. SARS Interpretation Note 34 illustrates it with a cruise liner; it does not mention yachts.
A privately used yacht is not obviously carrying passengers for reward. A charter yacht is arguable. One tax publisher declines to say whether a yacht is a qualifying "ship" and suggests a SARS binding private ruling for a particular vessel. Do not assume this exemption applies because a crewmate says so.
WARNING - Exempt is not invisible Exempt income is still declared on your return. Keep contracts, payslips, a day-count of every entry and exit, and passport copies.
Record-keeping that works
- A spreadsheet of every entry and exit date, updated monthly.
- Contracts and payslips showing employer, currency and amounts.
- The yacht's name, flag and whether it is private or chartered.
If your income exceeds the cap, you are considering ceasing SA residence, or you rely on s10(1)(o)(i), see a registered tax practitioner.