Non Residents Flashcards
1
Q
Principles
Non residents
A
- Immovable property in South Africa sold NR is in the scope of 8th schedule
- Upon emigration, deemed disposal of all assets except for immovable property. Base cost is base cost not MV at date of emigration
- Gain*period it was your primary resident/total months from (acquisition to sold) - Withholding Tax (it is not a final tax just an advance payment)
- Tax return not submitted within 12 months it becomes a final tax - s10(1)(h)<183 days if not consider 10(1)(i) limited to 24800 or 34 500
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- DTA between countries will override WHT levied by Country x
- Look at source s6quat foreign tax credit is N/A
- If TP is in an assessed loss position, s6quat deduction better option
- NR are taxed on source
- Determine originating source of income and location
- DTA only deals with income
If full amount is exempt s10B(2)(a) since own more than 10% no s6quat
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s10(1)(gC) funds do not qualify for exemptions if paid by SA fund
2
Q
Par 43(1)
A
- Individuals and non trading trusts. Calculate in foreign currency first then translate to rands
3
Q
Dealing with Non residents at any point and or residents
A
- Consider s9 source of income
- Consider WHT
- WHT is a final tax
4
Q
Tax residency of individual
-When DTA is involved, start with this part
A
- South Africa and the UK has a Double Tax Agreement (DTA) the provisions of the DTA will override the provisions within the South African Income Tax Act (section 108).
- Where is the person an ordinarily resident?
- X is a dual resident therefore tie breaker clause is considered
- Article 4
- Then conclude
5
Q
A resident wants to start own business. She wants to import stuff from Nigeria and sell them in UK. She does not see her taxable income exceeding R500k
A
- X is a SA tax resident subject to tax on WWI
- Operating through a PE not a legal entity
- All proceeds from selling bags will be included in her gross income
- Able to claim s11(a) deducted for handbags imported from Nigeria
- DTA-UK still has taxing rights on profits from UK PE, so double tax can arise
- FTC may be limited foreign taxable income/Total taxable income *SA tax payable
- TI from PE must be translated using average rate
- Foreign loss will be ring fenced
- Income from her own trade no appointment
- Can register as SBC
6
Q
Interest on NR
A
- Non-resident, interest will not be exempt in terms of s 10(1)(h), as has been physically present in South Africa for more than 183 days in the 12 month period prior to the accrual of the interest (i.e. 341/342 days - 1 March 2020 till 5 February 2021)
- She will however be entitled to a s10(1)(i) interest exemption which is limited to R23 800
- Co would not be obliged to withhold any interest withholdings tax on the interest paid to Brenda during the 2021 year of assessment as Brenda, being a natural person, has been physically present in SA for more than 183 days in the 12 month period prior to the interest being paid (s 50D(3)
7
Q
SA tax resident and had properties in UK
A
- Taxed on WWI as he is a resident
- Rental income is taxed in UK, the properties are situated in UK
- Therefore double taxed (UK&SA)
- UK/SA DTA must be used
- Article 6 in DTA states rental income may be taxed in UK
- SA & UK has taxing rights
- Therefore rental is still taxed in SA
- Gross income include at average rate
- UK tax paid will be translated at avrg included in squat
- He can claim a s6quat rebate on UK tax paid on rental income
8
Q
Par43(1A) (Company)
A
- Proceeds (lower)- recoupment
- Base cost (higher) + transaction cost
Use it for individuals if BC and P not in same currency
9
Q
Indirect holding on property (NR)
immovable property > total MV of assets
A
- Liabilities are excluded
- She has indirect interest in immovable property situated in SA thus SA source
- Hold shares for investment purposes therefore CGT applies
- Liable for CGT in SA on disposal of equity shares due to requirements
- WHT will be deducted from tax payable on CGT
- Proceeds = MV on date of emigration
- Natural person can choose between spot or average
- s35A WHT is advance collection of tax
- It is not a final tax
- Purchaser has obligation to pay WHT
- Consider DTA
- s6quat NA as she is NR
