4. Exempt Income Flashcards
What are the two situations exempt income result from?
- Taxpayers status
2. Nature of income
Where is exempt income in the framework?
Deducted from gross income to arrive at income
What is the difference between exemptions and deductions?
Exemptions relate to income
Deductions relate to expenses
What are the total exemptions?
- War pension and award for disease
- Disability pension and workmens compensation
- Foreign pensions
- Funeral benefits
- Employer owned insurance policies
- Dividends other than foreign and headquarter
- Foreign and headquarter dividends
- Copyright
- Unemployed insurance benefit fund
- Uniforms and uniform allowances
- Relocation benefits
- Employment outside the Republic
- Gratuities received from public funds
- Alimony received
What is a requirement for award for disease exemption?
It must be a disease contracted from mining
What is a workman’s compensation exemption limit concerning death?
R300000
What is a pure risk policy?
A policy that has no cash or surrender value
When is a pure risk policy income exempt?
If premiums are paid by employer and included in taxable income as fringe benefits
When are other policies exempt income?
When an amount equal to premiums are included in taxable income as fringe benefits
What are some dividends NOT exempt?
- Declared by property investment scheme
- Dividend from restricted equity instrument
- Certain other companies
What are the four exemptions concerning foreign and headquarter dividends?
- Participation exemption
- Country-to-country participation exemption
- Previously taxed exemption
- Cash foreign dividends in respect of JSE listed shares exemption
What is a participation exemption?
A person must hold more than 10% equity share in foreign company
What is a country-to-country participation exemption?
Where a foreign company is in the same country, they don’t have to meet participation requirement for exemption
Who does the copyright exemption not apply to?
A company or person who is not the first owner of the work
What are the requirements for uniform to be exempt?
- Required for duty
2. Distinguishable from normal clothes
What is an example of uniform that won’t be exempt?
Pink clothing because it it not distinguishable
What costs relating to relocation benefits are exempt to the employee?
- Cost borne by employer to move employer, household and possessions
- Cost for employee to sell house
- Cost to hire temporary stay until 183 days after relocation
Who benefits from employment outside Republic exemption?
- Officer or crew member working on ship transporting goods or passengers
- They are outside in total for 183 days during year of assessment
Their remuneration is exempt
What are requirements for persons who earn income outside Republic exemption?
- Outside total 183 days
2. Outside continuous 60 days
Where does the exemption not apply to concerning employment outside Republic
If its earned for holding office or rendered on behalf of employer who works in government etc.
What is a public fund?
Government funds etc,
What date must the divorce have been settled for exemption to apply?
21/03/1962
What are the partial exemptions?
- Interest
- Bursaries or scholarships
- Foreign dividends
What are the steps in calculating SA interest exemption?
- Add all local interest together along with spouses interest and divide by 50%
- Consider age reductions
