Page 188 - SAIT Compendium 2016 Volume2

IN 4 (4) Income Tax acT: InTeRPReTaTIon noTes IN 4 (4)
A treaty does not prescribe what is relevant to be considered a resident under a country’s domestic laws, only which country – for treaty purposes – has the better claim to residence of a particular person under international law.
A person who is exclusively deemed to be a resident of a country other than the Republic under a tax treaty (as a result of the tax treaty tie-breaker rules or otherwise), is not a resident for purposes of the Act,* regardless of any other rules in the de nition of a ‘resident’ in section 1(1). This exclusion is applicable with effect from 26 February 2003.†
5. Conclusion
A resident of the Republic is subject to tax on worldwide income in accordance with paragraph (i) of the de nition of the term ‘gross income’ in section 1(1). An individual can either be ordinarily resident, or can be deemed to be a resident by application of a physical presence test. The physical presence test is applied annually. An individual who meets the requirements of the physical presence test is a resident from the rst day of the year of assessment during which the requirements of the test are met. An individual ceases to be a resident in terms of the physical presence test if that individual is outside the Republic for at least 330 continuous full days. Any individual who is deemed to be a resident by virtue of the physical presence test is subject to tax on worldwide income. The individual will therefore be required to declare all receipts and accruals in this regard.
Attached as Annexure B is diagram setting out the process that must be followed to determine whether a person is a resident under the physical presence test.
* As provided in paragraph (a) of the exclusions from the de nition of a ‘resident’ in section 1(1).
† As amended by section 33(1) of the Exchange Control Amnesty and Amendment of Taxation Laws Act, 2003.
180 saIT comPendIum oF Tax LegIsLaTIon VoLume 2