Date: 2 September 1985

Sub-paragraph (c)(ii) of the definition of "gross income" in section 1 of the Income Tax Act provides as follows:—

It is accepted that this deeming provision is not of application where a natural person (Mr. X) is nominated by his employer to act as a director of a company (Company A) in which the said employer is a shareholder and where any directors fees which may become payable by Company A in respect of the directorship of Mr. X are in terms of a contract payable by Company A either to the employer direct, or to Mr. X subject to a condition requiring Mr. X to pay the directors fees over to and for the benefit of the employer.

The directors fees will, therefore, not be subject to tax in the hands of Mr. X but will be taxed in the hands of the employer.