Source Flashcards
CIR v Lever Bros and Unilever Ltd
Summary
The taxpayer company carried on business in England and did not carry on any business in SA. The taxpayer sold assets to a Dutch Company on credit and interest was payable on the outstanding balance, As security for payment of the debt, a trust was established and the Dutch Company deposited certain shares with a trustee in England. a Company was then established in South Africa. This company purchased the shares held by the Dutch company and took over the rights and obligations of the Dutch Company under the trust agreement. Not agreements were made in SA.
Outcome
The source of the interest payable was not in South Africa. It was not the existence of the debt that determined the source of income, but the agreement entered into by the parties under which interest was payable. This agreement was not entered into in SA.
Principles
The source of income is not the quarter whence it came but the originating cause of it being received as income. This originating cause is the work which the taxpayer does to earn the income, the quid pro quo which he gives in return.
CIR v Black
Summary
The taxpayer carried on business as a stockbroker in partnership with others but he also carried on a separate business of speculating in shares for his own account. He had an agreement with a London firm of stockbrokers whereby they would purchase shares on his behalf on the London stock exchange. The shares were purchased, held, paid for and sold in London. Fund were remitted to London by the taxpayer to finance the purchase of shares.
Outcome
The source was not in SA but in London. The taxpayer carried on a separate business in London and the business giving rise to the income was carried on only in London.
Principles
The dominant, real, main or substantial cause of the income will determine its source.
COT v Shein
The source of income from services rendered is the place where the services are rendered.
