source and taxation of non-residents chapter 21

two step enquiry for income

step 1. what is the originating source of the cause of the income

step 2. where is the originating casue situated

more than 1 originating cause; ID the dominant one

more than one dominant cause then apportion

statutory source rules- S9

dividends- S9(2)(a)- dividends paid by resident company

non-SA source- S9(4)(a)- dividends paid by non-resident company

interest

Interest has SA source if either apply: if person who borrowed money is SA res- S9(2)(b)(i)

or funds are used in SA- S9(2)(b)(ii)

rental income is sourced

where the asset is situated

disposals of immovable property- S9(2)(j) and S9(2)(d)

depends if property is inside or outside the RSA

disposals of movable property

resident- SA source if asset is not connected to PE out of RSA and only subject to SA tax-S9(s)(k)(i)

non-resident- SA source if asset is attributable to PE of Non-res inside RSA-S9(2)(k)(i)

services rendered- S9(2)

where the services were physically rendered

apportionment: if services rendered partially inside RSA

Directors fees: rendered at companies head office

amounts from retirement funds

if services rendered in SA then SA source

apportioned if servies rendered in and out of RSA

Annuities: originating cause, the source is where the contract is entered

With holding tax on immovable property-S35A

trigger- non-res sells property in SA so then the buyer must withholds from purchase price and pays SARS

rates for with holding tax on ommovable property

natural- 7.5%

company- 10%

trust- 15%

WHT on immovable property is not a final tax

still included as a taxable capital gain but exempt if proceeds are less than R2 000 000

WHT on interest- ss50A-50H

interest from SA source is paid to non-res

15% rate

payer of interest withholds

this is a final tax

Exemptions: S50D- paid to government, for listed debt, foreign person physically present, interest if attributable to PE of non-res in SA

calculating tax for non-res

only SA source of income

Normal progressive tax table

rebates fully apply

WHT on imovable property deducted from normal tax pyable

WHT on interest is a final tax and is not included