Taxpayer received (Co B) a tax certificate for 2016 tax year – the certificate does not stipulate codes (ie 4201, 4250, 4218, 4216 etc) only narrations like interest local, foreign interest etc. The certificate also has disclosed REIT income – from both l
Important:
This answer is based on tax law year ending 28 February 2017.
Answer:
In terms of the definition, in section 1(1) of the Income Tax Act, a REIT is a ‘company that is a resident’ (of the RSA). A distribution by a foreign REIT would therefore fall under section 25B or the foreign REIT would be treated as a company – see paragraph (e) of the definition in section 1(1).
The distribution, in both instances will constitute income, but the deduction would only be allowed if the recipient carries on a trade (section 11). Note, section 23(q) prohibits the deduction of any expense against foreign dividends.