Page 333 - SAIT Compendium 2016 Volume2

IN 18 (3) Income Tax acT: InTeRPReTaTIon noTes IN 18 (3)
Note:
(1) Under paragraph (ii) of the proviso to section 6quat(1A) the amount of foreign taxes attributable to the exempt foreign dividends of R18 750 under section 10B(3) potentially quali es for the foreign tax rebate under section 6quat(1).
(2) R2 025 of the qualifying withholding tax of R3 000 is deductible in full. The balance of R975 (R3 000 – R2 025) may be carried forward to the 2016 year of assessment to be used in determining the foreign tax rebate for that year.
(b) Calculation of the normal tax payable after taking into account rebates
Normal tax payable before rebates Less: Primary rebate
Less: Section 6quat rebate Less: PAYE
Amount payable
2. Tax calculation for the husband
2.1 Taxable income derived from foreign dividends (foreign sources)
Foreign dividends included in gross income
Less:
Section 10B(3) exemption for foreign dividends [R30 000 × 25 / 40]
Taxable income derived from foreign dividends
Note:
R
21 321
(12 726) 8 595 (2 025) (5 272)
1 298
R
30 000
(18 750)
11 250
The husband’s portion of the interest expense incurred in the production of foreign dividends is not deductible as a result of the prohibition under section 23(q).
2.2 Taxable income derived from South African sources
Local interest income [R62 000 / 2]
Less:
Section 10(1)(i) interest exemption
Taxable income derived from South African sources
2.3 Total taxable income derived from all sources
Taxable income derived from foreign sources Taxable income derived from South African source Total
2.4 Tax calculation for the husband on R18 450
(a) Calculation of normal tax payable before rebates Normal tax: (rates of tax – 2015 year of assessment)
R18 450 × 18%
(b) Calculation of the section 6quat limitation Amount of foreign taxes that qualify for the rebate
Limited to:
Calculation of the limitation:
Taxable income derived from all foreign sources _______________________________________ × Normal tax
Total taxable income derived from all sources
_R_1_1_2_5_0_ × R3 321 R18 450
= R2 025
Notes:
RR 31 000
(23 800)
7 200
7 200
R 11 250 7 200 18 450
R
3 321
R
3 000 2 025
(1) Under paragraph (ii) of the proviso to section 6quat(1A) the amount of foreign taxes attributable to the exempt foreign dividends of R18 750 under section 10B(3) potentially quali es for the foreign tax rebate under section 6quat(1).
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