I have a client that is a rugby player and will be playing rugby for a foreign club but this will span over 22 months. From Aug '18 to May '20 and he won't be based overseas for the whole time and will be coming back to SA for a couple of months in the of
Important:
This answer is based on tax law for the year ending 31 March 2020.
Answer:
The relevant requirement, in section 10(1)(o)(ii) of the Income Tax Act, reads as follows:
… if that employee was outside the Republic –
(aa) for a period or periods exceeding 183 full days in aggregate during any period of 12 months; and
(bb) for a continuous period exceeding 60 full days during that period of 12 months, …
This differs from, for instance, section 10(1)(o)(i) or (iA) – “… if such person was outside the Republic for a period or periods exceeding 183 full days in aggregate during the year of assessment …”
The point then is this, the 12-month period can, if not in all cases, be a period that starts before or ends after the year of assessment in respect of which the assessment is to apply. It can also overlap. The practice generally prevailing, that you referred to and that I agree with, agrees with this. The following is stated:
“The multiple use of any specified period is permitted due to the wording of the section that permits the test to be conducted over “any” period of twelve months.”
If we take the SARS example and change it slightly, it may explain the matter better:
“X was seconded by a South African holding company to a subsidiary in Australia for the period 1 March 2014 to 30 September 2014 (seven months). An employment contract was entered into stipulating X would be remunerated by the South African holding company. X did not return to the Republic during this period.”
I changed 1 March 2014 in the example to 1 February 2018, and 30 September 2014 to 31 August 2018.
With respect to the 2018 year of assessment, the individual will then look forward (from 1 February 2018) and meet the required absence of more than 183 days.
With respect to the 2019 year of assessment, the taxpayer will look backwards, from August 2018, and also meet the required absence of more than 183 days.