Page 582 - SAIT Compendium 2016 Volume2

IN 67 (2) Income Tax acT: InTeRPReTaTIon noTes IN 67 (2)
‘[C]hild’, in relation to any person, includes any person adopted by him or her—
(a) under the law of the Republic; or
(b) under the law of any country other than the Republic, provided the adopted person is under such law accorded the
status of a legitimate child of the adoptive parent and the adoption was made at a time when the adoptive parent was ordinarily resident in such country;
A relative of a natural person therefore includes –
• that person’s spouse;
• anybody related to that person within the third degree of consanguinity;
• anybody related to that person’s spouse within the third degree of consanguinity; and
• the spouse of anybody related within the third degree of consanguinity to that person or his or her spouse.
The following persons therefore qualify as ‘relatives’ in relation to any person:
• Children ( rst degree of consanguinity)
• Grandchildren (second degree of consanguinity)
• Great-grandchildren (third degree of consanguinity)
• Parents ( rst degree of consanguinity)
• Grandparents (second degree of consanguinity)
• Great-grandparents (third degree of consanguinity)
• Brothers and sisters (second degree of consanguinity)
• Nephews and nieces* (third degree of consanguinity)
• Uncles and aunts (third degree of consanguinity)
In addition, all of the above relatives of that person’s spouse would be relatives of the person as well as the spouses of any of those relatives. The deceased or insolvent estate of a natural person is not a connected person in relation to –
• that natural person;
• any relative of that natural person;
• any trust of which that natural person was a bene ciary, or
• any trust of which that natural person’s relative is a bene ciary.
Example 1 – Connected person in relation to a natural person
Facts:
E is married to F. B andA are the parents of E and C and D are the parents of F.Are B andA connected persons in relation to C and D?
Result:
B and A are not connected persons in relation to C and D under paragraph (a)(i) as they are not relatives of C and D. Paragraph (a)(ii) is also inapplicable.
Example 2 – Connected person in relation to a natural person
Facts:
B is the half-brother of A, as they have the same father but different mothers. Is B a connected person in relation to A?
Result:
B is related to A in the second degree of consanguinity, since B and A have a common parent. B is therefore a connected person in relation to A under paragraph (a)(i).
Example 3 – Connected person in relation to a natural person
Facts:
C is the stepmother of A and the spouse of B, who is the father of A. Is C a connected person in relation to A?
Result:
B is related to A in the rst degree of consanguinity. C is the spouse of B and therefore a relative of A. C is a connected person in relation to A under paragraph (a)(i).
Example 4 – Connected person in relation to a natural person
Facts:
X and Y are stepbrothers. The parents of X are C and D and the parents of Y are E and F. Both sets of parents are divorced and D and E have married. Is Y a connected person in relation to X?
Result:
D is related to X in the rst degree of consanguinity. E is the spouse of D and therefore related to X. Y is not related to X within the meaning of the de nition of a ‘relative’, since Y and X do not have a common parent. Y is therefore not a connected person in relation to X.
* Children of a brother or sister.
574 saIT comPendIum oF Tax LegIsLaTIon VoLume 2