“forward exchange contract” means any agreement in terms of which any person agrees with another person to exchange an amount of currency for another currency at some future date at a specified exchange rate;
Author: admin_kmos
“Foreign currency” definition of section 24I of ITA
“foreign currency” in relation to any exchange item of a person, means any currency which is not local currency;
“Exchange item” definition of section 24I of ITA
“exchange item” of or in relation to a person means an amount in a foreign currency-
(a) which constitutes any unit of currency acquired and not disposed of by that person;
(b) owing by or to that person in respect of a debt incurred by or payable to such person;
(c) owed by or to that person in respect of a forward exchange contract;
[Paragraph (c) substituted by section 20(1)(a) of Act 42 of 2024 effective on 1 January, 2025 and applicable in respect of years of assessment commencing on or after that date]
(d) where that person has the right or contingent obligation to buy or sell that amount in terms of a foreign currency option contract; or
[Paragraph (d) substituted by section 20(1)(a) of Act 42 of 2024 effective on 1 January, 2025 and applicable in respect of years of assessment commencing on or after that date]
(e) that constitutes a preference share as defined in section 8EA(1), in a foreign company;
[Paragraph (e) added by section 20(1)(b) of Act 42 of 2024 effective on 1 January, 2025 and applicable in respect of years of assessment commencing on or after that date]
[Definition of “exchange item” amended by section 18(1)(b) of Act 21 of 1994 and substituted by section 36(1)(a) of Act 60 of 2001 deemed to have come into operation on 1 October, 2001]
“Exchange difference” definition of section 24I of ITA
“exchange difference” means the foreign exchange gain or foreign exchange loss in respect of an exchange item during any year of assessment determined by multiplying such exchange item by the difference between –
(a) the ruling exchange rate on transaction date in respect of such exchange item during that year of assessment, and –
(i) the ruling exchange rate at which such exchange item is realised during that year of assessment; or
(ii) the ruling exchange rate at which such exchange item is translated at the end of that year of assessment; or
(b) the ruling exchange rate at which such exchange item was translated at the end of the immediately preceding year of assessment or at which it would have been translated had this section been applicable at the end of that immediately preceding year of assessment, and –
(i) the ruling exchange rate at which such exchange item is realised during that year of assessment; or
(ii) the ruling exchange rate at which such exchange item is translated at the end of that year of assessment;
“Disposal rate” definition of section 24I of ITA
“disposal rate” means the exchange rate in respect of an exchange item obtained by dividing the amount received or accrued in respect of the disposal of such exchange item by the foreign currency amount in respect of such exchange item;
“Affected contract” definition of section 24I of ITA
“affected contract” means any foreign currency option contract or forward exchange contract to the extent that the foreign currency option contract or forward exchange contract has been entered into by any person during any year of assessment to serve as a hedge in respect of a debt, where-
(a) that debt-
(i) is to be utilised by that person for the purposes of acquiring any asset or for financing any expenditure; or
(ii) will arise from the sale of any asset or supply of any services,
in terms of an agreement entered into by that person in the ordinary course of the person’s trade prior to the end of the current year of assessment; and
(b) that debt has not yet been incurred by such person or the amount payable in respect of such debt has not yet accrued during that current year of assessment;
[Definition of “affected forward exchange contract” inserted by section 18 of Act 21 of 1994, substituted by section 13 of Act 36 of 1996, amended by section 35 of Act 30 of 1998 and substituted by section 53 of Act 22 of 2012 and section 42 of Act 17 of 2017 effective on 18 December 2017]
“Acquisition rate” definition of section 24I of ITA
(1) For the purposes of this section –
“acquisition rate” means the exchange rate in respect of an exchange item obtained by dividing the amount of the expenditure incurred for the acquisition of such exchange item by the foreign currency amount in respect of such exchange item;
Section 24I (ITA) – Gains or losses on foreign exchange transactions
24I. Gains or losses on foreign exchange transactions
Subsections 2, 3, 4 and 5 of section 24H of ITA
(2) Where any trade or business is carried on in partnership, each member of such partnership shall, notwithstanding the fact that he may be a limited partner, be deemed for the purposes of this Act to be carrying on such trade or business.
(3) Notwithstanding anything to the contrary in this Act contained, the amount of any allowance or deduction which may be granted to any taxpayer under any provision of this Act in respect of or in connection with any trade or business carried on by him in a partnership in relation to which he is a limited partner shall not in the aggregate exceed the sum of –
(a) the amount, whether it consists of the taxpayer’s contribution to the partnership or of any other amount, for which the taxpayer is or may be held liable to any creditor of the partnership; and
(b) any income received by or accrued to the taxpayer from such trade or business.
(4) Any allowance or deduction which has been disallowed under the provisions of subsection (3) shall be carried forward and be deemed to be an allowance or deduction to which the taxpayer is entitled in the succeeding year of assessment.
(5)
(a) Where any income has in common been received by or accrued to the members of any partnership or foreign partnership, a portion (determined in accordance with any agreement between such members as to the ratio in which the profits or losses of the partnership are to be shared) of such income shall, notwithstanding anything to the contrary contained in any law or the relevant agreement of partnership, be deemed to have been received by or to have accrued to each such member individually on the date upon which such income was received by or accrued to them in common.
(b) Where a portion of any income is under the provisions of paragraph (a) deemed to have been received by or to have accrued to a taxpayer, a portion (determined as aforesaid) of any deduction or allowance which may be granted under the provisions of this Act in the determination of the taxable income derived from such income shall be granted in the determination of the taxpayer’s taxable income so derived.
“Limited partner” definition of section 24H of ITA
(1) For the purposes of this section, ‘limited partner’ means any member of a partnership en commandite, an anonymous partnership, any similar partnership or a foreign partnership, if such member’s liability towards a creditor of the partnership is limited to the amount which the member has contributed or undertaken to contribute to the partnership or is in any other way limited.