Q: A client is
working outside SA in Brazil and will be out of the country 183 days; however
it will fall in the 2014 and 2015 tax years. Will it qualify for the threshold
if it is not in one tax year?
A: The "days” requirements for the exemption in section 10(1)(o)(ii) of the Income
Tax Act for foreign employment income applies over any 12 month period and is
not limited to a specific tax year or calendar year. Each qualifying amount received should be
tested whether the exemption applies by reference to a historical and future
period in relation to that amount. For example if an amount is received on 1
October 2014 for foreign employment and the person has been outside the country
for 4 months and continuously for 60 days at such time the exemption at that
point referring to the historical period will not apply. However if such person
has been rendering those services outside the country for another 2 months by
January 2015, then it means that the October 2014 amount will qualify for the
exemption. Continuous foreign employment thereafter till April 15 will result
in March 2015 & April 2015 also being exemption even though part of the 12
month period falls within the previous tax year.
application is explained in detail in SARS’ IN 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.
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.