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In the tax court of South Africa: Case 12158

Tuesday, 08 May 2007   (0 Comments)
Posted by: TaxFind™
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In the case between Appellant and the commissioner for the South African Revenue Service.Heard on 22 March 2007 in Bloemfontein.

Mini Summary

In terms of section 83(1) of the Income Tax Act 58 of 1962, the appellant appealed against the assessments of the respondent for two tax years.

The appellant was a lawyer who practised in South Africa and Lesotho.He was a partner in a firm in Lesotho, and the respondent had included profits earned in that partnership in the two relevant tax years.The appellant objected as those profits were taxed in Lesotho.He contended that his share of the profits of the partnership was taxable only in Lesotho and exempted from tax in South Africa.

Held that the matter was governed by the "Agreement between the Government of the Republic of South Africa and the Government of the Kingdom of Lesotho for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income".As the appellant was a resident of South Africa, his involvement in the partnership was an enterprise of South Africa that carried on business in another contracting State (Lesotho) through a permanent establishment therein.Thus, in terms of article 7 of the Agreement, the profits of the enterprise so carried on by the appellant might be taxed in Lesotho, but taxes so paid should be deducted from taxes due by the appellant in South Africa as was done by the Commissioner.The appeal was therefore dismissed.

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