SARS Guide for Expats: Section 10(1)(o)(ii) and the 183-Day Rule Explained
The 183-day rule under Section 10(1)(o)(ii) allows South African tax residents to exempt foreign employment income if they spend at least 183 days outside South Africa within a 12-month period, including a continuous period of at least 60 days. Both conditions must be met to qualify for the exemption.
What is Section 10(1)(o)(ii)?
Section 10(1)(o)(ii) of the Income Tax Act provides relief to South African tax residents who earn employment income outside the country. It allows qualifying individuals to exempt up to R1.25 million of foreign employment income from South African tax.
Important:
This is not automatic, it must be:
- Income must be correctly calculated. This includes using correct exchange rates and accounting for all fringe benefits.
- The return must be accurately completed, reflecting both the income and the deduction related to foreign-sourced employment earnings.
An audit file must be created and maintained to thoroughly substantiate the claimed exemption. SARS has a habit of auditing these claims.
The 183-Day Rule Explained
To qualify, you must meet the following:
Requirement:
You must be outside South Africa for at least 183 days in any 12-month period
Key Clarifications:
- Days do NOT need to be consecutive
- The 12-month period can span across two tax years
- The table of days in and out of the country during the identified 12-month period is critical.
The 60 Continuous Days Rule
This is where most taxpayers fail.
Requirement:
Within the same 12-month period, you must be outside South Africa for at least 60 consecutive days
Important:
- Break the continuity → lose the exemption
- Even 1 day back in SA resets the count.
The requirement is a full day out of the country. Thus, the date of departure or arrival may not be counted as a full day.
Rule Comparison Table
Rule | Requirement | Common Misinterpretation | Risk |
183-Day Rule | 183 total days | Counting days in a tax year. | Disqualification |
60-Day Rule | 60 consecutive days | Ignored or misunderstood | Full exemption lost |
How SARS Calculates Days
SARS applies a strict physical presence approach.
Rules:
- Any part of a day will not count as a full day
- Only days within the identified 12-month period may be counted.
- Meeting the 60 continuous days in the previous 12-month period does not count in any new or subsequent 12-month period.
What Counts as Being “OUTSIDE SOUTH AFRICA”
Qualifying days include:
- Normal working days
- Weekends days
- Leave taken abroad while maintaining the employer-employee relationship.
- Layovers within South Africa permitted provided no entry is made through a South African port of entry.
Non-qualifying:
- Remote work while in SA
- Vacation in a foreign country while not under an employment contract. (Vacation may be counted while a taxpayer remains employed with any employer)
Calculation Example (ZAR-based)
Scenario:
- Foreign sourced employment income: R1,500,000
- Days outside SA: 190
- Continuous days: 65
Result:
Component | Amount |
Total income | R1,500,000 |
Exempt portion | R1,250,000 |
Taxable portion | R250,000 |
Key Pitfalls That Trigger Tax Failures
Miscounting Days
Most common issue. Counting the date of departure or arrival as a full day out of South Africa.
Breaking the 60-Day Period
Even short trips to SA invalidate it.
Incorrect Travel Records
Passing through an electronic gate and not getting your passport stamped.
Assuming Employer Compliance Covers You
It does not.
SARS Audit Triggers
Trigger | Risk Level |
High income (>R1m) | High |
Frequent travel | High |
Missing records | Very High |
Prior disallowances | Very High |
Advanced Insight: 12-Month Period Flexibility
You are NOT restricted to the tax year.
Planning Opportunity:
Choose a 12-month cycle that:
- Distributes foreign earnings over two tax years. For instance, it is preferable to take on a project that offers R2.5M over the course of a year, running from August 1, 2026, to September 2027, to allow the exemption to be utilized across both the 2027 and 2028 tax years.
- Accommodates your plan to leave the country, remain outside South Africa for the necessary 60 days, and return at an optimal time, such as in December.
Strategic Tax Planning
Strategy 1: Align Work Rotations
Ensure Long uninterrupted offshore periods
Strategy 2: Avoid Short SA Visits
Short trips break compliance.
Strategy 3: Plan start and end period
If the exemption aligns with the tax year and is limited to a single year, income cannot be distributed across multiple tax years. For instance, earning R2,500,000 between March and February results in taxable foreign income of R1,250,000. If the start date were October 2026, an income of R1,041,666 during the 2027 tax year would qualify for deduction, followed by R1,250,000 in the following tax year. An increase in the exemption amount could allow even more foreign sourced income to qualify as exempt.
When The Rule Does Not Apply
You do NOT qualify if:
- You work remotely from SA
- You fail the 60-day rule
- You earn non-employment income such as independent contractor income
What Happens if you Fail the Rule?
Outcome
- Full income becomes taxable in SA
Example 1
A person leaves on December 17, 2025, to begin a 10-month project in Dubai starting January 1, 2026, with a monthly salary of 10,000 UAE Dirhams. Dubai’s tax authorities do not levy any taxes on income. The south African tax resident stays in Dubai throughout the entire duration and returns on November 1, 2026, after the project’s completion at the end of October. On December 15, 2026, the individual began working for a South African company and earned R250,000 by February 2027.
Tax Outcome
The 12-month period begins on 1 January 2026, as the taxpayer’s employment starts on that date (rather than the departure date).
The taxpayer satisfies the condition of being outside South Africa for over 183 days, including more than 60 consecutive days, during this 12-month timeframe. (Since taxpayer was present in the other country for the full period)
As the 12-month period spans across tax year 2026 and tax year 2027, the exemption will extend over two tax periods: the 2026 tax year and the 2027 tax year.
The initial exemption period will cover January and February 2026, while the remaining exemption (from March 2026 to October 2026) will be granted during the 2027 tax year if correctly submitted to SARS.
The remaining income, derived from South African sources between 15 November and 28 February 2027, will be taxed as usual.
| Income Period | Amount | Currency | Exchange Rate | Total Income | Exempt |
| Jan and Feb 2026 | 20 000 | UAE | 4.5 | R90 000 | R90 000 |
| March 2026 to Oct 2026 | 80 000 | UAE | 4.5 | R360 000 | R360 000 |
| 15 December 2026 to 28 February 2027 | R250 000 | ZAR | 1 | R250 000 | R0 |
In the 2027 tax year, the taxpayer’s income sourced from South Africa will be subject to taxation. PAYE must be withheld from income sourced in South Africa, and if the taxpayer has additional deductions, these can be claimed against the R250,000 taxable income in 2027.
A South African citizen, employed overseas, left South Africa in January 2026 to begin work on February 1, 2026, but returned to South Africa after a month due to homesickness. To simplify, assume this South African resident was unemployed from March 2025 to January 2026, with the sole income being $10,000 earned in February 2026, along with $500 in taxes paid in the foreign jurisdiction. Consider the exchange rate as $1 to R17.5.
Outcome
| Income Period | Amount | Currency | Exchange Rate | Total Income | Exempt |
| March 2025 to Jan 2026 | – | USD | 17.5 | R0 | – |
| February 2026 | 10 000 | USD | 17.50 | 175 000 | – |
Taxpayer did not meet the required days for the income to rank as exempt. The full amount of R175 000 is taxable. In addition, if the taxpayer is able to prove that the 500USD taxes paid to the IRS is a final tax charge, then he may claim 500USD * 17.50 = R8750 as a foreign tax credit under section 6quat.
| Item | Amount |
|---|---|
| Foreign gross income | R175 000 |
| Deduction | R0 |
| Taxable income | R175 000 |
| Tax on amount | R31 500 (R175 000 × 18% per tax tables) |
| Rebate | -R17 235 |
| Section 6quat | -R8 750 |
| Due to SARS | R5 515 |
If no provisional taxes have been paid on this amount, SARS may add an underpayment penalty and interest. Please visit https://fmjfinancial.co.za/provisional-tax/ for more information around provisional taxes.
Example 2
A taxpayer lands an employment contract in Dubai and earns a monthly amount of 46 500UAE. He starts on 1 August 2026 and completes the project during July 2027. Assume the taxpayer had no other income during either tax year 2027 or tax year 2028.
| Income Period | Amount | Currency | Exchange Rate | Total Income | Exempt |
| March 2026 to July 2026 | – | – | 4.50 | R0 | – |
| August 2026 to February 2027 | 46 500 * 7 = 325 500 | UAE | 4.50 | R1 464 750 | R1250 000 |
| March 2027 to July 2027 | 46 500 * 5 = 232 500 | UAE | 4.50 | R1 046 250 | R1250 000 |
Result
In the 2027 tax year, the taxpayer’s income exceeded the R1,250,000 exemption. Consequently, his taxable income would amount to R214,750 (R1,464,750 minus R1,250,000). If no additional deductions apply, the taxpayer must pay income taxes on the sum of R214,750.
In the 2027 tax year, the foreign income fell within the R1,250,000 threshold, resulting in no taxable income.
Step-By-Step Compliance Process
- Track all exit and entries in and out of South Africa.
- Confirm 183-day compliance
- Confirm 60-day continuous days compliance
- Gather all documentation per checklist
- Declare income correctly, use the correct exchange rates, etc.
Claim for the exemption when filing the SARS return
Documentation Requirements
You must retain:
- Passport copies
- A table of days in and out of the country.
- Employment contract
- Payslips
- A table calculating gross income with reference to payslips
- Obtain proof that PAYE was a final tax charge in the foreign country
Decision Framework
Situation | Action |
Simple employment | Use specialist |
Complex travel | Use specialist |
Income >R1.25m | Specialist required |
Exemption disallowed. | Specialist required |
Common Mistakes
Mistake | Impact | Fix |
Miscounting days | Disqualification | Plan trips to meet the days requirement. |
Ignoring 60-day rule | Full tax | Plan travel. Invite spouse to foreign country. |
Poor records | SARS disallows exemption | Dispute assessment within the dispute rules and framework. |
Frequently Asked Questions
Do weekends count?
Yes, if outside SA and remained employed with an employer.
Can I qualify with 182 days?
No. SARS is strict in their application of more than 183 days. SARS will however, allow exactly 183 days and 1 minute.
Does SARS verify travel?
Yes.
Can I claim retrospectively?
Corrections are possible under specific circumstances. If the original return had no audit, then that return may be re-filed within a period of 3 years. Or, if the return was under review, then a dispute may be lodged within 80 working days. If SARS raised an estimated assessment, a taxpayer has 40 working days to file a correction.
Does remote work qualify?
No.
Can I combine DTA and exemption?
Only where a taxpayer as a resident for a part of the year and a non-resident for
