Q: I have a client that receives interest income and receipts of a capital
nature. I need confirmation in terms of the interest and receipts of a capital
nature received by a political party and whether this is definitely seen as tax
exemption in terms of section 10(1)(cE) in the hands of the party.
A: Section 10(1)(cE) of
the Income Tax Act (ITA) exempts receipts and accruals if the political party
is registered in terms of the Electoral Commission Act. The exemption therefore
attaches to the entity (i.e. it is exempt if received/accrued by a particular
entity). Unlike section 10(1)(cN) of the ITA, this section does not have
exclusions such as trading rules where certain income not received from its
main activities are taxable, therefore it does not matter if the gross income
is earned from other activities. In our view the legal conducting of such
activities would, if any, be regulated by the Electoral Commission Act.
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.
Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.