(1) For the purposes of this section –
“intrinsic value”, in relation to an option contract, means an amount equal to the difference between the market price or value of an asset, index, currency, rate of interest or any other factor, as provided for in the option contract, on the date of acquisition of the option contract and the pre–arranged price or value provided for in the option contract; and
24L. Incurral and accrual of amounts in respect of option contracts
(2) Any amount contemplated in the definition of “interest rate agreement” in subsection (1) shall for the purposes of this Act be deemed to have been incurred by or accrued to, as the case may be, a person contemplated in such definition on a day to day basis during the period in respect of which it is calculated.
(3) Where any amount contemplated in subsection (2) is to be calculated with reference to a variable rate for the purposes of such subsection, such amount shall be calculated with reference to the variable rate applicable on the date such amount is to be calculated to determine all amounts payable or receivable after such date.
(1) For the purposes of this section “interest rate agreement” means any agreement in terms of which any person –
(a) acquires the right to receive –
(i) an amount calculated by applying any rate of interest to a notional principal amount specified or referred to in such agreement; or
(ii) an amount calculated with reference to the difference between any combination of rates of interest applied to a notional principal amount specified or referred to in such agreement; or
(iii) a fixed amount specified or referred to in such agreement as consideration in terms of such agreement whereunder the obligation is imposed to pay any other amount as contemplated in paragraph (b) (i) in terms of such agreement or an amount equal to the difference between such fixed amount and such other amount; or
(b) becomes liable to pay –
(i) an amount calculated by applying any rate of interest to a notional principal amount specified or referred to in such agreement; or
(ii) an amount calculated with reference to the difference between any combination of rates of interest applied to a notional principal amount specified or referred to in such agreement; or
(iii) a fixed amount specified or referred to in such agreement as consideration in terms of such agreement whereunder the right is acquired to receive any other amount as contemplated in paragraph (a) (i) in terms of such agreement or an amount equal to the difference between such fixed amount and such other amount.
24K. Incurral and accrual of amounts in respect of interest rate agreements
(2) Subject to sections 8F, 8FA and subsection (4), there must be included in or deducted from the income, as the case may be, of any covered person for any year of assessment all amounts in respect of financial assets and financial liabilities of that covered person that are recognised in profit or loss in the statement of comprehensive income in respect of financial assets and financial liabilities of that covered person that are measured at fair value in profit or loss in terms of IFRS 9 or, in the case of commodities, at fair value less cost to sell in profit or loss in terms of IFRS for that year of assessment, excluding any amount in respect of-
[Words preceding paragraph (a) substituted by section 44 of Act 17 of 2017 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]
(a) a financial asset that is-
(i) a share;
(ii) an endowment policy;
(iii) an interest held in a portfolio of a collective investment scheme;
[Subparagraph (iii) amended by section 43 of Act 43 of 2014 effective on 1 January 2014]
(iv) an interest in a trust; or
[Subparagraph (iv) amended by section 43 of Act 43 of 2014 effective on 1 January 2014]
(v) an interest in a partnership,
[Subparagraph (v) added by section 43 of Act 43 of 2014 effective on 1 January 2014]
if that financial asset does not constitute trading stock; or
[Words following subparagraph (v) substituted by section 44 of Act 17 of 2017 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]
(b) a dividend or foreign dividend received by or accrued to a covered person, other than a dividend or foreign dividend in respect of a share that is measured at fair value in profit or loss in terms of this subsection and that serves as a hedge in respect of a financial asset or financial liability of that person that is measured at fair value in profit or loss in terms of this subsection;
[Paragraph (b) amended by section 27(1) of Act 23 of 2020 and substituted by section 23(1) of Act 5 of 2026 effective on 1 January, 2026 and applicable in respect of years of assessment commencing on or after that date]
(c) a dividend distributed.
[Paragraph (c) added by section 27(1) of Act 23 of 2020 effective on 1 January, 2021 and applicable to dividends declared on or after that date]
[Subsection (2) amended by section 44(1)(c) of Act 17 of 2017 effective on 1 January, 2018 and applicable in respect of years of assessment commencing on or after that date]
(2A) A covered person must include in or deduct from income for a year of assessment a realised gain or a realised loss that is recognised in a statement of other comprehensive income as contemplated in IFRS 9 if that realised gain or realised loss is attributable to a change in the credit risk of the financial liability as contemplated in IFRS 9 and that instrument was issued in any year of assessment commencing on or after 1 January 2018.
[Subsection (2A) inserted by section 44 of Act 17 of 2017 and substituted by section 44 of Act 23 of 2018 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]
(2B) Where a covered person has, during any year of assessment preceding the year of assessment commencing on or after 1 January 2018, included in or deducted from income any amount attributable to a change in the credit risk of a financial liability issued by that covered person measured at fair value through profit or loss in terms of subsection (2), such covered person must include in or deduct from income, as the case may be, any amount in respect of a change in credit risk of that financial liability recognised in other comprehensive income during any year of assessment commencing on or after 1 January 2018.
[Subsection (2B) inserted by section 44 of Act 17 of 2017 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]
(3) Any amount contemplated in the definition of “gross income” or any amount required to be taken into account in determining the taxable income in terms of any provision of Part I of Chapter II, or in determining any assessed capital loss of a covered person in respect of a financial asset or a financial liability contemplated in subsection (2) must only be taken into account in terms of this section
[Subsection (3) substituted by section 43(1)(f) of Act 43 of 2014 and by section 21(1) of Act 42 of 2024 deemed to have come into operation on 31 December, 2024 and applicable in respect of years of assessment ending on or after that date]
(4) Subsection (2) does not apply to any amount in respect of a financial asset or a financial liability of a covered person where-
(a) a covered person and another person that is not a covered person, are parties to an agreement in respect of a financial asset or financial liability; and
[Paragraph (a) substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]
(b) the agreement contemplated in paragraph (a) was entered into solely or mainly for the purpose of a reduction, postponement or avoidance of liability for tax, which, but for that agreement, would have been or would become payable by the covered person.
(5) In addition to any amount included in or deducted from the income of any person in terms of subsection (2), there must be included in or deducted from the income, as the case may be, of any person for the post-realisation years of that person an amount determined in terms of subsection (6).
(6) For the purposes of subsection (5)-
(a) if-
(i) the financial reporting values of all financial assets of a nature as described in subsection (2) held by that person as at the end of the realisation year of that person exceed the tax base amount attributed to those financial assets as at the end of the realisation year of that person; or
[Subparagraph (i) substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]
(ii) the tax base amount attributed to all financial liabilities of a nature as described in subsection (2) held by that person as at the end of the realisation year of that person exceeds the financial reporting values of those financial liabilities as at the end of the realisation year of that person,
[Subparagraph (ii) substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]
one-third of the excess must be included in the income of that person;
(b) if-
(i) the tax base amount attributed to all financial assets of a nature as described in subsection (2) held by that person as at the end of the realisation year of that person exceeds the financial reporting values of those financial assets as at the end of the realisation year of that person; or
[Subparagraph (i) substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]
(ii) the financial reporting values of all financial liabilities of a nature as described in subsection (2) held by that person as at the end of the realisation year of that person exceed the tax base amount attributed to those financial liabilities as at the end of the realisation year of that person,
[Subparagraph (ii) substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]
one-third of the excess must be deducted from the income of that person.
(7) If a person ceases to be a covered person before the expiry of the post-realisation years of that person, the amounts determined in terms of subsection (6) which have not been included in or deducted from, as the case may be, the income of that person, must be included in or deducted from the income of that person in the year of assessment that it ceases to be a covered person.
(8) Where a person ceases to be a covered person, that person is deemed to have-
(a) disposed of its financial assets and redeemed its financial liabilities that were subject to tax in terms of subsection (2); and
(b) immediately reacquired those financial assets and incurred those financial liabilities,
at an amount equal to the market value of those financial assets on the last day of the year of assessment of that person before that person ceased to be a covered person.
(9) Where a financial asset held by or financial liability owed by a covered person at the end of the year of assessment immediately preceding the year of assessment commencing on or after 1 January 2018 would have ceased to be subject to tax or would have become subject to tax in terms of subsection (2), had IFRS 9 applied on the last day of that immediately preceding year of assessment, that covered person is deemed to have-
(a) disposed of that financial asset or redeemed that financial liability; and
(b) immediately reacquired that financial asset or incurred that financial liability,
for an amount equal to the market value of that financial asset or financial liability on that day.
[Subsection (9) inserted by section 44 of Act 17 of 2017 effective on 1 January 2018 and applies in respect of years of assessment commencing on or after that date]
‘tax base’ means tax base as defined in International Accounting Standard 12 of IFRS or any International Accounting Standard replacing International Accounting Standard 12.
‘realisation year’, in relation to a person, means-
(a) where that person is a covered person, the year of assessment of that person immediately preceding the year of assessment ending on or after 1 January 2014; or
(b) where that person becomes a covered person during any year of assessment ending after 1 January 2014, the year of assessment of that person that precedes the first year of assessment of that person in which that person becomes a covered person;
‘post-realisation years’, in relation to a covered person, means-
(a) the year of assessment immediately succeeding the realisation year;
(b) the year of assessment immediately succeeding the year of assessment contemplated in paragraph (a);and
(c) the year of assessment immediately succeeding the year of assessment contemplated in paragraph (b);
‘financial liability’ means a financial liability defined in and within the scope of International Accounting Standard 32 of IFRS or any International Accounting Standard that replaces International Accounting Standard 32;