Pensions drawn from overseas by residents in South Africa will be taxed once new legislation has been passed - though certain monies such as social pensions, paid by foreign states, may be exempt.
That's the word from Kosie Louw, the general manager of law administration in the SA Revenue Service (Sars).
Louw told Personal Finance this week that it was international practice that foreign pensions be taxed in the country of residence.
This means if you are ordinarily resident in South Africa and are paid a pension from another country, you will have to pay South African tax on the money. It is part of the changeover from a source-based to a residence-based system of taxation announced in this year's budget.
It implies that people resident in South Africa will be taxed on pensions from all sources, instead of only on pensions from a South African source.
But credit will be allowed for taxes paid in the country where the pension arises.
Foreign dividends became taxable from February this year, but other forms of income, including pensions from abroad, will generally only be taxable once new legislation has been passed.
Louw says in the 50 countries with which South Africa has signed double taxation agreements only government pensions and social pensions (old age pensions paid by the foreign state) are usually taxed in the country which pays the pensions.
"A pensioner who is living in South Africa and is using our infrastructure is expected to contribute to the South African fiscus.
"South Africans in retirement receiving pensions are being taxed and it would not be fair to exempt foreign pensioners on pensions received from abroad."