SARS warns South Africans working in these specific jobs

South Africans working offshore, including yacht crew and cruise ship staff, remain subject to complex tax rules based on residency, exemptions, and treaties, and must carefully comply to avoid penalties and unexpected tax liabilities.

Hobbs Sinclair Advisory tax director Danielle Luwes explained that South Africans working offshore face unique tax obligations.

This ranges from South Africans working as yacht crew and cruise ship staff to commercial divers, riggers, and other seafarers employed under international crew visas.

Although specialised visas allow them to work globally without being tied to any one country’s immigration system, these documents do not automatically exempt them from South African tax.

“The first question is never where you’re paid – it’s where you’re resident for tax purposes, and whether you qualify for one of the specific exemptions,” Luwes said.

Only once residency and exemption status are clear do factors such as the location of bank accounts, the currency the worker is paid in, or their employer’s domicile become relevant.

South Africa taxes its residents on worldwide income, while non-residents are taxed only on South African-sourced income.

To determine whether someone is a resident, the law applies tests such as the “ordinarily resident” test and the physical presence test. In some cases, a double-tax treaty may even pull South Africans into sole residence elsewhere.

After a taxpayer establishes where they are resident, they can determine whether they are subject to full South African tax or only on income sourced within the country.

For crew on vessels engaged in international transport, South African tax law offers the seafarer exemption.

For those who are employees, their pay may be fully exempt from tax, provided they spend more than 183 full days outside the country, and their duties are performed “on board for the passage” of the ship.

However, Luwes warned that for many yacht crew, divers or riggers, the job does not neatly fit this model.

Foreign-employment exemption

Many yacht crew, divers, or riggers must utilise the foreign-employment exemption, which exempts the first R1.25 million of foreign remuneration from tax for South African residents.

To qualify, they must meet both the 183-day and 60-day continuous-absence tests. For the 183-full‑day requirement, everything depends on the date they leave South Africa.

The count is always worked backwards from 28 February, the end of the tax year. To reach 183 full days outside the country, you must depart on or before 29 August.

Leaving later gives the person fewer than 183 full days and means the person will not qualify for the exemption.

The rule is strict – only full days spent outside South Africa, counted midnight‑to‑midnight, can be included. “We’ve seen many yacht crew assume they qualify under the seafarer exemption,” Luwes said.

However, they often discover that their contract or duties exclude them because they don’t perform the ‘passage’ duties, and they must then rely on the capped foreign-employment exemption instead.

Those who are working on a ship operated by a company resident in the United Kingdom, for example, may see the relevant South Africa–UK tax treaty assign taxing rights differently.

For instance, the treaty provides that wages of a crew member aboard a ship in international traffic may be taxed in the state where the enterprise is resident.

Factors such as where someone is employed, the ship’s flag, the nature of their duties and the employer’s domicile all feed into this formula.

The result is that they may owe tax elsewhere and need to claim a credit in South Africa, or vice versa.

Tax risks for South Africans working overseas

Where a salary is paid – whether into a UK bank, a European account, Caribbean payroll, or a South African bank – does not, in itself, change where someone is taxed.

However, even if someone is a tax resident in South Africa and their foreign pay is exempt or reduced, they must still comply with South Africa’s exchange control rules.

Foreign earnings repatriated, accounts held offshore, and transfers into or out of South Africa may require approval by an authorised dealer like a bank’s foreign-exchange desk.

“Where you deposit your salary is less important than how you report and structure it,” Luwes said. “Ignoring South Africa’s exchange-control and tax-disclosure obligations is a sure way to invite audits.”

In practice, Luwes explained that the tax rules tend to play out as follows –

• Crew on cruise ships or international cargo ships often qualify under the full seafarer exemption if their duties, ship type, and time-away tests are satisfied.
• Yacht crew (“yachties”) and offshore divers or riggers often do not meet the passage-duty test, so they default to the foreign-employment exemption with its cap.
• Contractors or independent consultants normally fall outside both exemptions and must analyse source, treaty, and permanent establishment issues in greater depth.

To remain compliant, Luwes advised that taxpayers need to keep detailed records of the following:

• Days outside South Africa (full 24-hour blocks)
• Contract description (employee versus contractor)
• The nature of duties
• The country of the employer
• The ship’s flag and other relevant facts

The final step is filing a tax return. Even when much of someone’s income is exempt, they may still be required to register with SARS, submit a return, claim the correct exemption, and claim any foreign tax credits.

Luwes warned that failure to do so may trigger estimated assessments, penalties, or additional taxes.

“When you’re working offshore, you’re playing by two sets of rules simultaneously – your employment contract and the tax regime of your home country. Overlooking either can lead to unintended tax consequences,” she said.