GI Definition for non-residents Definition of Source S9 Dividends s9(2)(a)
- Total amount [Lever Brothers] – Source means originating cause of -Only the company needs to be resident in SA – paid to
- Cash/otherwise income any person; resident or non-residents
- Received by/accrued to - What is the originating cause? - s10(1)(k) Local dividends exemption applies to
- FROM SOURCE WITHIN REPUBLIC - Where is it located residents and non-residents
-During YOA [Boyd] – Source is place where contract was entered
-Excluding items of a capital nature into
[British United Shoe Manufacturer] – rental income Sale of immovable property s35A
from source of moveable property has source where - Non-res disposes of non-moveable in SA, subject to
it is used WHT: 5% natural
Pensions + annuities s(2)(i) [Millin] – source where mental faculties originate 7.5% company
- For services rendered in SA - NOT final tax; purchaser withholds
-Can apportion in services were partly in SA •Act does not define “source within SA”
- (Total amt x No. Of yrs in SA) / Total yrs of service -> s9 has deemed sources
Interest Income s9(2)(b)
-Either (a) incurred by residents OR
Section 35 and Old s10(1)(l) (b) utilised in SA
-Royalties withholding tax -Residence of debtor or place where funds are utilised
-On/Before 30/06/2013 Tax II – Non-Residence Tax -UNLESS connected person to PE outside SA
-S10(1)(h) non resident interest exemption
S35: 12% Final Tax. On amts rec under s9(2)(c)-(f)
not app in PE in SA
person paying royalties is responsible to pay
Royalties s9(2)(c) and s9(2)(d) + imparting of
Old s10(1)(l): exempt any amt subject to withholding tax
under s35 scientific/commercial knowledge s9(2)(e) + OLD 1/1/15 New
s9(2)(f)
Royalties: Included by resident OR if Non residents unless: Same as old EXCEPT
s49A-G and New s10(1)(l) used within republic 1. > 183 days in SA - Debt from which
-Replaces s35 from 1/7/13 s35 exemption 2. Carried out interest arises MUST
-s49A-G: 12% up until 31/12/14 Unless att. To PE out of SA business PE be linked to SA PE
15% from 1/1/15 Knowledge: if incurred resident OR
-New s10(1)(l): Royalty is exempt if used in SA
-UNLESS: > 183 days in SA OR S35 exemption WHT
- Carry on business via PE during 12 Unless attributed to PE out of SA
Permanent Establishment
months before
- Fixed place of business incl. Place of management,
branch, office, factory, workshop
Capital Gain immovable property in SA s9(2)(j)
Withholding tax on foreign entertainers + sportsman If non resident has property in SA, normal CGT
-ss47A-47K: FINAL TAX 15% consequences will apply Public office s9(2)(g) and public sector s9(2)(h)
-Holding of any republic public office
-Not app if > 183 days OR employed by resident
-- if the entity is an SA entity (NOT location)
-S10(1)(lA): exemption if subject to ss47A WHT
- E.g. Eskom, Transnet, Sanral
, Trading Stock Definition S1 Opening Stock S22(2)
-Anything -Deduction – subtract from TI at BOY
-Produced, manufactured, - Held but not disposed
Closing Stock s22(1)
constructed, assembled, purchased -Inclusion – add back to TI at EOY -Value = previous yrs cl. stock
- for purpose of manufacture or BUT if not part of previous cl. stock, value at
- Held but not disposed
sale original cost
-Proceeds forms gross income - Value: LOWER of cost* and MV
(*cost – allowable deductions) UNLESS deemed disposal = MV (CGT)
-Any cons. stores, spare parts
-If value is lower than cost, must [Ernst Bester Trust] – bought and sold in same
disclose to SARS year no s22 impact. Only s11(a)
Trading Stock held for the purposes other than - Shares held as TS ALWAYS valued as
trade s22(8)
-S22(8)(a) – pvt or domestic use where cost has cost
previously been taken into account in TI
-> deemed recoupment Cost of Stock s22(3)
-> cost -Same as valuation for IAS2
-Donations as per s18A:
- Cost = acquiring + bringing into condition +
- PBO is registered Tax II – Trading Stock location
- Where cost has previosly
been taken into acc in TI
- Exclude: selling, admin, R+D, interest
-> deemed recoupment * NO LIFO valuation allowed s22 (5)
-> cost
Other|No s18A: deemed recoupment Anti-Avoidance Provisions S23F
-> MV s23F(1) – No deductions for s1(a) if:
a. No sales in GI; OR
Shares held as Trading Stock s9(c) b. No amt in cl. stock
-Qualifying share:
s11(a) only granted when Stock acquired for no consideration s22(4)
*Equity share 1. sold; 2. incl. in cl. stock -Deemed to be acquired at MV
* Held for > 3yrs 3. taxpayer proves that it cant be sold
* proviso: Not in shareblock - Incl. In cl. stock if sell on hand at EOY
Not in hybrid equity -NO s11(a) deduction as not incurred
s23F(2) – Occurs when consideration does not
Not of co that was non-res during those 3 accrue in VOA disposed of TS; deduction is ltd to BUT
yrs amts rec/accrued in that YOA in practice, SARS grants a non-legalisation
-on/after 1/10/07 deduction
- Shall be deemed to be CAPITAL in nature and its s23F(3) – deemed recoupment on disposal of
disposal will have CGT implications right or interest of TS
-In year of disposal of qualifying share
* Included any loss, expense s9C(5)
* Allowed as a deduction
- Total amount [Lever Brothers] – Source means originating cause of -Only the company needs to be resident in SA – paid to
- Cash/otherwise income any person; resident or non-residents
- Received by/accrued to - What is the originating cause? - s10(1)(k) Local dividends exemption applies to
- FROM SOURCE WITHIN REPUBLIC - Where is it located residents and non-residents
-During YOA [Boyd] – Source is place where contract was entered
-Excluding items of a capital nature into
[British United Shoe Manufacturer] – rental income Sale of immovable property s35A
from source of moveable property has source where - Non-res disposes of non-moveable in SA, subject to
it is used WHT: 5% natural
Pensions + annuities s(2)(i) [Millin] – source where mental faculties originate 7.5% company
- For services rendered in SA - NOT final tax; purchaser withholds
-Can apportion in services were partly in SA •Act does not define “source within SA”
- (Total amt x No. Of yrs in SA) / Total yrs of service -> s9 has deemed sources
Interest Income s9(2)(b)
-Either (a) incurred by residents OR
Section 35 and Old s10(1)(l) (b) utilised in SA
-Royalties withholding tax -Residence of debtor or place where funds are utilised
-On/Before 30/06/2013 Tax II – Non-Residence Tax -UNLESS connected person to PE outside SA
-S10(1)(h) non resident interest exemption
S35: 12% Final Tax. On amts rec under s9(2)(c)-(f)
not app in PE in SA
person paying royalties is responsible to pay
Royalties s9(2)(c) and s9(2)(d) + imparting of
Old s10(1)(l): exempt any amt subject to withholding tax
under s35 scientific/commercial knowledge s9(2)(e) + OLD 1/1/15 New
s9(2)(f)
Royalties: Included by resident OR if Non residents unless: Same as old EXCEPT
s49A-G and New s10(1)(l) used within republic 1. > 183 days in SA - Debt from which
-Replaces s35 from 1/7/13 s35 exemption 2. Carried out interest arises MUST
-s49A-G: 12% up until 31/12/14 Unless att. To PE out of SA business PE be linked to SA PE
15% from 1/1/15 Knowledge: if incurred resident OR
-New s10(1)(l): Royalty is exempt if used in SA
-UNLESS: > 183 days in SA OR S35 exemption WHT
- Carry on business via PE during 12 Unless attributed to PE out of SA
Permanent Establishment
months before
- Fixed place of business incl. Place of management,
branch, office, factory, workshop
Capital Gain immovable property in SA s9(2)(j)
Withholding tax on foreign entertainers + sportsman If non resident has property in SA, normal CGT
-ss47A-47K: FINAL TAX 15% consequences will apply Public office s9(2)(g) and public sector s9(2)(h)
-Holding of any republic public office
-Not app if > 183 days OR employed by resident
-- if the entity is an SA entity (NOT location)
-S10(1)(lA): exemption if subject to ss47A WHT
- E.g. Eskom, Transnet, Sanral
, Trading Stock Definition S1 Opening Stock S22(2)
-Anything -Deduction – subtract from TI at BOY
-Produced, manufactured, - Held but not disposed
Closing Stock s22(1)
constructed, assembled, purchased -Inclusion – add back to TI at EOY -Value = previous yrs cl. stock
- for purpose of manufacture or BUT if not part of previous cl. stock, value at
- Held but not disposed
sale original cost
-Proceeds forms gross income - Value: LOWER of cost* and MV
(*cost – allowable deductions) UNLESS deemed disposal = MV (CGT)
-Any cons. stores, spare parts
-If value is lower than cost, must [Ernst Bester Trust] – bought and sold in same
disclose to SARS year no s22 impact. Only s11(a)
Trading Stock held for the purposes other than - Shares held as TS ALWAYS valued as
trade s22(8)
-S22(8)(a) – pvt or domestic use where cost has cost
previously been taken into account in TI
-> deemed recoupment Cost of Stock s22(3)
-> cost -Same as valuation for IAS2
-Donations as per s18A:
- Cost = acquiring + bringing into condition +
- PBO is registered Tax II – Trading Stock location
- Where cost has previosly
been taken into acc in TI
- Exclude: selling, admin, R+D, interest
-> deemed recoupment * NO LIFO valuation allowed s22 (5)
-> cost
Other|No s18A: deemed recoupment Anti-Avoidance Provisions S23F
-> MV s23F(1) – No deductions for s1(a) if:
a. No sales in GI; OR
Shares held as Trading Stock s9(c) b. No amt in cl. stock
-Qualifying share:
s11(a) only granted when Stock acquired for no consideration s22(4)
*Equity share 1. sold; 2. incl. in cl. stock -Deemed to be acquired at MV
* Held for > 3yrs 3. taxpayer proves that it cant be sold
* proviso: Not in shareblock - Incl. In cl. stock if sell on hand at EOY
Not in hybrid equity -NO s11(a) deduction as not incurred
s23F(2) – Occurs when consideration does not
Not of co that was non-res during those 3 accrue in VOA disposed of TS; deduction is ltd to BUT
yrs amts rec/accrued in that YOA in practice, SARS grants a non-legalisation
-on/after 1/10/07 deduction
- Shall be deemed to be CAPITAL in nature and its s23F(3) – deemed recoupment on disposal of
disposal will have CGT implications right or interest of TS
-In year of disposal of qualifying share
* Included any loss, expense s9C(5)
* Allowed as a deduction
