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income tax
Income derived from the letting of rental properties is subject to income tax in the case of South African resident taxpayers.  In March of 2021, SARS sent a stern warning to South African taxpayers that income derived from the rental of properties through platforms such as Airbnb would equally be required to declare such income in the submission of their income tax return.

Fast forward one year and the international collaboration agreement between SARS and the Irish Tax Authority (ITA) was revealed when SARS issued the ITA with an exchange of information request pertaining to South African resident Airbnb hosts of properties located in Ireland.  It was suspected that these individuals had failed to declare to SARS their earnings from Airbnb, on their Irish-based property rentals.  The ITA did not hesitate to respond to this request and duly disclosed the information sought by SARS. 

Tax implications of non-disclosure

South African resident taxpayers found to be guilty of not declaring income from Airbnb (or any other rental income, for that matter) are liable to penalties of up to 200% of the capital tax liability.  SARS may further pursue administrative or criminal actions against errant individuals. 

To avoid penalties and other severe sanctions, errant taxpayers are advised to declare all previously undeclared rental income under SARS’ ongoing Voluntary Disclosure Programme (VDP), which is regulated by the Tax Administration Act. It is a condition that the disclosure must be voluntary, i.e. not in response to non-disclosure identified by SARS through an audit process, for example. 

Where a taxpayer is granted relief under the VDP, penalties are waived, and SARS will not pursue criminal steps against the taxpayer.  SARS will require payment of the outstanding income tax liability as well as interest thereon, to extinguish the debt to SARS.

Here’s what you need to know….
  1. South African resident taxpayers are taxed on their worldwide income.
  2. If you are earning rental income from properties abroad, do not assume that the taxation thereof (if applicable) in the foreign jurisdiction absolves you of declaration of the income in South Africa.
  3. Ensure that you declare all income in your income tax return, even if earned in a foreign jurisdiction. Where Double Taxation Agreements (DTA) exist between SARS and the respective foreign jurisdiction(s), the potential double taxation of the income derived, will be addressed under the terms of the DTA.
  4. If you have undeclared income from tax periods that are now closed, regularise your affairs under the VDP.
Our income tax experts are well versed in dealing with issues arising like the above.  If you require support in regularising your income tax affairs, get in touch with our taxation professionals.