The owners of the property is married in community of property. Would the rental income and the deductions be split between the husband and wife? The one person (husband) works mostly abroad on ships as a paramedic. The ships are not SA ships.
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
Section 10(1)(o)(i) applies to “any form of remuneration as defined in paragraph 1 of the Fourth Schedule, derived by any person as an officer or crew member of a ship engaged—
(aa) in the international transportation for reward of passengers or goods …”
In terms of the current practice generally prevailing, the exemption applies if “the ship is engaged in the international transportation of passengers or goods for reward.” “Reward” in this context means “compensation received for the transportation of the passengers or goods on the ship. This refers to merchant ships such as cruise ships, passenger liners and cargo ships travelling in international waters …”
In terms of the current practice generally prevailing, the section “exempts any form of remuneration that is derived by a person as an officer or crew member of a ship. In context, this means that there must be a causal connection between the remuneration received, and the person’s role as an officer or crew member on the ship, in order for the exemption to apply. Any remuneration derived outside the Republic other than as an officer or crew member of a ship, does not qualify for exemption under this provision.”
The exemption under section 10(1)(o)(i) applies to “any person” but practically can mean only individuals who are South African residents. It is imperative that you determine where the person is a resident. From the information provided it appears that the individual is ordinarily resident in the RSA. Remember that the days physical presence, bout in and outside the RSA, are irrelevant. We accept that the service is also not caught by the terms of a double taxation treaty. Most treaties deal with international transport.
The wording in section 10(1)(o)(i) reads further as follows:
“… if such person was outside the Republic for a period or periods exceeding 183 full days in aggregate during the year of assessment…”
Note that it differs from the wording in section 10(1)(o)(ii) where the requirement is with reference to ‘any period of 12 months’. It has read like that since its introduction in the Act.
It is outside the scope of the service offered by us to its members to "outline the legislation". You must read section 10(1)(i) and also refer to issue 2 of interpretation note 34.
With regard to the other ‘income’, section 7(2A) applies. It reads as follows:
“In the case of spouses who are married in community of property—
(a) any income (other than income derived from the letting of fixed property) which has been derived from the carrying on of any trade shall, if such trade is carried on—
(i) by only one of the spouses, be deemed to have accrued to that spouse; or
(ii) jointly by both spouses, be deemed, subject to the provisions of subsection (2) (b), to have accrued to both spouses in the proportions determined by them in terms of the agreement that regulates their joint trade or, if there is no such agreement, in the proportion to which each spouse would reasonably be entitled having regard to the nature of the relevant trade, the extent of each spouse’s participation therein, the services rendered by each spouse or any other relevant factor; and
(b) any income derived from the letting of fixed property and any income derived otherwise than from the carrying on of any trade shall be deemed to have accrued in equal shares to both spouses: Provided that any such income which does not fall into the joint estate of the spouses shall be deemed to be income accrued to the spouse who is entitled thereto.”
We are not sure why you consider the income from the “the guest house” to be rental income. It may well be derived from a trade, but as section 7(2A) deals with both, we don't provide further guidance.