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Section 10(1)(o)(i) ITA – does it apply if boat is docked but workers have not stepped into land?

30 January 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: I have a client who works outside the country and each year qualifies for the 183 day rule (i.e. the section 10(1)(o) exemption . Once question:

He works on a ship and it happened during the 2015 tax year that the boat he works on had to be placed in dock in Cape Town for repairs, but only for 48 hours and they never stepped onto land. For this reason their passports were never stamped as they never left the boat. I know this probably also involves international water law again, but surely as they never stepped onto land he would still be considered as outside the country?

A: The remuneration of an officer or crew member of a ship engaged in the international transportation of goods and passengers becomes exempt in terms of section 10(1)(o)(i) and merely requires that the person be outside the Republic for 183 days during that year of assessment. It is therefore different to the s10(1)(o)(ii) requirements that require the person to be outside the Republic for 183 days in any 12 month period  and 60 days continuous. The "Republic” is defined in section 1 of the Income Tax Act as including SA territorial seas or such areas outside such seas which have been designated under international law.

In our view the fact that his passport was not stamped while in dry-dock does not mean that the person was not in "the Republic” as this is rather an evidentiary matter rather than a legal question. The question is whether the 48 hours results in the 183 days not being met and as the 2015 year of assessment is not completed yet it can still be met.

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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