Page 101 - P6 Slide Taxation - Lecture Day 7 - Various Topics

Unilateral reliefs

Rebates and deductions for foreign tax (s 6 quat )

South African tax residents, who suffer foreign taxes on their

income, are entitled to some form of relief from those taxes.

The relief is provided in one of the following ways: l

• A rebate (often also called a credit) for the foreign taxes on

the income. This rebate or credit is deducted from the

normal tax otherwise payable by the resident. As such, the

normal tax is reduced by the full amount of the rebate. The

rebate for foreign tax is discussed in 21.6.3.1 of Silk. l

• A deduction for the foreign taxes on the income. Unlike the

rebate, the deduction for foreign taxes is allowed in the

calculation of the resident’s taxable income. The foreign tax

is treated similarly to any other deductible expenditure.

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