‘avoidance arrangement’ means any arrangement that, but for this Part, results in a tax benefit;
Author: admin_kmos
“Arrangement” definition of section 80L of ITA
For purposes of this Part –
‘arrangement’ means any transaction, operation, scheme, agreement or understanding (whether enforceable or not), including all steps therein or parts thereof, and includes any of the foregoing involving the alienation of property;
Section 80L (ITA) – Definitions
80L. Definitions
Section 80K (ITA) – Interest
80K. Interest
Where the Commissioner has applied this Part in determining a party’s liability for tax, the Commissioner may not exercise his or her discretion in terms of section 89quat(3) or (3A) to direct that interest is not payable in respect of that portion of any tax which is attributable to the application of this Part.
Section 80J (ITA) – Notice
80J. Notice
(1) The Commissioner must, prior to determining any liability of a party for tax under section 80B, give the party notice that he or she believes that the provisions of this Part may apply in respect of an arrangement and must set out in the notice his or her reasons therefor.
(2) A party who receives notice in terms of subsection (1) may, within 60 days after the date of that notice or such longer period as the Commissioner may allow, submit reasons to the Commissioner why the provisions of this Part should not be applied.
(3) The Commissioner must within 180 days of receipt of the reasons or the expiry of the period contemplated in subsection (2) –
(a) request additional information in order to determine whether or not this Part applies in respect of an arrangement;
(b) give notice to the party that the notice in terms of subsection (1) has been withdrawn; or
(c) determine the liability of that party for tax in terms of this Part.
(4) If at any stage after giving notice to the party in terms of subsection (1), additional information comes to the knowledge of the Commissioner, he or she may revise or modify his or her reasons for applying this Part or, if the notice has been withdrawn, give notice in terms of subsection (1).
Section 80I (ITA) – Use in the alternative
80I. Use in the alternative
The Commissioner may apply the provisions of this Part in the alternative for or in addition to any other basis for raising an assessment.
Section 80H (ITA) – Application to steps in or parts of an arrangement
80H. Application to steps in or parts of an arrangement
The Commissioner may apply the provisions of this Part to steps in or parts of an arrangement.
Section 80G (ITA) – Presumption of purpose
80G. Presumption of purpose
(1) An avoidance arrangement is presumed to have been entered into or carried out for the sole or main purpose of obtaining a tax benefit unless and until the party obtaining a tax benefit proves that, reasonably considered in light of the relevant facts and circumstances, obtaining a tax benefit was not the sole or main purpose of the avoidance arrangement.
(2) The purpose of a step in or part of an avoidance arrangement may be different from a purpose attributable to the avoidance arrangement as a whole.
“Accommodating or tax-indifferent party” definition of section 80E of ITA
(1) A party to an avoidance arrangement is an accommodating or tax-indifferent party if –
(a) any amount derived by the party in connection with the avoidance arrangement is either –
(i) not subject to normal tax; or
(ii) significantly offset either by any expenditure or loss incurred by the party in connection with that avoidance arrangement or any assessed loss of that party; and
(b) either –
(i) as a direct or indirect result of the participation of that party an amount that would have –
(aa) been included in the gross income (including the recoupment of any amount) or receipts or accruals of a capital nature of another party would be included in the gross income or receipts or accruals of a capital nature of that party; or
(bb) constituted a non-deductible expenditure or loss in the hands of another party would be treated as a deductible expenditure by that other party; or
(cc) constituted revenue in the hands of another party would be treated as capital by that other party; or
(dd) given rise to taxable income to another party would either not be included in gross income or be exempt from normal tax; or
(ii) the participation of that party directly or indirectly involves a prepayment by any other party,
Section 80F (ITA) – Treatment of connected persons and accommodating or tax-indifferent parties
80F. Treatment of connected persons and accommodating or tax-indifferent parties
For the purposes of applying section 80C or determining whether or not a tax benefit exists for purposes of this Part, the Commissioner may –
(a) treat parties who are connected persons in relation to each other as one and the same person; or
(b) disregard any accommodating or tax-indifferent party or treat any accommodating or tax-indifferent party and any other party as one and the same person.