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Is the gross income received by a political party exempt in terms of section 10(1)(cE) of the ITA?

Friday, 06 February 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

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.



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