Residence

Question 1

Cohen v CIR

Answer 1

Summary

The Taxpayer went overseas to act as buyer for his company in order to obtain merchandise which had become difficult to obtain due to war conditions. He initially obtained a permit authorising his stay for 9 months and this was later extended by a further 12 months. He settled in an apartment in New York with his family. During this period he made no visits to South Africa. Prior to his departure from South Africa, he had entered into a 5 year lease agreement for a flat in Johannesburg. He then sublet this flat which he had furnished, during his stay in America.

Outcome

The taxpayer was held to be ordinarily resident in South Africa.

Principles

In determining the ordinary residence of a person, the enquiry is not to be based solely on his actions during a specific year under consideration. Nor is an absence for the entire year of assessment decisive. a Person is Ordinarily resident where he would as a matter of course return from his wanderings. It would be his usual or principal residence; that which could be described as his real home.

Question 2

CIR v Kuttle

Answer 2

Summary

The taxpayer had emigrated to the United states where he set up a home, joined a church, established an office, registered with Social Security and bought a car. His children completed their schooling in South Africa. He made several trips to South Africa to pursue business interests, attend his brothers funeral and to pursue his hobby of yachting. During these trips he stayed for up to two months at a time in a flat in Cape Town owned by a Company in which he, together with his wife, held all the shares.

Outcome

He was not ordinarily resident in South Africa. He had sound financial reasons for maintaining a residence in South Africa and this was not inconsistence with ordinary residence being in the USA.

Principles

The court adopted the the formulation of Shreiner JA in the Cohen case and held that a person is ordinarily resident where he has his usual or principle residence, what may be described as his real home.

Question 3

Oceanic Trust Co Ltd v CSARS

Answer 3

Summary

The taxpayer company, registered and incorporated in Mauritius, was the sole trustee of a Trust which was also established and registered in Mauritius. This trust carried on the business of captive reinsurer for a South African Company.

Outcome

The taxpayer had not made out a case for the declaratory relief sought, that the trust was not a resident of South Africa. On the facts available, it appeared that at least some of the key management and commercial decisions of the Trust were made in South Africa.

Principles

The court relied on the criteria established in the Smallwood case and looked to the place where the key management and commercial decisions were made in determining whether or not the trust was a resident of South Africa.

Question 4

Interpretation Note 6 - Factors to consider in determining the ordinary residence of a person.

Answer 4

• Habitual abode
• Most fixed and settled place of residence
• Location of personal belongings
• Family and Social relations
• Political and Cultural activities
• Status of individual in country
• Application for residency
• Place of business and personal interests
• Nationality
• Period abroad, purpose and nature of visits
• Frequency and reasons of visits