CH 21 – CROSS-BORDER TRANSACTIONS
The Statutory Source Rules – s9
Positive S9(2) – when is a receipt/accrual deemed to be from a source within SA
Negative s9(4) – when is a receipt/accrual NOT deemed to be from a source within SA
Crux From Source in RSA From Source Outside RSA
Dividends Source of dividend income – S9(2)(a) – Dividend received S9(4)(a) – Foreign dividends received
depends on the residence of by/accrued to that person by/accrued to that person
the company that pays the Dividend – paid by a resident Foreign dividend – paid by a foreign
dividend company company
Interest – Source of interest income is Interest is attributable – to an S9(4)(b) – interest that does not meet
s24J determined on 2 bases: amount incurred by a person that is the criteria in s9(2)(b)(i) or (ii)
Residence of person paying a resident – unless the interest is
the interest and attributable to a PE of a resident
Place where the funds/credit outside RSA – s9(2)(b)(i)
obtained is being S9(2)(b)(ii) – interest is received or
used/applied accrued i.r.o utilization or
application in the republic – by any
person of any funds/credit obtained
ito any interest-bearing arrangement
Rental Common law principles: Originating cause – is located in RSA Originating cause – not located in RSA
Income 1. Originating cause of the
rental income
2. Where is the originating
cause located
Amount Depends on – the location of S9(2)(j) – immovable property is S9(4)(d) – amounts derived from the
received immovable property situated in RSA disposal of s9(2)(j) and s9(2)(k) assets
on disposal Includes – disposal of interest are from source outside SA if – the
of or right to immovable amounts do not meet these sections
immovable property as in par 2 of 8th
property Sched
Amounts S9(2)(k)(i) if – the person who Resident s9(2)(k)(i) – Asset not S9(4)(d) – amounts derived from the
received disposes of the asset and effectively connected with disposal of s9(2)(j) and s9(2)(k) assets
from other receives the amount is a permanent establishment of that are from source outside SA if – the
assets – resident resident which is situated outside amounts do not meet these sections
e.g. S9(2)(k)(ii) if – person RSA; AND
movable disposing asset is a non- Proceeds on disposal – not subject
property resident to taxes in any country other than
RSA
Non-resident s9(2)(k)(ii) – asset is
attributable to a permanent
establishment of that non-resident –
which is situated in RSA
, Crux From Source in RSA From Source Outside RSA
Amounts 1. Originating cause of the Originating cause – located in RSA Originating cause – not located in RSA
received income – services
i.r.o rendered
Services 2. Where is the originating
Rendered cause located
Amounts Applies to – lump sums, S9(2)(i) – services rendered in RSA Services rendered – outside RSA
received pensions, annuities paid by Apportion if – services rendered
from retirement funds partly within and partly outside RSA
Retirement Key – where were the services
Funds rendered?
Withholding Taxes
S35A – Withholding Amounts from Payments to Non-resident Sellers of Immovable
Property
Charge – 7.5% - if seller is natural person
- 10% - if seller is a company
- 15% - if seller is a trust or
- Seller can apply for directive from CSARS
Person withholding – buyer of immovable property s35A(1)
Liability – non-resident seller
Return submitted – buyer submits a return with payment
S50A – Withholding Taxes on Interest
Levy of Withholding Tax – 15% of interest as defined in s9(2)(b)
Person withholding – payer of the interest
Liability – foreign person (non-resident)
Exemption of WHT on Interest – s50D
- Interest paid by government or bank
- Interest paid i.r.o listed debt
- Foreign person – physically present >183 days in RSA (12 months preceding payment of
interest) or PS in SA
- -> interest is included in gross income – and exempt ito s10(1)(h)
NO s10(1)(h) Exemption if:
o Foreign person (NP) – is physically present >183 days in RSA or
o Debt of the interest – is connected to PE of foreign person in RSA
o S10(1)(i) is applicable – if s10(1)(h) is NOT applicable
CH 7 – NATURAL PERSONS
The Statutory Source Rules – s9
Positive S9(2) – when is a receipt/accrual deemed to be from a source within SA
Negative s9(4) – when is a receipt/accrual NOT deemed to be from a source within SA
Crux From Source in RSA From Source Outside RSA
Dividends Source of dividend income – S9(2)(a) – Dividend received S9(4)(a) – Foreign dividends received
depends on the residence of by/accrued to that person by/accrued to that person
the company that pays the Dividend – paid by a resident Foreign dividend – paid by a foreign
dividend company company
Interest – Source of interest income is Interest is attributable – to an S9(4)(b) – interest that does not meet
s24J determined on 2 bases: amount incurred by a person that is the criteria in s9(2)(b)(i) or (ii)
Residence of person paying a resident – unless the interest is
the interest and attributable to a PE of a resident
Place where the funds/credit outside RSA – s9(2)(b)(i)
obtained is being S9(2)(b)(ii) – interest is received or
used/applied accrued i.r.o utilization or
application in the republic – by any
person of any funds/credit obtained
ito any interest-bearing arrangement
Rental Common law principles: Originating cause – is located in RSA Originating cause – not located in RSA
Income 1. Originating cause of the
rental income
2. Where is the originating
cause located
Amount Depends on – the location of S9(2)(j) – immovable property is S9(4)(d) – amounts derived from the
received immovable property situated in RSA disposal of s9(2)(j) and s9(2)(k) assets
on disposal Includes – disposal of interest are from source outside SA if – the
of or right to immovable amounts do not meet these sections
immovable property as in par 2 of 8th
property Sched
Amounts S9(2)(k)(i) if – the person who Resident s9(2)(k)(i) – Asset not S9(4)(d) – amounts derived from the
received disposes of the asset and effectively connected with disposal of s9(2)(j) and s9(2)(k) assets
from other receives the amount is a permanent establishment of that are from source outside SA if – the
assets – resident resident which is situated outside amounts do not meet these sections
e.g. S9(2)(k)(ii) if – person RSA; AND
movable disposing asset is a non- Proceeds on disposal – not subject
property resident to taxes in any country other than
RSA
Non-resident s9(2)(k)(ii) – asset is
attributable to a permanent
establishment of that non-resident –
which is situated in RSA
, Crux From Source in RSA From Source Outside RSA
Amounts 1. Originating cause of the Originating cause – located in RSA Originating cause – not located in RSA
received income – services
i.r.o rendered
Services 2. Where is the originating
Rendered cause located
Amounts Applies to – lump sums, S9(2)(i) – services rendered in RSA Services rendered – outside RSA
received pensions, annuities paid by Apportion if – services rendered
from retirement funds partly within and partly outside RSA
Retirement Key – where were the services
Funds rendered?
Withholding Taxes
S35A – Withholding Amounts from Payments to Non-resident Sellers of Immovable
Property
Charge – 7.5% - if seller is natural person
- 10% - if seller is a company
- 15% - if seller is a trust or
- Seller can apply for directive from CSARS
Person withholding – buyer of immovable property s35A(1)
Liability – non-resident seller
Return submitted – buyer submits a return with payment
S50A – Withholding Taxes on Interest
Levy of Withholding Tax – 15% of interest as defined in s9(2)(b)
Person withholding – payer of the interest
Liability – foreign person (non-resident)
Exemption of WHT on Interest – s50D
- Interest paid by government or bank
- Interest paid i.r.o listed debt
- Foreign person – physically present >183 days in RSA (12 months preceding payment of
interest) or PS in SA
- -> interest is included in gross income – and exempt ito s10(1)(h)
NO s10(1)(h) Exemption if:
o Foreign person (NP) – is physically present >183 days in RSA or
o Debt of the interest – is connected to PE of foreign person in RSA
o S10(1)(i) is applicable – if s10(1)(h) is NOT applicable
CH 7 – NATURAL PERSONS
