Page 345 - SAIT Compendium 2016 Volume2

IN 18 (3) Income Tax acT: InTeRPReTaTIon noTes IN 18 (3) Annexure C – The law
Section 6quat
6quat. Rebate or deduction in respect of foreign taxes on income.—(1) Subject to subsection (2), where the taxable income of any resident during a year of assessment includes—
(a) any income received by or accrued to such resident from any source outside the Republic; or
(b) any proportional amount contemplated in section 9D; or (c) . . . . . .
(d) ..... .
(e) any taxable capital gain contemplated in section 26A, from a source outside the Republic; or (f) any amount—
(i) contemplated in paragraph (a) or (b) which is received by or accrued to any other person and which is deemed to have been received by or accrued to such resident in terms of section 7;
(ii) of capital gain of any other person from a source outside the Republic and which is attributed to that resident in terms of paragraph 68, 69, 70, 71, 72 or 80 of the Eighth Schedule; or
(iii) contemplated in paragraphs (a), (b) or (e) which represents capital of a trust, and which is included in the income of that resident in terms of section 25B(2A) or taken into account in determining the aggregate capital gain or aggregate capital loss of that resident in terms of paragraph 80(3) of the Eighth Schedule,
there must be deducted from the normal tax payable in respect of that taxable income a rebate determined in accordance with this section.
(1A) For the purposes of subsection (1), the rebate shall be an amount equal to the sum of any taxes on income proved to be payable to any sphere of government of any country other than the Republic, without any right of recovery by any person (other than a right of recovery in terms of any entitlement to carry back losses arising during any year of assessment to any year of assessment prior to such year of assessment) by—
(a) such resident in respect of—
(i) any income contemplated in subsection (1)(a); or
(ii) . . . . . .
(iii) any amount of taxable capital gain as contemplated in subsection (1)(e); or
(b) any controlled foreign company, in respect of such proportional amount contemplated in subsection (1)(b), subject to section 72A(3); or
(c) ..... .
(d) ..... .
(e) ..... .
(f) any other person contemplated in subsection (1)(f)(i) or (ii) or any trust contemplated in subsection (1)(f)(iii), in
respect of the amount included in the taxable income of that resident as contemplated in subsection (1)(f),
which is so included in that resident’s taxable income: Provided that—
(i) where such resident is a member of any partnership or a bene ciary of any trust and such partnership or trust
is liable for tax as a separate entity in such other country, a proportional amount of any tax payable by such entity, which is attributable to the interest of such resident in such partnership or trust, shall be deemed to have been payable by such resident; and
(ii) for the purposes of this subsection, the amount so included in such resident’s taxable income must be determined without regard to section 10B(3).
(1B)Notwithstanding the provisions of subsection (1A)—
(a) the rebate or rebates of any tax proved to be payable as contemplated in subsection (1A), shall not in aggregate
exceed an amount which bears to the total normal tax payable the same ratio as the total taxable income attributable to the income, proportional amount, taxable capital gain or amount, as the case may be, which is included as contemplated in subsection (1), bears to the total taxable income: Provided that—
(i) in determining the amount of the taxable income that is attributable to that income, proportional amount, taxable capital gain or amount, any allowable deductions contemplated in sections 11(n), 18 and 18A must be deemed to have been incurred proportionately in respect of income derived from sources within and outside the Republic;
(iA) the taxes contemplated in subsection (1A)(b) that are attributable to any proportional amount which— (aa) . . . . . .
(bb) relates to any amount contemplated in section 9D(9A)(a) which is not excluded from the application of section 9D(2) in terms of that section or section 9D(9)(b),
shall in aggregate be limited to the amount of the normal tax which is attributable to those proportional
amounts;
(iB) the taxes contemplated in subsection (1A)(a)(iii) which are attributable to any taxable capital gain in respect of an asset which is not attributable to a permanent establishment of the resident outside the Republic, must in aggregate be limited to the amount of normal tax which is attributable to that taxable capital gain;
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