6quat. Rebate or deduction in respect of foreign taxes on income
(1) Subject to subsection (2), where the taxable income of any resident during a year of assessment includes-
(a) any income received by or accrued to such resident from any source outside the Republic; or
(b) any proportional amount contemplated in section 9D; or
(c) ……….
(d) ……….
(e) any taxable capital gain contemplated in section 26A, from a source outside the Republic; or
(f) any amount-
(i) contemplated in paragraph (a) or (b) which is received by or accrued to any other person and which is deemed to have been received by or accrued to such resident in terms of section 7;
(ii) of capital gain of any other person from a source outside the Republic and which is attributed to that resident in terms of paragraph 68, 69, 70, 71, 72 or 80 of the Eighth Schedule; or
(iii) contemplated in paragraphs (a), (b) or (e) which represents capital of a trust, and which is included in the income of that resident in terms of section 25B(2A) or taken into account in determining the aggregate capital gain or aggregate capital loss of that resident in terms of paragraph 80(3) of the Eighth Schedule,
in determining the normal tax payable in respect of that taxable income there must be deducted a rebate determined in accordance with this section.
[Words following paragraph (f) substituted by section 10 of Act 15 of 2016 effective on 19 January 2017]
(1A) For the purposes of subsection (1), the rebate shall be an amount equal to the sum of any taxes on income proved to be payable to any sphere of government of any country other than the Republic, without any right of recovery by any person (other than a right of recovery in terms of any entitlement to carry back losses arising during any year of assessment to any year of assessment prior to such year of assessment), by-
(a) such resident in respect of-
(i) any income contemplated in subsection (1)(a); or
(ii) ……….
(iii) any amount of taxable capital gain as contemplated in subsection (1)(e); or
(b) any controlled foreign company, in respect of such proportional amount contemplated in subsection (1)(b), subject to section 72A(3); or
(c) ……….
(d) ……….
(e) ……….
(f) any other person contemplated in subsection (1)(f)(i) or (ii) or any trust contemplated in subsection (1)(f)(iii), in respect of the amount included in the taxable income of that resident as contemplated in subsection (1)(f),
which is so included in that resident’s taxable income: Provided that-
(i) where such resident is a member of any partnership or a beneficiary of any trust and such partnership or trust is liable for tax as a separate entity in such other country, a proportional amount of any tax payable by such entity, which is attributable to the interest of such resident in such partnership or trust, shall be deemed to have been payable by such resident; and
(ii) for the purposes of this subsection, the amount so included in such resident’s taxable income must be determined without regard to section 10B(3).
(1B) Notwithstanding the provisions of subsection (1A)-
(a) the rebate or rebates of any tax proved to be payable as contemplated in subsection (1A), shall not in aggregate exceed an amount which bears to the total normal tax payable the same ratio as the total taxable income attributable to the income, proportional amount, taxable capital gain or amount, as the case may be, which is included as contemplated in subsection (1), bears to the total taxable income:
Provided that –
(i) in determining the amount of the taxable income that is attributable to that income, proportional amount, taxable capital gain or amount-
(aa) any allowable deductions contemplated in sections 11F and 18A must be deemed to have been incurred proportionately in respect of taxable income derived from sources within and outside the Republic;
(bb) the deduction under section 11F must be allocated in relation to the taxable income from sources within and outside the Republic before taking into account any deduction in terms of that section, subsection (1C) and section 18A; and
(cc) the deduction under section 18A must be allocated in relation to taxable income from sources within and outside the Republic before taking into account any deduction in terms of that section and subsection (1C);
[Paragraph (i) of the proviso substituted by section 11 of Act 24 of 2011, section 4 of Act 17 of 2017 and section 7 of Act 23 of 2018 effective on 1 March 2018, applies in respect of years of assessment commencing on or after that date]
(iA) the taxes contemplated in subsection (1A)(b) that are attributable to any proportional amount which-
(aa) ……….
(bb) relates to any amount contemplated in section 9D(9A)(a) which is not excluded from the application of section 9D(2) in terms of that section or section 9D(9)(b),
shall in aggregate be limited to the amount of the normal tax which is attributable to those proportional amounts;
(iB) the taxes contemplated in subsection (1A)(a)(iii) which are attributable to any taxable capital gain in respect of an asset which is not attributable to a permanent establishment of the resident outside the Republic, must in aggregate be limited to the amount of normal tax which is attributable to that taxable capital gain;
(ii) where the sum of any such taxes proved to be payable (excluding any taxes contemplated in paragraphs (iA) and (iB) of this proviso) exceeds the rebate as so determined (hereinafter referred to as the excess amount), that excess amount may-
(aa) be carried forward to the immediately succeeding year of assessment and shall be deemed to be a tax on income paid to the government of any other country in that year; and
(bb) be set off against the amount of any normal tax payable by that resident during that year of assessment in respect of any amount derived from any other country which is included in the taxable income of that resident during that year, as contemplated in subsection (1), after any tax payable to the government of any other country in respect of any amount so included during such year of assessment which may be deducted in terms of subsection (1) and (1A), has been deducted from the amount of such normal tax payable in respect of such amount so included; and
(iii) the excess amount shall not be allowed to be carried forward for more than seven years reckoned from the year of assessment when such excess amount was for the first time carried forward;
(b) ……….
(c) ……….
(d) ……….
(e) ……….
(1C)
(a) For the purpose of determining the taxable income derived by any resident from carrying on any trade, there may at the election of the resident be allowed as a deduction from the income of such resident so derived the sum of any taxes on income (other than taxes contemplated in subsection (1A)) paid or proved to be payable by that resident to any sphere of government of any country other than the Republic, without any right of recovery by any person other than in terms of a mutual agreement procedure in terms of an international tax agreement or a right of recovery in terms of any entitlement to carry back losses arising during any year of assessment to any year of assessment prior to such year of assessment.
(b) Where, during any year of assessment, any amount was deducted in terms of this subsection from the income of a resident and, in any year of assessment subsequent to that year of assessment, that resident receives any amount by way of refund in respect of the amount so deducted or is discharged from any liability in respect of that amount, so much of the amount so received or so much of the amount of that discharge as does not exceed that amount must be included in the income of that resident in respect of that subsequent year of assessment.
[Subsection (1C) inserted by section 7 of Act 35 of 2007 and substituted by section 3 of Act 22 of 2012, section 6 of Act 25 of 2015 and section 10 of Act 15 of 2016 effective on 1 January 2016, applies in respect of years of assessment commencing on or after that date]
(1D) Notwithstanding subsection (1C), the deduction of any tax paid or proved to be payable as contemplated in that subsection shall not in aggregate exceed the total taxable income (before taking into account any such deduction) attributable to income which is subject to taxes as contemplated in that subsection: Provided that in determining the amount of the taxable income that is attributable to that income-
(a) any allowable deductions contemplated in sections 11F and 18A must be deemed to have been incurred proportionately in respect of attributable and non-attributable taxable income;
(b) the deduction under section 11F must be allocated in relation to the taxable income from attributable and non-attributable taxable income before taking into account any deduction in terms of that section, subsection (1C) and section 18A; and
(c) the deduction under section 18A must be allocated in relation to attributable and non-attributable taxable income before taking into account any deduction in terms of that section and subsection (1C).
[Subsection (1D) inserted by section 7 of Act 35 of 2007, substituted by section 6 of Act 25 of 2015, section 4 of Act 17 of 2017 and section 7 of Act 23 of 2018 effective on 1 March 2018, applies in respect of years of assessment commencing on or after that date]
(2) The rebate under subsection (1) and the deduction under subsection (1C) shall not be granted in addition to any relief to which the resident is entitled under any agreement between the governments of the Republic and the said other country for the prevention of or relief from double taxation, but may be granted in substitution for the relief to which the resident would be so entitled.
(3) For the purposes of this section-
“taxes on income” does not include any compulsory payment to the government of any other country which constitutes a consideration for the right to extract any mineral or natural oil;
(4) For the purpose of this section the amount of any foreign tax proved to be payable as contemplated in subsection (1A) or any amount paid or proved to be payable as contemplated in subsection (1C) in respect of any amount which is included in the taxable income of any resident during any year of assessment, shall be translated to the currency of the Republic on the last day of that year of assessment by applying the average exchange rate for that year of assessment.
[Subsection (4) substituted by section 9 of Act 74 of 2002, section 7 of Act 35 of 2007, section 7 of Act 18 of 2009 and section 6 of Act 25 of 2015 effective on 1 January 2016]
(4A) If the amount translated in accordance with subsection (4) includes a number of cents that is less than one rand, that amount must be rounded off to the nearest rand.
(5) Notwithstanding the provisions of sections 93, 99(1) and 100 of the Tax Administration Act, an additional or reduced assessment in respect of a year of assessment to give effect to subsections (1) and (1A) may be made within a period that does not exceed six years from the date of the original assessment in respect of that year.
[Section 6quat inserted by section 9 of Act 89 of 1969, repealed by section 5 of Act 94 of 1983, inserted by section 5 of Act 85 of 1987, amended by section 5 of Act 28 of 1997, by section 12 of Act 53 of 1999 and by section 16(1) of Act 30 of 2000, substituted by section 4 of Act 59 of 2000(as amended by section 125(1) of Act 74 of 2002) and amended by section 7(a) of Act 35 of 2007. Subsection (5) amended by section 9(1)(m) of Act 74 of 2002 and substituted by section 7(e) of Act 35 of 2007, by section 11(1)(g) of Act 24 of 2011, by section 271 read with paragraph 29 of Schedule 1 of Act 28 of 2011, by section 3 of Act 39 of 2013 and by section 2 of Act 18 of 2023]