46A.  Limitation of expenditure incurred in respect of shares held in an unbundling company

(1)     Notwithstanding any other provision of this Act, if a taxpayer acquires a share in an unbundled company from an unbundling company in terms of an unbundling transaction defined in section 46 and a share in that unbundling company was within a period of two years preceding the acquisition held by a person who was a connected person in relation to the taxpayer at any time during that period, and any amount received by or accrued to that person in respect of the disposal of the share at any time during that period would not have been subject to normal tax or would not have been taken into account for purposes of determining the net income, as defined in section 9D, of that person, the expenditure incurred by the taxpayer in respect of any share held in that company as a result of that unbundling transaction shall not for purposes of this Act exceed an amount determined in accordance with subsection (2).

[Subsection (1) substituted by section 28(1) of Act 20 of 2021 effective on 1 January, 2022 and applicable in respect of the allocation of expenditure to unbundled shares acquired on or after that date]

(2)     The amount to be determined for purposes of subsection (1) is the sum of-

(a)     the cost of the equity share to the connected person contemplated in subsection (1) that first held that share less the sum of all deductions that have been allowed in respect of the share to any connected person that held that share during that period;

(b)     any amount contemplated in paragraph (n) of the definition of ‘gross income’ in section 1 that is required to be included in the income of any connected person that held that share during that period that arises as a result of the disposal of the share by any such person; and

(c)     any capital gain of any connected person that held that share during that period that arises as a result of the disposal of the share by any such person.