My client is a non resident and received a capital gain on the sale of shares. According to my knowledge a non resident is exempt from capital gain tax in South Africa on the sale of shares. Is it therefore necessary for this individual to submit a tax re
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
You can only assist your client once you confirmed whether the individual is a resident of a country with which the RSA has a double tax agreement. This is specifically relevant to the interest with a source in the RSA.
We will give some general guidance.
The capital gain can never be exempt from tax. Under paragraph 2(1)(b)(i) or (ii) of the Eighth Schedule to the Act, the RSA doesn’t “tax” a capital gain in respect of the sale of shares, unless it is an interest in immovable property situated in the RSA as defined in paragraph 2(2).
With interest we can only give the guidance if we know the country of residence of the individual. Section 10(1)(h) and section 50D however provide for the exemption, from normal tax and the withholding tax respectively.