In terms of SARS Interpretation Note No. 16 dated 27 March 2013, a taxpayer will be entitled to the s10(1)(o)(ii) exemption if employment services is rendered for a continuous period of more than 60 days and a total of 183 days in total outside of the Republic of South Africa (RSA). The taxpayer had 2 continuous periods of exactly 60 days in a specific cycle of more than 183 days in total. Will the taxpayer still qualify for this exemption or should the continuous period be at least 61 days? It is furthermore stated that the 12-month period used to calculate the absence from the RSA need not correspond with a financial tax year. Is it correct that any period used in the calculation can only be applied for one tax period?
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
Just a comment: you must use the most recent practice generally prevailing - Issue 3 – issued on 31 January 2020. With respect to the issue raised it may well read the same as the old one you used, but we will quote form the new one – as will SARS as the assessment will be for a year of assessment after issue of the practice. The 183 full days’ requirement, as well as the 60 continuous full days of absence, is determined, not in respect of the year of assessment, but in respect of any period of 12 months commencing or ending in the year of assessment. The practice generally prevailing (relevant to this and found in IN16), is that “a person is entitled to look both forwards and backwards over any period of 12 months, meaning that some periods may overlap”. This agrees with the Act itself – see the two subitems listed below (the subitems in section 10(1)(o)(ii)): … 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. Whilst the same days of absence can then be used, it ultimately is the requirement that both the 183 full days and 60 full days requirements must be present in the 12-month period – the one used for the 2020 or the 2021 year of assessment.
SARS gives the following example: “For example, if a period of 12 months from 1 April 2013 to 31 March 2014 is used to calculate whether the person spent a period or periods exceeding 183 full days in aggregate outside the Republic, that same period of 12 months must be used to determine whether the person spent a continuous period exceeding 60 full days outside the Republic.” But, with respect to the requirement that it must be ‘full days’, the following is relevant. The practice generally prevailing states that “A “full day” means 24 hours (from 0h00 to 24h00)” and we agree with that. And then also, “To exceed a continuous period of 60 full days does not mean that it must be exceeded by a full day, but by any amount of time, even if this amounts to, for example, a few minutes or hours.”