With reference to my query ref 17998641, I am concerned about the wording of the response, namely 'If the client is a resident of the RSA this would not be available (we accept that citizen implies the person is ordinarily resident in the RSA). " This cli
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
We purposefully made the remark regarding the resident status of the individual (and also relating to the source of the services) as we had a concern that the facts may not be complete or correct.
The reference to the agreement, which we are not sure that it has actually been ratified by the RSA (but that is irrelevant for the moment) caused us to deal with the section 10(1)(c) exemption – as that would then have been the relevant one. There, the status as resident of the individual (employed by the UN) is then relevant (as we indicated). Periods of absence outside the RSA would then be irrelevant.
For section 10(1)(o)(ii) to apply, the individual (as employee) must be a resident of the RSA. You now confirmed that the individual, for the period that the income was earned, is in fact a “person who is deemed to be exclusively a resident of” another country “for purposes of the application of any agreement entered into between the governments of” the RSA and the other country for the avoidance of double taxation.
As such, the person would not qualify for the section 10(1)(o)(ii) exemption. This is because no double tax would arise as the RSA doesn’t have a right to tax the income at all. So, as long as the person is not a tax resident of the RSA, the income will not be taxed in the RSA.
The days of physical presence outside the RSA is not at all relevant in order to determine whether the person (ordinarily resident in the RSA) is, or is not, a resident of the RSA.