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Income Tax Act, 1962 (Act 58 of 1962)

Chapter II: The Taxes

Part I: Normal Tax

9. Source of income

 

(1) For the purposes of this section, ‘royalty’ means any amount that is received or accrues in respect of the use, right of use or permission to use any intellectual property as defined in section 23I.

 

(2) An amount is received by or accrues to a person from a source within the Republic if that amount—
(a) constitutes a dividend received by or accrued to that person;
(b) constitutes interest as defined in section 24J where that interest—
(i) is attributable to an amount incurred by a person that is a resident, unless the interest is attributable to a permanent establishment which is situated outside the Republic; or
(ii) is received or accrues in respect of the utilisation or application in the Republic by any person of any funds or credit obtained in terms of any form of interest-bearing arrangement;
(c) constitutes a royalty that is attributable to an amount incurred by a person that is a resident, unless that royalty is attributable to a permanent establishment which is situated outside the Republic;
(d) constitutes a royalty that is received or accrues in respect of the use or right of use of or permission to use in the Republic any intellectual property as defined in section 23I;
(e) is attributable to an amount incurred by a person that is a resident and is received or accrues in respect of the imparting of or the undertaking to impart any scientific, technical, industrial or commercial knowledge or information, or the rendering of or the undertaking to render, any assistance or service in connection with the application or utilization of such knowledge or information, unless the amount so received or accrued is attributable to a permanent establishment which is situated outside the Republic;
(f) is received or accrues in respect of the imparting of or the undertaking to impart any scientific, technical, industrial or commercial knowledge or information for use in the Republic, or the rendering of or the undertaking to render, any assistance or service in connection with the application or utilisation of such knowledge or information;
(g) is received or accrues in respect of the holding of a public office to which that person has been appointed or is deemed to have been appointed in terms of an Act of Parliament;
(h) is received or accrues in respect of services rendered to or work or labour performed for or on behalf of any employer—

(i)        in the national, provincial or local sphere of government of the Republic;

(ii) that is a constitutional institution listed in Schedule 1 to the Public Finance Management Act;
(iii) that is a public entity listed in Schedule 2 or 3 to that Act; or
(iv) that is a municipal entity as defined in section 1 of the Local Government: Municipal Systems Act, 2000 (Act No. 32 of 2000);
(i) constitutes a lump sum, a pension or an annuity payable by a pension fund, pension preservation fund, provident fund or provident preservation fund and the services in respect of which that amount is so received or accrues were rendered within the Republic: Provided that if the amount is received or accrues in respect of services which were rendered partly within and partly outside the Republic, only so much of that amount as bears to the total of that amount the same ratio as the period during which the services were rendered in the Republic bears to the total period during which the services were rendered must be regarded as having been received by or accrued to the person from a source within the Republic;

[Subsection (2)(i) amended by section 18(1)(a) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016 - commenced 1 March 2017]

(j) constitutes an amount received or accrued in respect of the disposal of an asset that constitutes immovable property held by that person or any interest or right of whatever nature of that person to or in immovable property contemplated in paragraph 2 of the Eighth Schedule and that property is situated in the Republic;
(k) constitutes an amount received or accrued in respect of the disposal of an asset other than an asset contemplated in paragraph (j) if—

(i)        that person is a resident and—

(aa) that asset is not attributable to a permanent establishment of that person which is situated outside the Republic; and
(bb) the proceeds from the disposal of that asset are not subject to any taxes on income payable to any sphere of government of any country other than the Republic; or
(ii) that person is not a resident and that asset is attributable to a permanent establishment of that person which is situated in the Republic; or
(l) is attributable to any exchange difference determined in terms of section 24I in respect of any exchange item as defined in that section to which that person is a party if—

(i)        that person is a resident and—

(aa) that exchange item is not attributable to a permanent establishment of that person which is situated outside the Republic; and
(bb) that amount is not subject to any taxes on income payable to any sphere of government of any country other than the Republic; or
(ii) that person is not a resident and that exchange item is attributable to a permanent establishment of that person which is situated in the Republic.

 

(3) [Subsection (3) deleted by section 18(1)(b) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016) - commenced 1 March 2017

 

(4) An amount is received by or accrues to a person from a source outside the Republic if that amount—
(a) constitutes a foreign dividend received by or accrued to that person;
(b) constitutes interest as defined in section 24J(1) received by or accrued to that person that is not from a source within the Republic in terms of subsection (2)(b);

[Subsection (4)(b) amended by section 11 of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015]

(c) constitutes a royalty received by or accrued to that person that is not from a source within the Republic in terms of subsection (2)(c) or (d);
(d) constitutes an amount received or accrued to that person in respect of the disposal of an asset that is not from a source within the Republic in terms of subsection (2)(j) or (k); or
(e) is attributable to any exchange difference determined in terms of section 24I in respect of any exchange item as defined in that section to which that person is a party and is not from a source within the Republic in terms of subsection (2)(1).