A South African tax resident works in Namibia, but does not qualify for the section 10(1)(o)(ii) exemption. If the individual pays tax in Namibia will he also be liable to pay tax in South Africa or will he qualify for the section 6quat rebate?
Important:
This answer is based on tax law year ending 28 February 2017.
Answer:
From the information provided we accepted that with “a South African tax resident” you imply that the client is not deemed to be exclusively a resident of Namibia for purposes of the application of any agreement entered into between the governments of the RSA and Namibia for the avoidance of double taxation.
In terms of article 15.1 of the relevant treaty salaries, wages and other similar remuneration derived by a resident of the RSA in respect of employment is exercised in Namibia may be taxed in Namibia.
The point then is that the RSA can tax this remuneration – principally because he is a resident of the RSA and we tax on the basis of residency. We are not sure why you say that section 10(1)(o)(ii) doesn’t apply, but accept that the full days outside the RSA requirements were not met.
The taxpayer (client) must declare the foreign income in his return of income in the RSA. Any tax paid in Namibia will qualify for the section 6quat rebate. You don’t need proof that a return was submitted, only that the tax was payable to Namibia.