Unit 3 - 1 Flashcards
Gross Income
Where is the definition for Gross Income found?
Section 1 of the ITA
What is the definition of GI ito a Resident? (3 steps)
Total amount in cash or otherwise received by / accrued to / in favour of
During the year / period of assessment
Excluding receipts / accruals capital in nature
What is the definition of GI ito a Non-resident? (3 steps + 1)
Total amount in cash or otherwise received by / accrued to / in favour of
During the year / period of assessment
Excluding receipts / accruals capital in nature
But only that which is from a deemed source in SA
On what income are Residents taxed?
Worldwide income
On what income are Non-residents taxed?
Deemed source in SA
What is crucial to keep in mind if deemed a resident but you work abroad/have foreign income?
Double taxation agreements
Are all terms in the definition of Gross Income defined?
No, one needs to refer to case law as well.
When is income DEEMED to be Income?
Some items may seem to Capital, but a specific rule states that it must be treated as Income.
Is ‘ordinarily resident’ defined in legislation?
No. Refer to case law.
What did the court decide in the Levene case?
The aspect of continuity
What did the court decide in Reid?
Held that not more than 1 ordinary residency is possible at the same time
What did the court decide in Cohen?
Referred to “naturally returned from your wanderings”
Which case substantiated Cohen?
ITC 1807
What is notable about the Kuttel case?
It was decided before a definition for Resident was included in the ITA
Which tests are used to determine whether a TP is a Resident?
The Ordinary Resident Test and the Physical Presence Test
When is the Physical Presence Test applicable?
When the TP is not ordinarily resident in SA at any time
What is the further test in the Physical Presence Test (how is it applied?)
By calculating the days that the person is physically present in SA.
What are the time periods related to the Physical Presence Test?
- Exceeding 91 (i.e. 92) days in aggregate during YOA
and - Exceeding 91 days (i.e. 92) in aggregate during each of the 5 YOAs preceding the current YOA
and - Exceeding 915 (i.e. 916) days in aggregate during the 5 YOAs preceding current YOA
What does ‘in transito’ mean ito Tax Law?
That the person did not pass through customs
When does the Physical Presence Test not apply?
When the person has spent 330 continuous days outside SA
Do the time period (i.e. 92 days, etc.) of the Physical Presence Test have to be continuous?
No, the days are simply in aggregate in that YOA.
To whom is withholding tax applicable?
Non-residents
To whom is donations tax applicable?
Residents
Ito of juristic persons, how is the residency test applied?
A juristic person (CC, Pty, trust, etc.) that is incorporated, established, formed in SA
or
With its place of effective management [not ownership] in SA.
Ito of a Pty Ltd, when is it resident in SA?
When its effective management and commercial decisions are based in SA.
When is a trust resident in SA?
When the management of assets is based in SA.
What did the court decide in the Butcher Brothers case?
That the amount must be ascertainable with the onus on SARS. [SARS later changed legislation to avoid this]
What did the court in Brummeria Renaissance decide?
[Buyer supplied interest free loan as payment] court decided that the total amount must still be determined.
What aspect is entirely irrelevant when deciding residency for tax purposes?
Where you are domiciled
