Will Sars tax me on my Belgian pension?

It depends on whether the scholarship is provided by the employer.

By Devon Card

November 22, 2022 00:31

I’m a South African studying in Belgium and I’m on a full scholarship that pays me around €3,000 [around R53 245] In a tax-free month in Belgium (tax-free).

The money I receive from my pension is to pay for my living expenses in Belgium. However, some is transferred to my bank account in South Africa so that I can support my family and meet my SA debt obligations. Before receiving the Belgian scholarship, I worked full time in SA.

As I am still a SA tax resident, will the South African Revenue Service (Sars) ever ask me to pay tax on the money I receive from my pension? I plan to come back to SA after I finish my studies, so I don’t think I need to suspend my SA residency.

Dear Reader,

Thank you for your question, which is relevant now that study abroad is becoming more frequent and accessible.

Before discussing whether funds received from a pension or superannuation are taxable, it is important to understand Sars’ definition of income and how it relates to your particular case.

According to Sars, income includes premiums earned by a person (individual or legal entity) for goods and/or services provided or, in the case of pensioners, income from various annuity sources. Once these funds are received, they are treated as taxable income and a portion of this income will be taxed according to a sliding scale of income tax.

However, there are a number of tax benefits available to taxpayers, for example, Section 10 (1) (q) of the Income Tax Act directly applies to scholarships and bursaries.

According to the act, A honest a scholarship or scholarship awarded to an individual to facilitate their studies at a particular educational institution, university or research institution is tax-free.

That is, if a pension or stipend is provided by the employer or any related association in relation to the employee or the employee’s relative, these funds may be taxable under the following circumstances:

  • The employee is unable to complete their studies and/or research and no arrangements have been made to reimburse the employer; or
  • A stipend or stipend paid to a relative of an employee exceeds R600 000 per annum. In this regard, no tax if the scholarship or bursary is limited to R20 000 per month for R to 12 (NQF levels 1 to 4) or R60 000 per year for NGF levels 5 to 10 will not be paid.

Thus, even though your worldwide income has to be included for tax purposes in terms of the Income Tax Act, if your pension or pension meets the conditions of Section 10(1)(q) as described above, it will be exempt from tax. tax purposes. We recommend that you speak to a professional tax advisor or accountant for the advice you require.

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