Kaya Borkowski
Tax Law
Lecture notes, cases, seminars and skeletons
Topics covered in each Seminar
Seminar 1 (page 32)
- Q1: residence of a company
- Q2: residence of a natural person
Seminar 2 (page 65)
- Q1: gross income
- Q2: essay on Brummeria
Seminar 3 (page 84)
- Q1: deductions
- Q2: essay on Labat
Skeletons
- Please note ⭐
- These are brief summaries as a cheat sheet to show you the steps to take. Refer to the page nu
seminars and rest of the notes in full when writing the exam to flesh each step out more :)
- I suggest reading through all the notes and quizzes first (so the skeletons are understandable) th
the skeletons. Remember that most marks come from application so set out the law and apply it
Gross income
- There are various requirements that a person/situation needs to meet before it is decided whethe
gross income or not. Below are the elements. For each element, there is a different test/case aut
whether it is met or not. When being asked a question on gross income, lay them all out to see if
more pertinent to the issue. Then conclude whether the amount will be part of gross income or n
Gross income elements:
- Total amount in cash or otherwise
- Received by
- Or accrued to
- A resident
- Or non-resident from a SA source
- During year or period of assessment
, Kaya Borkowski
- Kuttel ( The ordinary resident test looks at the intention of the taxpayer. Secondly, we look
confirm the taxpayer’s intention). Held that the respondent was not ordinarily resident in S
maintaining a presence in South Africa due to exchange controls, but had moved and mai
the US
- If they are not an ordinary resident, could still be one by virtue of the physical presence te
- If they are not a resident then look at 3) source below
2) Residence of a non-natural person (page 21)
- S1 of the ITA: Resident means any –
- ‘(b) person (other than a natural person) which is incorporated, established or form
has its place of effective management in the Republic
- What sources should be consulted when determining whether a juristic person is residen
- The Income Tax Act 58 of 1962.
- Foreign and domestic case law.
- Any applicable Double Taxation Agreements.
- Determine if incorporated, established or formed in the Republic then move onto POEM if
- The Act does not provide a definition for the concept ‘place of effective management’.
- SARS in Interpretation Note 6: suggests a company's POEM be ascertained by a
considering all relevant factors. This involves ascertaining who is exercising realistic pos
company and making the key management and commercial decisions for the conduct of t
- Oceanic (determine what POEM is in SA but dealt with a trust)
- Smallwood (UK case. Dealt with a trust. Tells us that ‘POEM is the place where the key m
commercial decisions that are necessary for the conduct of the entity’s business are m
- Wood (UK case POEM test is the same as the central management and control (CMC) te
How to determine POEM of a company? (look at seminar 1 to see this in application
- Use of Oceanic Trust case to determine POEM of a company in SA:
- SA courts likely look to UK case law on this issue because Oceanic deals with a trust
deals with a trust.
- UK case law focuses on central management and control (CMC) test. CMC test is basic
test - Wood v Holden (UK case).
3) Source (page 26)
- If they are not a resident, then we can still establish a jurisdictional link by determining
- whether the source of their income is from SA
- Source not defined in the ITA so look at Lever Bros test. It defines source as the orig
which the taxpayer does to earn the income
- Step 1: what type of income is it?
Tax Law
Lecture notes, cases, seminars and skeletons
Topics covered in each Seminar
Seminar 1 (page 32)
- Q1: residence of a company
- Q2: residence of a natural person
Seminar 2 (page 65)
- Q1: gross income
- Q2: essay on Brummeria
Seminar 3 (page 84)
- Q1: deductions
- Q2: essay on Labat
Skeletons
- Please note ⭐
- These are brief summaries as a cheat sheet to show you the steps to take. Refer to the page nu
seminars and rest of the notes in full when writing the exam to flesh each step out more :)
- I suggest reading through all the notes and quizzes first (so the skeletons are understandable) th
the skeletons. Remember that most marks come from application so set out the law and apply it
Gross income
- There are various requirements that a person/situation needs to meet before it is decided whethe
gross income or not. Below are the elements. For each element, there is a different test/case aut
whether it is met or not. When being asked a question on gross income, lay them all out to see if
more pertinent to the issue. Then conclude whether the amount will be part of gross income or n
Gross income elements:
- Total amount in cash or otherwise
- Received by
- Or accrued to
- A resident
- Or non-resident from a SA source
- During year or period of assessment
, Kaya Borkowski
- Kuttel ( The ordinary resident test looks at the intention of the taxpayer. Secondly, we look
confirm the taxpayer’s intention). Held that the respondent was not ordinarily resident in S
maintaining a presence in South Africa due to exchange controls, but had moved and mai
the US
- If they are not an ordinary resident, could still be one by virtue of the physical presence te
- If they are not a resident then look at 3) source below
2) Residence of a non-natural person (page 21)
- S1 of the ITA: Resident means any –
- ‘(b) person (other than a natural person) which is incorporated, established or form
has its place of effective management in the Republic
- What sources should be consulted when determining whether a juristic person is residen
- The Income Tax Act 58 of 1962.
- Foreign and domestic case law.
- Any applicable Double Taxation Agreements.
- Determine if incorporated, established or formed in the Republic then move onto POEM if
- The Act does not provide a definition for the concept ‘place of effective management’.
- SARS in Interpretation Note 6: suggests a company's POEM be ascertained by a
considering all relevant factors. This involves ascertaining who is exercising realistic pos
company and making the key management and commercial decisions for the conduct of t
- Oceanic (determine what POEM is in SA but dealt with a trust)
- Smallwood (UK case. Dealt with a trust. Tells us that ‘POEM is the place where the key m
commercial decisions that are necessary for the conduct of the entity’s business are m
- Wood (UK case POEM test is the same as the central management and control (CMC) te
How to determine POEM of a company? (look at seminar 1 to see this in application
- Use of Oceanic Trust case to determine POEM of a company in SA:
- SA courts likely look to UK case law on this issue because Oceanic deals with a trust
deals with a trust.
- UK case law focuses on central management and control (CMC) test. CMC test is basic
test - Wood v Holden (UK case).
3) Source (page 26)
- If they are not a resident, then we can still establish a jurisdictional link by determining
- whether the source of their income is from SA
- Source not defined in the ITA so look at Lever Bros test. It defines source as the orig
which the taxpayer does to earn the income
- Step 1: what type of income is it?
