Q: An individual
is employed by a South African company and as part of his employment contract
is required to render services some of which some are rendered in South Africa
and some outside of the borders of the Republic. If the taxpayer spends more
than 183 days outside of South Africa of which at least 60 are consecutive can
I apply the section 10(1)(o) exemption and if so would it only pertain the
income earned outside of the Republic or all employment income from the said employer?
A: We agree with
you that based on the number of days absence the taxpayer meets the section
10(1)(o)(ii) requirements and the income would be exempt from normal tax in the
RSA. You are also correct in your interpretation regarding the resident status
of the employer.
The exemption applies in respect of "services rendered
outside” the RSA. In terms of proviso C
and for the purposes of section 10(1)(o)(ii), where remuneration is received by
or accrues to any employee during any year of assessment in respect of services
rendered by that employee in more than
one year of assessment, the remuneration is deemed to have accrued evenly over
the period that those services were rendered.
We submit that the foreign source part can also be determined on a basis
of time spend (apportioned).
SARS deals with section 10(1)(o)(ii) in its Interpretation
Note No. 16.
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.
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