UNIVERSITY OF JOHANNESBURG

TAXATION 300– 2024

EXEMPT INCOME – COMPANIES

OUTLINE:
REFERENCES
Income Tax Act Haupt
WHERE TO FIND INFO Chapter 4, 8, 16
1. Introduction Section 10 4.1
2. Definitions
 Gross income Section 1
 Income Section 1
 Dividend (“dividend” means any amount………………… any Section 1
share in that company) – do not read further in the act
3. Exemptions Section 10
 Local Dividends 10(1)(k)(i) 4.5. and 4.5.1 – Stop
reading before REIT

4.5.2 – Stop reading

 Foreign Dividends S10B(2)(a) & before heading:
10B(3)(a) “Annuities and
10B(3)(b) leave Payments out of
out (cc) foreign dividends”

 Dividend paid by way of annuity 10(2)(b) 4.6

Leave out the following:

ACT
sections 10(1)(a), (bA), (bB), (c), (cA), (cE), (cG) to (cQ), (d), (e),
(gE), (gH), (gJ), (hA), (iB), (j), (k)(i) proviso (dd) - (ii) and proviso
(kk), (l), (IA), (nC), (nE), (o)(i), (o)(iA), (o)(ii) proviso (B), (p), (r),
(t), (y) & (yA) – (zL)
TEXTBOOK
4.2, 4.10, 4.15, 4.16, 4.17, 4.18
All other exemptions relate to individuals and will only be dealt with in Semester 2

What is Exempt Income: Exempt income is simply income that is free from normal tax.

1
OBJECTIVES:
You must be able to:
Identify which amounts are exempt for income tax purposes
Calculate & discuss taxable income implications by applying section 10

BACKGROUND

Framework for computation of normal tax

GROSS income Section 1 XXX

Less
EXEMPT income Section 10 (XX)
INCOME XXX
Less
Allowable deductions Section 11 -19 & (XX)
23
Less
Allowable allowances Section 11 -19 & (XX)
23
Add
Taxable capital gains Section 26A XX
TAXABLE INCOME / XXX
(loss)

Please note for an amount to be exempt is should have been included in Gross income first.