Page 740 - SAIT Compendium 2016 Volume2

BGR 025
INCOME Tax aCT: BINdINg gENERaL RuLINgS
BINDING GENERAL RULING (INCOME TAX): NO. 25
14 November 2014
INCOME TAX ACT 58 OF 1962 SECTION 10 (1) (gC) (ii) EXEMPTION – FOREIGN PENSIONS
BGR 029
DATE: ACT: SECTION: SUBJECT:
Preamble
For the purposes of this ruling –
‘BGR’ means a binding general ruling issued under section 89 of the Tax Administration Act 28 of 2011; ‘Republic’ means ‘Republic’ as de ned in section 1(1);
‘resident’ means ‘resident’ as de ned in section 1(1);
‘section’ means a section of the Act;
‘the Act’ means the Income Tax Act No. 58 of 1962; and
any word or expression bears the meaning ascribed to it in the Act.
1. Purpose
This BGR provides clarity on the interpretation and application of the words ‘from a source outside the Republic’ in section 10(1)(gC)(ii) in relation to pension payments that are received by or accrue to a resident.
2. Background
Section 10(1)(gC)(ii) exempts from normal tax any pension received by or accrued to a resident from a source outside the Republic as consideration for past employment outside the Republic.
The term ‘source outside the Republic’ can be interpreted to mean either the originating cause which gave rise to that pension (foreign services rendered), or the location from which the pension is received (namely, where the fund is situated). The term ‘past employment outside the Republic’ refers to services rendered outside the Republic. Only the portion
of a pension that relates to services rendered outside the Republic is exempt from income tax.
3. Ruling
The term ‘source outside the Republic’, for purposes of section 10(1)(gC)(ii), refers to the originating cause which gives rise to the pension income, namely, where the services have been rendered. This ruling constitutes a BGR issued under section 89 of the Tax Administration Act 28 of 2011.
4. Application
The following formula is used to calculate the portion of a pension that will be exempt due to services rendered outside the Republic:
Foreign services rendered
___________________ × Total pension received or accrued
Total services rendered
5. Period for which this ruling is valid
This BGR applies from date of issue and will apply until it is withdrawn or the relevant legislation is amended.*
DATE: ACT: SECTION: SUBJECT:
Preamble
BINDING GENERAL RULING (INCOME TAX): NO. 29
20 August 2015
INCOME TAX ACT 58 OF 1962
SECTION 46 (3) (a) (v)
UNBUNDLING TRANSACTIONS: MEANING OF ‘AS AT THE END OF THE DAY AFTER THAT DISTRIBUTION’
For the purposes of this ruling–
• ‘BGR’ means a binding general ruling issued under section 89 of the Tax Administration Act No. 28 of 2011;
• ‘business day’ as de ned in the JSE Limited Listings Requirements means any day other than a Saturday, Sunday or
any other day on which the JSE is closed;
• ‘expenditure’ means expenditure as de ned in section 46(3)(b);
* As established in CIR v Lever Bros and Unilever Ltd 1946 AD 441, 14 SATC 1.
732 SAIT CompendIum oF TAx LegISLATIon VoLume 2