Unit 3 - 1

Question 1

Where is the definition for Gross Income found?

Answer 1

Section 1 of the ITA

Question 2

What is the definition of GI ito a Resident? (3 steps)

Answer 2

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

Question 3

What is the definition of GI ito a Non-resident? (3 steps + 1)

Answer 3

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

Question 4

On what income are Residents taxed?

Answer 4

Worldwide income

Question 5

On what income are Non-residents taxed?

Answer 5

Deemed source in SA

Question 6

What is crucial to keep in mind if deemed a resident but you work abroad/have foreign income?

Answer 6

Double taxation agreements

Question 7

Are all terms in the definition of Gross Income defined?

Answer 7

No, one needs to refer to case law as well.

Question 8

When is income DEEMED to be Income?

Answer 8

Some items may seem to Capital, but a specific rule states that it must be treated as Income.

Question 9

Is ‘ordinarily resident’ defined in legislation?

Answer 9

No. Refer to case law.

Question 10

What did the court decide in the Levene case?

Answer 10

The aspect of continuity

Question 11

What did the court decide in Reid?

Answer 11

Held that not more than 1 ordinary residency is possible at the same time

Question 12

What did the court decide in Cohen?

Answer 12

Referred to “naturally returned from your wanderings”

Question 13

Which case substantiated Cohen?

Answer 13

ITC 1807

Question 14

What is notable about the Kuttel case?

Answer 14

It was decided before a definition for Resident was included in the ITA

Question 15

Which tests are used to determine whether a TP is a Resident?

Answer 15

The Ordinary Resident Test and the Physical Presence Test

Question 16

When is the Physical Presence Test applicable?

Answer 16

When the TP is not ordinarily resident in SA at any time

Question 17

What is the further test in the Physical Presence Test (how is it applied?)

Answer 17

By calculating the days that the person is physically present in SA.

Question 18

What are the time periods related to the Physical Presence Test?

Answer 18

• 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

Question 19

What does ‘in transito’ mean ito Tax Law?

Answer 19

That the person did not pass through customs

Question 20

When does the Physical Presence Test not apply?

Answer 20

When the person has spent 330 continuous days outside SA

Question 21

Do the time period (i.e. 92 days, etc.) of the Physical Presence Test have to be continuous?

Answer 21

No, the days are simply in aggregate in that YOA.

Question 22

To whom is withholding tax applicable?

Answer 22

Non-residents

Question 23

To whom is donations tax applicable?

Answer 23

Residents

Question 24

Ito of juristic persons, how is the residency test applied?

Answer 24

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.

Question 25

Ito of a Pty Ltd, when is it resident in SA?

Answer 25

When its effective management and commercial decisions are based in SA.

Question 26

When is a trust resident in SA?

Answer 26

When the management of assets is based in SA.

Question 27

What did the court decide in the Butcher Brothers case?

Answer 27

That the amount must be ascertainable with the onus on SARS. [SARS later changed legislation to avoid this]

Question 28

What did the court in Brummeria Renaissance decide?

Answer 28

[Buyer supplied interest free loan as payment] court decided that the total amount must still be determined.

Question 29

What aspect is entirely irrelevant when deciding residency for tax purposes?

Answer 29

Where you are domiciled