Source Rules and Foreign Tax Credits

South Africa follows a residency-based tax system, meaning that residents are taxed on their worldwide income, regardless of the source of the income. By contrast, non-residents are only subject to tax on income earned from a South Africa source.

Section 9 of the Income Tax Act (“Act”) determines the source of specific types of income while our common law rules as laid down by the courts determines the sources of all other types of income.

As residents are taxed on their worldwide income, their foreign income may taxed twice and therefore such double taxation may be alleviated by tax relief contained in a relevant double tax treaty or by allowing a rebate in terms of section 6quat of the Act.

During this webinar series we unpack the following:

  • Residency based tax systems.
  • The source rules provided for under section 9 of the Act and common law rules for source of income.
  • Unilateral relief from double taxation:
    • Section 6quat of the Act.
  • Bilateral relief from double taxation:
    • Double Tax Agreements.

CPD:  3 hours