Page 249 - SAIT Compendium 2016 Volume2

IN 16 Income Tax acT: InTeRPReTaTIon noTes IN 16
(A) for purposes of this subparagraph, a person who is in transit through the Republic between two places outside the Republic and who does not formally enter the Republic through a port of entry as de ned in the Immigration Act, 2002 (Act 13 of 2002), shall be deemed to be outside the Republic; and
(B) the provisions of this subparagraph shall not apply in respect of any remuneration derived in respect of the holding of any of ce or from services rendered for or on behalf of any employer, as contemplated in section 9 (1) (e);’
3. Application of the law
3.1 The wording of section 10 (1) (o) (ii) is analysed and interpreted below:
Wording
Interpretation
any remuneration as de ned in paragraph 1 of the Fourth Schedule
‘remuneration’ is speci cally de ned in paragraph 1 of the Fourth Schedule to the Act.
received by or accrued to any person during any year of assessment in respect of services rendered
The term ‘received by or accrued to’ retains its meaning for income tax purposes. The remuneration that is covered by the exemption relates to remuneration received or accrued in the year of assessment in which the 12 month period (referred to below) commences or ends. If, for example, remuneration accrues in the 2005 year of assessment, but the remuneration is in respect of services rendered outside the Republic during a 12 month period commencing or ending in the 2002 year of assessment, the exemption will not apply. Payments in respect of the relinquishment, termination, loss, repudiation, cancellation or variation of any of ce or employment or of any appointment (or right to be appointed) to any of ce or employment are not covered by this exemption.
outside the Republic
it literally means services rendered outside the borders of the Republic of South Africa. It must be noted that the borders of the Republic include territorial waters, which is a belt of sea within 12 nautical miles (roughly 22,2 km) beyond the coastline of the country. Remuneration from services rendered beyond the coastline of the Republic will therefore only be exempt if the services are rendered outside the territorial waters.
for or on behalf of any employer
‘any employer’ means an employer which could either be an employer operating in South Africa, or a nonresident employer.
for a period or periods exceeding 183 full days in aggregate
‘full day’ means 24 hours (from 0h00 to 0h00). The 183 days do not have to be consecutive or continuous, but a total of 183 days must be exceeded.
during any 12 months period commencing or ending during that year of assessment
Each month in the 12 month period, is a ‘month’ as de ned in the Interpretation Act, 1957 i.e. a calendar month. The period must therefore commence on the rst day of a particular month, and end on the last day of the twelfth calendar month thereafter.
The 183 day period mentioned above must fall within a period of 12 consecutive calendar months. The 12 month period is not necessarily a year of assessment, a nancial year, or a calendar year; it is any 12 month period that commences or ends in the year of assessment in which the remuneration in question may be taxed or exempted. To identify the 12 month period it is necessary to identify the period during which the services were rendered to the employer and to t the 12 month period so as to include the period (or as much of it as can t) during which the services were rendered.
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