Section 10(1)(o)(i) ITA – does it apply if boat is docked but workers have not stepped into land?
30 January 2015
Posted by: Author: SAIT Technical
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 .
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
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.