“translate” means the restatement of an exchange item in the local currency at the end of any year of assessment, by applying the ruling exchange rate to such exchange item.

 “transaction date” means, in relation to –

(a)     ……….

(b)     a debt owing by a person, the date on which such debt was actually incurred;

(bA)   a preference share, the date on which the preference share was issued or acquired;

[Paragraph (bA) inserted by section 22(1)(e) of Act 5 of 2026 deemed effective on 1 January, 2025 and applicable in respect of years of assessment commencing on or after that date]

(c)     ……….

(d)     a debt owing to a person, the date on which the amount payable in respect of such debt accrued to such person or the date on which such debt was acquired by such person in any other manner;

(e)     a forward exchange contract, the date on which such contract was entered into;

(f)      a foreign currency option contract, the date on which such contract was entered into or acquired; and

(g)     an amount which constitutes a unit of currency, the date on which that amount was acquired;

“ruling exchange rate” means, in relation to an exchange item, where such exchange item is –

(a)     a debt or a preference share in a foreign currency on-

(i)      transaction date, the spot rate on such date;

(ii)     the date it is translated, the spot rate on such date; or

(iii)    the date it is realised, the spot rate on such date:

Provided that where the rate prescribed in respect of a debt or a preference share in terms of this definition is the spot rate on transaction date or the spot rate on the date on which such debt is realised, and any consideration paid or incurred or received or accrued in respect of the acquisition or disposal of such debt or preference share was determined by applying a rate other than such spot rate on transaction date or date realised, such spot rate shall be deemed to be the acquisition rate or disposal rate, as the case may be;

[Paragraph (a) amended by section 53(1)(d) and (e) of Act 22 of 2012 and by section 22(1)(c) and (d) of Act 5 of 2026 deemed effective on 1 January, 2025 and applicable in respect of years of assessment commencing on or after that date]

(b)     a forward exchange contract on –

(i)      transaction date, the forward rate in terms of such forward exchange contract;

(ii)     the date it is translated, the market-related forward rate available for the remaining period of such forward exchange contract or in respect of a forward exchange contract which is an affected contract, the forward rate in terms of such forward exchange contract;

(iii)    the date it is realised, the spot rate on such date; or

(c)     a foreign currency option contract on–

(i)      transaction date, a nil rate;

(ii)     the date it is translated–

(aa)   in relation to a foreign currency option contract which is not an affected contract, the rate obtained by dividing the market value of such foreign currency option contract on that date by the foreign currency amount as specified in such foreign currency option contract; or

(bb)   in relation to a foreign currency option contract which is an affected contract, the rate obtained by dividing any amount included or deducted, as the case may be, in terms of subsection (3)(b) by the foreign currency amount, as specified in such affected contract;

(iii)    the date it is realised, the rate obtained by dividing the market value of such foreign currency option contract on that date by the foreign currency amount as specified in such foreign currency option contract: Provided that where such foreign currency option contract is realised by the disposal thereof, the rate shall be obtained by dividing the amount received or accrued as a result of the disposal of such foreign currency option contract, by the foreign currency amount as specified in such foreign currency option contract:

(d)     an amount which constitutes a unit of currency, on-

(i)      transaction date, the spot rate on that date;

(ii)     the date it is translated, the spot rate on that date; or

(iii)    the date it is realised, the spot rate on that date:

: Provided that the Commissioner may, having regard to the particular circumstances of the case, prescribe an alternative rate to any of the aforementioned prescribed rates to be applied by a person in such particular circumstances, if such alternative rate is used for the purposes of financial reporting pursuant to IFRS;

[Proviso substituted by section 44 of Act 25 of 2015 effective on 8 January 2016]

“realised” means, in relation to an exchange item, where such exchange item is –

(a)     a debt in any foreign currency, when and to the extent to which payment is received or made in respect of such debt, or when and to the extent to which debt is settled or disposed of in any other manner;

(b)     a forward exchange contract, when payment is received or made in respect of such forward exchange contract;

(c)     a foreign currency option contract, when payment is received or made in respect of the right in terms of such foreign currency option contract having been exercised, or when such foreign currency option contract expires without such right having been exercised, or when such foreign currency option contract is disposed of;

[Paragraph (c) substituted by section 11(1)(a) of Act 140 of 1993 and amended by section 27(1)(c) of Act 74 of 2002 and by section 22(1)(a) of Act 5 of 2026 deemed effective on 1 January, 2025 and applicable in respect of years of assessment commencing on or after that date]

(d)     an amount which constitutes a unit of currency, when that amount is disposed of; or

[Paragraph (d) added by section 27(1)(d) of Act 74 of 2002 and amended by section 22(1)(a) of Act 5 of 2026 deemed effective on 1 January, 2025 and applicable in respect of years of assessment commencing on or after that date]

(e)     a preference share, when the share is cancelled or disposed of;

[Paragraph (e) added by section 22(1)(b) of Act 5 of 2026 deemed effective on 1 January, 2025 and applicable in respect of years of assessment commencing on or after that date]

“premium or discount on a forward exchange contract” ……….

[Definition of “premium or discount on a forward exchange contract” deleted by section 44 of Act 25 of 2015 effective on 8 January 2016]

“option strike rate” means the specified exchange rate as referred to in the definition of “foreign currency option contract”;

“market value”, in relation to a foreign currency option contract, means –

(a)     in the case of a person who for accounting purposes uses a market–related valuation method in terms of a practice consistently applied by him to determine the value of all his foreign currency option contracts, the market–related value so determined; or

(b)     in the case of any other person, the intrinsic value of such foreign currency option contract;

“local currency” means in relation to-

(a)     any person in respect of an exchange item which is attributable to any permanent establishment outside the Republic, the functional currency of that permanent establishment: Provided that for purposes of this paragraph any exchange item shall be deemed not to be attributable to any such permanent establishment if the functional currency of that permanent establishment is the currency of a country which has an official rate of inflation of 100 per cent or more throughout the relevant year of assessment;

(b)     any resident, other than a headquarter company, a domestic treasury management company and an international shipping company as defined in section 12Q(1), in respect of an exchange item which is not attributable to a permanent establishment outside the Republic, the currency of the Republic;

[Paragraph (b) substituted by section 30 of Act 34 of 2019]

(c)     any person that is not a resident in respect of any exchange item which is attributable to a permanent establishment in the Republic, the currency of the Republic;

(d)     any headquarter company in respect of an exchange item which is not attributable to a permanent establishment outside the Republic, the functional currency of that headquarter company;

(e)     any domestic treasury management company in respect of an exchange item which is not attributable to a permanent establishment outside the Republic, the functional currency of that domestic treasury management company;

(f)      any international shipping company defined in section 12Q, in respect of an amount which is not attributable to a permanent establishment outside the Republic, the functional currency of that international shipping company;

“intrinsic value”, in relation to a foreign currency option contract, means the value for the holder or writer thereof, as the case may be, determined by applying the difference between –

(a)     the spot rate on translation date or the date on which the foreign currency option contract is realised, as the case may be; and

(b)     the option strike rate,

to the amount of foreign currency as specified in such foreign currency option contract: Provided that such foreign currency option contract shall have a nil value for the holder or writer thereof if such holder thereof would have sustained a loss had he exercised his right in terms of such foreign currency option contract on such translation date or date realised due to the unfavourable difference between the option strike rate and the spot rate on such translation date or date realised;

“forward rate” means the specified exchange rate as referred to in the definition of “forward exchange contract”;