Page 268 - SAIT Compendium 2016 Volume2

IN 17 (3) Income Tax acT: InTeRPReTaTIon noTes IN 18 (3)
Annexure E
Letter to paragraph (a) applicants
‘Dear
EMPLOYEES’ TAX: APPLICATION TO BE RECOGNISED AS AN INDEPENDENT CONTRACTOR
I refer to your application to be classi ed as an independent contractor in terms of exclusionary subparagraph (ii) of the de nition of the term ‘remuneration’ in the Fourth Schedule to the Income Tax Act, 1962.
The amounts paid or payable to you will only be exempt from the deduction of employees’ tax by virtue of the exclusionary paragraph (ii) of the de nition of the term ‘remuneration’ in the Fourth Schedule if—
1. You are an independent contractor under common law;
2. You are not required to perform services and duties mainly at the client’s premises, and
3. You are not subject to the control or supervision of any other person as to the manner in which your duties are performed or to be performed or to your hours of work.
The responsibility to deduct employees’ tax from remuneration paid or payable to an employee lies with the person paying the remuneration. It is, therefore, the employer/client who is responsible for determining whether or not the amounts paid or payable to you are subject to the deduction of employees’ tax.
The substance of the contractual relationship between you and your employer or client is crucial in the determination of your status as either an independent contractor or an employee. Your employer or client, being a party to the contract, is in the best position to determine whether or not you are an independent contractor and whether or not you are subject to control or supervision. It is for this reason that the responsibility to determine your status is on your employer or client.
You are, therefore, requested to approach your employer or client for a decision in this regard. Note, however, that your employer or client will be held liable for the employees’ tax should an investigation reveal that he/she/it made an incorrect decision. The employer will then have the right to recover the employees’ tax from you.
Sincerely’
Interpretation Note: No. 18 (Issue 3)
Robodes and Deduction for Foreign Taxes on Income Date: 26 June 2015
Act : Income Tax Act 58 of 1962
Sections : Sections 6quat, 6quin and 64N
Subject : Rebates and Deduction for Foreign Taxes on Income
CONTENTS
Preamble
1. Purpose
2. Background
3. The law
4. Section 6quat(1) – Rebate in respect of foreign taxes on income
4.1 4.2
4.3
4.4 4.5
Introduction to the foreign tax rebate method of relief under section 6quat(1) Foreign-source amounts included in taxable income [section 6quat(1)]
4.2.1 Meaning of the term ‘source’ for purposes of the section 6quat(1) rebate12
(a) Section 9(2) and 9(4)
(b) Common law as formulated by the South African courts
(c) Deeming source rules in tax treaties which override actual source rules
4.2.2 The source of income from services (a) General approach
(b) Dominant originating cause versus subsidiary causes
(c) Apportionment of service income between different locations
Requirements that must be met in order for foreign taxes to be regarded as qualifying foreign taxes [section 6quat(1A)]
4.4.1 The taxes must be payable on income
4.4.2 The taxes must be proved to be payable to any sphere of government of any country other than South
Africa in respect of an existing foreign tax liability
4.4.3 The taxes must be payable without any right of recovery by any person
4.4.4 The taxes must be payable on amounts included in a resident’s taxable income [section 6quat(1)] Person liable for the qualifying foreign tax liability [section 6quat(1A)]
4.4.1 General remarks
4.4.2 Application of section 6quat(1A)
Limitation on the amount of the rebate [section 6quat(1B)(a)]
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