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Summary Taxation 2nd year Notes

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Taxation second year summaries for the whole year











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Uploaded on
February 21, 2023
Number of pages
27
Written in
2022/2023
Type
Summary

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2nd Year

Taxation
Notes

, Residency


Natural persons
Exclusively a residnet of another country in terms of DTA?


Yes No

Ordinarily resident?
Non-resident

Yes No

Resident Physical Presence Test

Ordinarily Resident
▪ Interpretation Note 3
▪ Cohen:
✓ Naturally and as a matter of course return from wanderings
✓ Mode of life outside YOA considered
✓ Physical absence during full YOA considered
▪ Kuttel:
✓ Usual or principal residence / real home
✓ Habitually and normal residence
▪ Start:
- Non-resident until day before
- Resident from day become ordinarily resident
▪ Cease:
- Resident until day before
- Non-resident from day of ceasing
Physical Presence Test
▪ > 91 days in current YOA
▪ > 91 days in each of 5 proceeding years
▪ > 915 days in those 5 years
▪ Start: 1st day of YOA which requirements are met
▪ Cease: Physically absent for 330 continuous days (2 years = 91 + 330 days)
- Resident until day before left
- Non-resident from day they left


Persons other than natural person
▪ Incorporated (registered at CIPC), established and formed in Republic
▪ Effective management = Key management and commercial decisions

, Gross Income

Resident: The total amount in cash or otherwise, received by or accrued to or in favour of
such resident during such year of assessment excluding receipts of a capital nature.
▪ Non-Resident: The total amount in cash or otherwise, received by or accrued to or in favour
of such resident during such year of assessment from a source within South Africa, excluding
receipts of a capital nature.
▪ Residents are taxed on a resident-based system of tax (place of resident).
▪ Non-residents are taxed on a source-based system of tax (source of income).
Onus of establishing an amount lies with the Commissioner.
CIR v Butcher Bros If a monetary value cannot be determined for an asset or the
amount in
The total




(Pty) Ltd asset cannot be turned into cash, then it cannot be included
in GI.
The value of property (corporeal or incorporeal) earned by
Lategan v CIR
the taxpayer will be included in GI.
Cash or CSARS v Brummeria If the taxable benefit has ascertainable monetary value, it is
otherwise Renaissance (Pty) Ltd incl in GI.
Once you have become entitled to an amount, it has accrued
Lategan WH v CIR
Accrued to a person




to you.
Mooi v SIR “unconditionally entitled to”.
CIR v People’s Stores An amount “accrued to” a taxpayer is the amount to which a
(Walvis Bay) (Pty) Ltd taxpayer “had become entitled to”.
Witwatersrand
Association of Racing An amount is only incl if it has been beneficially received.
Clubs
CIR v Delagoa Bay The legality of a transaction does not affect the taxability of it.
Cigarette Co Illegal receipts are still taxable.
Received by or:




Geldenhuys v CIR Received by him on his own behalf and for his own benefit.
MP Finance Group CC
The legality of a transaction does not affect the taxability of it.
(in liquidation) v
Illegal receipts are still taxable.
CSARS
Deposits are incl. in GI if it is received for one’s own behalf
Pyott Ltd v CIR and own benefit. The deposit must be kept in a separate
account to be excl.
Moneys paid by customers for gift cards only accrue to the
Gift cards taxpayer upon transfer out of the designated bank account
upon redemption or expiry.
Berea West Estates If the intention of a realization company (do not trade) does
Excluding receipts and accruals of a




(Pty) Ltd v SIR not change, the proceeds will be capital in nature.
Intention of shareholder barely considered. Look at the
Elandsheuwel Farming
“corporate veil”. In appropriate circumstances, the corporate
(Edms) Bpk v SBI
capital nature:




veil may be lifted.
If assets are acquired for trade, it is incl in GI. Only in special
CSARS v Founders Hill
circumstances will the proceeds be capital in nature as if it is a
(Pty) Ltd
realization company.
A mere decision to sell a capital asset at a profit does not
render it revenue in nature. Something more is required to
John Bell & Co (Pty)
prove that there was actually a change in intention. Consider
Ltd v SIR
factors like the number of transactions of a similar nature by
the taxpayer, extensive advertising, etc.
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