Page 378 - SAIT Compendium 2016 Volume2

IN 25 (3) Income Tax acT: InTeRPReTaTIon noTes IN 25 (3)
Result:
Y’s year of assessment for 2014 runs from 1 March 2013 to 21 January 2014. During that period Y was physically present in the Republic for 91 days in aggregate, determined as follows:
Period
2 June 2013 to 19 June 2013
10 November 2013 to 21 January 2014 Number of in aggregate
Number of days
18 73 91
Since Y does not comply with the rst requirement of the physical presence test, namely, that Y must be physically present in the Republic for a period or periods exceeding 91 days in aggregate during the year of assessment (1 March 2013 to 21 January 2014), Y is not regarded as a resident for income tax purposes in the 2014 year of assessment.
Example 2 – Death
Facts:
The facts are the same as in Example 1, except that Y died 6 hours later, at 02:00 on 22 January 2014.
Result:
Y’s year of assessment would have been for the period 1 March 2013 to 22 January 2014. Y would have been physically present in the Republic for a period or periods exceeding 91 days in aggregate during the period of assessment in question, that is:
Period
2 June 2013 to 19 June 2013
10 November 2013 to 22 January 2014 Number of days in aggregate
Number of days
18 74 92
Y would therefore have been regarded as a resident because Y would have been physically present in the Republic for –
• more than 91 days in total during the current year of assessment;
• more than 91 days in total in each of the ve years of assessment immediately preceding the current year of
assessment; and
• more than 915 days in total during those ve immediately preceding years of assessment.
4.3 The year of assessment in which a person is declared insolvent
The periods of assessment, when the estate of a natural person is sequestrated, is determined, in the case of –
(a) (b)
(c)
the insolvent person, for the period from 1March up to the day before the date of sequestration;
the insolvent person, (a new taxpayer for tax purposes*) for the period from the date of sequestration to the last day of February; and
the insolvent estate† (a new person for tax purposes‡), from the date of sequestration to the last day of February.§
The insolvent person will be assessed as a natural person for the period before insolvency, as well as for the period subsequent to insolvency, should any income accrue to that person in his or her personal capacity. The physical presence test must be applied each year of assessment. A year of assessment includes a period of assessment.¶ In the case of a sequestration where there are two periods of assessment, the physical presence test must be applied to each of these periods of assessment. The rst period (in (a) above) will be regarded as an immediately preceding year of assessment in relation to the second period ((b) above).
The rst period of assessment (referred to in (a) above) ends the day before the date of sequestration. In the case of – (i) a voluntary surrender of an estate, this is the date that the debtor’s application for acceptance of the surrender is
lodged with the High Court, if the court accepts the surrender; and
(ii) a ‘compulsory’ sequestration, being an application for sequestration of a debtor by a creditor, this is the date of the
provisional order of sequestration, if the provisional order of sequestration is made nal by the court.
The second period of assessment (referred to in (b) above) commences on the date of sequestration and ends on the last day of that year of assessment, which is the last day of February.
* The insolvent persons before and after sequestration are separate taxpayers but the same natural person. See also ITC 349 (1936) [9 SATC 66] at 69.
† De ned in section 1(1) to mean an ‘insolvent estate’ as de ned in section 2 of the Insolvency Act No. 24 of 1936. ‡ A ‘person’ as de ned in section 1(1) speci cally includes an insolvent estate.
§ The income tax treatment of insolvent estates is discussed in paragraph 3 of Interpretation Note No. 8 (Issue 3), and will not be discussed in this Note
¶ The de nition of a ‘year of assessment’ in section 1(1) refers to any year ‘or other period’.
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