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Will the section 10(1)(o)(ii) exemption apply if one was out of the country over two tax periods?

Tuesday, 17 February 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

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.  

This 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.



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