Page 411 - SAIT Compendium 2016 Volume2

IN 34 Income Tax acT: InTeRPReTaTIon noTes IN 34
1. Purpose
The purpose of this interpretation note is to provide guidance on the circumstances under which the remuneration derived by a person as an of cer or crew member of a ship will be exempt from tax in terms of the provisions of section 10 (1) (o) (i) of the Act.
2. Background
Section 10 (1) (o) (i) was inserted into the Act in 1993, to bring the provisions of the Act in line with that of other major maritime nations, which exempt their seamen from income tax if they are absent from their home countries for a period exceeding 183 days in aggregate during the year of assessment.
3. The law
2.1 Section 10 (1) (o) (i) of the Act
‘10. Exemptions – (1) There shall be exempt from the tax—
(o) any remuneration as de ned in paragraph 1 of the Fourth Schedule—
(i) derived by any person as an of cer or crew member of a ship engaged—
(aa) in the international transportation for reward of passengers or goods; or
(bb) in the prospecting (including surveys and other explanatory work) for, or the mining of, any minerals
(including natural oils) from the seabed outside the continental shelf of the Republic as contemplated in section 8 of the Maritime Zones Act, 1994 (Act 15 of 1994), where such of cer or crew member is employed on board such ship solely for the purposes of the ‘passage’ of such ship, as de ned in the Marine Traf c Act, 1981 (Act 2 of 1981),
if such person was outside the Republic for a period or periods exceeding 183 full days in aggregate during the year of assessment;’
2.2 De nition of ‘remuneration’ in Paragraph 1 of the Fourth Schedule
‘‘remuneration’ means any amount of income which is paid or is payable to any person by way of any salary, leave pay, wage, overtime pay, bonus, gratuity, commission, fee, emoument penson, superannuation allowance, retiring allowance or stipend, whether in cash or otherwise and whether or not in respect of services rendered, includng—
(a) any amount referred to in paragraph (a), (c), (cA), (d), (e), (eA) or (f) of the de nition of ‘gross income’ in section
one of this Act;
(b) any amount required to be included in such person’s gross income under paragraph (i) of that de nition;
(bA) any allowance or advance, which must be included in the taxable income of that person in terms of section 8 (1)
(a)(i) other than—
(i) an allowance in respect of which paragraph (c) applies; or
(ii) an allowance or advance paid or granted to that person in respect of accommodation, meals or other incidental
costs while that person is obliged to spend at least one night away from his or her usual place of residence in
the Republic;
(c) 50 per cent of—
(i) the amount of any allowance or advance in respect of transport expenses referred to in section 8 (1) (b), other than any such allowance or advance contemplated in section 8 (1) (b) (iii) which is based on the exceed the appropriate rate per kilometre xed by the Minister of Finance under the said section 8 (1) (b) (iii); and
(ii) the amount of any allowance referred to in section 8 (1) (d) granted to the holder of a public of ce contemplated in section 8 (1) (e);
(d) ...
(e) ...
but not including—
(i) ...
(ii) any amount paid or payable in respect of services rendered or to be rendered by any person (other than a person
who is not a resident or an employee contemplated in paragraph (b), (c), (d), (e) or (f) of the de nition of ‘employee’) in the course of any trade carried on by him independently of the person by whom such amount is paid or payable and of the person to whom such services have been or are to be rendered: Provided that for the purposes of this paragraph a person shall not be deemed to carry on a trade independently as aforesaid—
(aa) if he is subject to the control or supervision of any other person as to the manner in which his duties are performed or to be performed or as to his hours of work; or
(bb) if the amounts paid or payable for his services consist of or include earnings of any description which are payable at regular daily, weekly, monthly or other intervals;
(iii) any pension or additional pension under the Aged Persons Act 1967 (Act 81 of 1967), or the Blind Persons Act, 1968 (Act 26 of 1968), any disability grant or additional or supplementary allowance under the Disability Grants Act 1968 (Act 27 of 1968), or any grant or contribution under the provisions of section 89 of the Children’s Act, 1960 (Act 33 of 1960);
(iv) Deleted by section 44 of Act 101 of 1990;
(v) Deleted by section 6 of Act 30 of 1984;
(vi) any amount paid or payable to any employee wholly in reimbursement of expenditure actually incurred by such employee in the course of his employment;
(vii) deleted by section 19 of Act 19 of 2001;
(viii) any annuity under an order of divorce or decree of judicial separation or under any agreement of separation;’
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