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Exempt Income because of entity, Exemptions: Special type of Income,…
Exempt Income
because of entity
Government and certain non-profit organisations
10(1)(c)
Pension of any State President or his surviving spouse prior to May 1994
10(1)(cA)
Certain bodies established by law (SARS Approved)
10(1)(c)
Government of other countries
10(1)(cE)
Registered political parties
10(1)(a)
The government of the republic in the national, provincal or local level
10(1)(t)
quasi-gvt organisations (eg. DBSA, CSIR)
Certain funds, public institutions, societies & associations
10(1)(cQ)
Small business funding entities (1/3/15)
10(1)(d)
Retirement funds, benefit funds, Prof bodies
10(1)(cO)
Recreational Clubs (approved by comm)
10(1)(e)
Bodies corporate(levies received)
10(1)(cN)
PBO's (approved by comm)
Exemptions:
Special type of Income
1.) Pension received
S10(1)(gA)
Disability pension
S10(1)(g)
Any amount received as:
war pension
compensation e.g)diseases contracted due to work
S10(1)(gB)
Compensation received i.t.o
Funeral benefits
Workmen's compensation Act
Compensation i.r.o RAF
Compensation for death of employee during course of employment
limit exemption to R300 000
Compensation for occupational injuries and diseases Act
S10(1)(gC)
Foreign pensions
Past employment
from a foreign insurer
South African resident receiving pension due to
2.) UIF Benefits
S10(1)(mB)
Any benefit or allowance payable in terms of the UIF Act is exempt
3.) SA Source Interest received by non-resident
S10(1)(h)
this will be exempt
Unless :red_cross:
the natural person has been physically present in SA for more than 183 days
Debt is connected to a permanent establishment in SA
4.) Interest Income
S10(1)(i)
Only applicable to Natural persons
Foreign Interest
Interest is not exempt
Local Interest
Persons who are 65 or greater
Exempt capped at R34 500
Persons who are less than 65
Exempt capped at R23 800
5.) Tax free Investment
all proceeds exempt from tax
Exemption Cap
Contribute up to
R33 000 per year
R500 000 per lifetime
limitation
6.) SA Dividends
S10(1)(k)
Accrued or received by any person are exempt
7.) Foreign Dividends
S10B(2)
two formulas need to be applied
to be exempt
Participation exemption
holds at least 10% of total equity shares and voting rights
Full exempt
Person receiving dividend
Ratio exemption
formula
A=B*C
A= exemption
B=
if
Natural person: 25/45
B=
if
Company:8/28
C= Price of the dividend
8.) Dividends paid as annuity
This section states that the
S10(1)(h)
exemption in respect of
SA soured Interest received by non-resident
and the
S10(1)(k)
exemption i.r.o
SA dividends
does not apply if the interest or dividends are paid to the person as an annuity
9.) Royalties paid to non residents
Subject to withholding tax of 15%
will be exempt
unless
the natural person has been physically present in SA for more than 183 days
Or the intellectual property is connected to a permanent establishment in SA
Exemptions:
Special type of Income
10.) Alimony and maintenance
S10(1)(u)
If divorce took place after 21 March 1962
11.) Uniform Allowance
S10(1)(nA)
Must wear special uniform as a condition of employment
clearly distinguishable
12.) Bursaries and scholarships
three requirements
enable person to study
Recognised educational or research institution
Bona fide(genuine) bursary
Additional requirements
Bursary for non-employee
Exempt
Bursary for employee
Exempt
if paid back on failure to complete course
S10(1)(q)
Bursary for employee relative
employee earns > R600 000 p.a
No exempt
employee earns < R600 000 p.a
Grade R - Matric
Limit
R20 000
Tertiary
Limit
R60 000
Subsidies, rebates and grants
An government grant or payment
Approved and identified by the minister
Purchased Annuities
S10A
to divide the annuity into capital and income portion
the capital portion is exempt
Capital Element
exempt portion - "Y"
is calculated as follows
Y=A/B*C
B
The total expected returns of all the annuities
if its a lifetime annuity, use the life expectancy test
C
The amount of the annuity
can be monthly, annually or in total
The capital portion being 1% of the total annuity
A
being the lumpsum paid
S10A
exempts a portion of a purchased annuity amount
Individuals
Special trusts
A portion of the lumpsum resulting from the commutation or termination of the annuity contract is also exempted.
Formula for calculating exempt portion is
X=A-D
A being the amount originally paid for the annuity
D being the Total of previously exempt portions to date
X being the exempt portion