“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”;

“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;

“foreign currency” in relation to any exchange item of a person, means any currency which is not local currency;

“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]