SARS Rejects Section 11a Business Deduction due to Commission being less than 50% of Gross Income. The client has over the past years earned Salary and Benefits PLUS Commission which is usually very high as a portion of Income. But due to the recent econo
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
The practice generally prevailing that you refer to is found in Interpretation Note 13, (Issue 3; 15 March 2011). Whilst it was not issued under section 5 of the Tax Administration Act, it has not been withdrawn by SARS. This is because it is a ‘official publication’ (as defined in section 1 of the Act) and the date of issue is then irrelevant. Section 269(1) confirms this and states that “…. notices and regulations issued under the provisions of a tax Act repealed by this Act that are in force immediately before the commencement date of this Act, remain in force as if they were issued under the equivalent provisions of this Act, to the extent consistent with this Act, until new … notices … are issued under such provisions.”
The relevant words in section 23(m), relevant to your dispute we assume, are “… any person … in respect of which he or she derives any remuneration, as defined in paragraph 1 of the Fourth Schedule …” The words do not limit the remuneration to remuneration derived in a year of assessment. The practice generally prevailing confirms this and states the following:
“The test for “normally” is a subjective test and each case must be evaluated on its own merits, with due regard to the taxpayer’s previous and future years of assessment.”