Page 186 - SAIT Compendium 2016 Volume2

IN 4 (4) Income Tax acT: InTeRPReTaTIon noTes IN 4 (4)
The aggregate of days during the ve previous years of assessment amounts to 563 days (95 + 110 + 115 + 92 + 151). As this does not exceed the required 915 days, the third requirement has not been met. The days present during the current year of assessment (2014) are not taken into account for purposes of this part of the calculation.
All three requirements have not been met, therefore X is not resident in terms of the physical presence test for the 2014 year of assessment.
4.3 Date on which a natural person becomes a resident
The effect of the de nition of a ‘resident’ is that a natural person who is not ordinarily resident in the Republic can, in terms of the physical presence test, only become a resident for tax purposes in the year after a period of ve consecutive years of assessment during which the person is physically present in the Republic for a qualifying period or periods. A person will be a resident with effect from the rst day of the relevant year (that is, the sixth year) during which all the requirements of the physical presence test have been met. A person who has met the requirements of the physical presence test and is therefore resident will be subject to tax in the Republic on worldwide income* received or accrued from the rst day of that year of assessment.
Example 3 – Date on which a person becomes resident
Facts:
Y, who is not ordinarily resident in the Republic, was physically present in the Republic for the following number of days:
Year of assessment Number of days
2009 113
2010 147
2011 208
2012 202
2013 305
During the 2014 year of assessment, Y was physically present in South Africa from 15 April 2013 until 31 July 2013, that is, 108 days.
Result:
(i) Y was physically present in South Africa for more than 91 days in the current year of assessment, 2014 (108
days).
(ii) Y was physically present for more than 91 days in 2009 (113 days), 2010 (147 days), 2011 (208 days), 2012 (202
days) and 2013 (305 days).
(iii) Y was physically present for a period exceeding 915 days in aggregate during those preceding 5 years of
assessment (113 + 147 + 208 + 202 + 305 = 975 days).
Y is resident in South Africa for the 2014 year of assessment. Even though Y was only present in South Africa from 15 April 2013, Y will be resident in South Africa from the rst day of the year of assessment that he or she became resident, that is, 1 March 2013.
A person who ceases to be a resident (see 4.4 below) during a year of assessment, and then returns to the Republic during the following year of assessment and again meets the requirements of the physical presence test in that following year, will once again be resident as from the rst day of that following year of assessment in which the requirements for the physical presence test are met.
4.4 Date on which a natural person ceases to be a resident
A natural person, who is resident by virtue of the physical presence test, ceases to be a resident when that person is physically outside the Republic for a continuous period of at least 330 full days. Residence will cease from the day after the person left the Republic. The continuous period of 330 full days cannot be observed over a single year of assessment, because the person must have been physically present in South Africa for at least 92 days during that year in order to qualify as a resident during that year of assessment. The continuous period of at least 330 full days will therefore always extend over two years of assessment. A natural person, who is ordinarily resident, spending time outside the Republic and who intends on returning to the Republic after his or her wanderings, is regarded as a resident, regardless of the period of time spent outside the Republic. For more information in this regard, refer to Interpretation Note No. 3.
* The term ‘income’ is de ned in section 1(1) and means ‘gross income’ less amounts that are exempt from normal tax. In the case of any person who is a resident, ‘gross income’ includes amounts received or accrued from sources both within and outside the Republic, in accordance with paragraph (i) of the de nition in section 1(1).
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