CATEGORIES
- (1) Negotiating Tax Debt and Payment Arrangements with SARS
- (31)Accounting
- (2)Accounting for Income Tax
- (1)Accounting for Income Tax
- (7)Administration of Estates
- (1)Advisory Services
- (1)Application of tax rates, s6(2) rebates
- (1)Assessed losses
- (4)Audit, Reviews & Other Services
- (9)Blogs
- (8)Capital Gains Tax
- (1)Capital Gains Tax - Individuals Tax
- (1)Capital Gains Tax Implications of Trusts
- (2)Case study: Home office expense
- (1)Case study: Travel allowances
- (1)Company Formations
- (1)Compliance
- (123)Corporate Tax
- (9)Customs and Excise
- (2)Deceased Estate
- (1)Deductions Pre-trade and prepaid expenses
- (1)Deregistration
- (2)Employer and Employee (PAYE and UIF Specific)
- (1)Estate Duty
- (1)Events / Webinars
- (9)Faculty News
- (2)Farming
- (152)Individuals Tax
- (1)Input - Customs Duty
- (3)Interest
- (13)International Tax
- (17)Legislation
- (1)Low interest rate loans and loan subsidies
- (1)Nature of the rights of beneficiaries
- (1)Notional input tax
- (9)Payroll
- (2)Practical Payroll
- (2)Provisional tax (Link with other Taxes)
- (2)SARS Dispute Resolution
- (4)SARS Issues
- (1)Salaried Employees
- (134)Tax Administration
- (2)Tax Administration Part 2B: Resolving Problems with SARS using the Tax Ombud
- (1)Tax Administration Part 3B Dispute Resolution - Objection and appeal
- (3)Tax Update
- (1)Tax implications of loans to trusts
- (1)Tax residence
- (1)Tax returns and payments
- (2)Transfer-Pricing
- (1)Trust Income / Gain Allocations
- (1)Trust types and income allocations
- (6)Trusts
- (70)VAT
- (3)VAT periods
- (1)Wear and tear allowances
- (1)Wills, Estates & Trusts
- (1)Zero Rated
- (1)eFiling
- Show All
[FAQ] Rebates in the year a taxpayer ceases to be resident in South Africa
- 02 November 2020
- Application of tax rates, s6(2) rebates
- Piet Nel
Background
A taxpayer ceased to be a resident in South Africa during the year of assessment, and it came to his attention that SARS allows the rebates on a pro-rata basis in such cases. The taxpayer declared income only for that specific period and he accepts that rebates will only be allowed accordingly.
However, what if a taxpayer ceased to be a resident but still has a property in South Africa from which rental income is received for the full year of assessment? Will the rebates only be allowed pro-rata for the period up until the taxpayer ceased to be a resident? How will SARS address this issue?
Answer
The Income Tax Act
In terms of section 9H(2) of the Income Tax Act, where a person … that is a resident ceases during any year of assessment of that person to be a resident-
(a) …
(b) that year of assessment must be deemed to have ended on the date immediately before the day on which that person so ceases to be a resident; and
(c) the next succeeding year of assessment of that person must be deemed to have commenced on the day on which that person so ceases to be a resident.
Under section 66(13)(a)(ii), a return for normal tax to be made by any person in respect of any year of assessment shall be … in the case of a person where a person ceased to be a resident … shall be made for the period commencing on the first day of that period and ending on the day preceding the date that the person ceases to be a resident.
Application of the principles
In terms of section 6(4) of the Income Tax Act, where the period assessed is less than 12 months, the amount to be allowed by way of a rebate under section 6(2) shall be such amount as bears to the full amount of such rebate, the same ratio as the period assessed bears to 12 months.
Your statement that the income is ‘declared for the full year of assessment’ needs comment as well. It is only South Africa sourced income that must be declared by the non-resident for the rest of the year.
Webinar Commentary
Further webinar commentary on Application of tax rates, s6(2) rebates can be accessed here.