80E. Accommodating or tax-indifferent parties
Author: admin_kmos
Section 80D (ITA) – Round trip financing
80D. Round trip financing
(1) Round trip financing includes any avoidance arrangement in which –
(a) funds are transferred between or among the parties (round tripped amounts); and
(b) the transfer of the funds would –
(i) result, directly or indirectly, in a tax benefit but for the provisions of this Part; and
(ii) significantly reduce, offset or eliminate any business risk incurred by any party in connection with the avoidance arrangement.
(2) This section applies to any round tripped amounts without regard to –
(a) whether or not the round tripped amounts can be traced to funds transferred to or received by any party in connection with the avoidance arrangement;
(b) the timing or sequence in which round tripped amounts are transferred or received; or
(c) the means by or manner in which round tripped amounts are transferred or received,
(3) For the purposes of this section, the term ‘funds’ includes any cash, cash equivalents or any right or obligation to receive or pay the same.
Section 80C (ITA) – Lack of commercial substance
80C. Lack of commercial substance
(1) For purposes of this Part, an avoidance arrangement lacks commercial substance if it would result in a significant tax benefit for a party (but for the provisions of this Part) but does not have a significant effect upon either the business risks or net cash flows of that party apart from any effect attributable to the tax benefit that would be obtained but for the provisions of this Part,
(2) For purposes of this Part, characteristics of an avoidance arrangement that are indicative of a lack of commercial substance include but are not limited to –
(a) the legal substance or effect of the avoidance arrangement as a whole is inconsistent with, or differs significantly from, the legal form of its individual steps; or
(b) the inclusion or presence of –
(i) round trip financing as described in section 80D; or
(ii) an accommodating or tax indifferent party as described in section 80E; or
(iii) elements that have the effect of offsetting or cancelling each other.
Section 80B (ITA) – Tax consequences of impermissible tax avoidance
80B. Tax consequences of impermissible tax avoidance
(1) The Commissioner may determine the tax consequences under this Act of any impermissible avoidance arrangement for any party by –
(a) disregarding, combining, or re-characterising any steps in or parts of the impermissible avoidance arrangement;
(b) disregarding any accommodating or tax-indifferent party or treating any accommodating or tax-indifferent party and any other party as one and the same person;
(c) deeming persons who are connected persons in relation to each other to be one and the same person for purposes of determining the tax treatment of any amount;
(d) reallocating any gross income, receipt or accrual of a capital nature, expenditure or rebate amongst the parties;
(e) re-characterising any gross income, receipt or accrual of a capital nature or expenditure; or
(f) treating the impermissible avoidance arrangement as if it had not been entered into or carried out, or in such other manner as in the circumstances of the case the Commissioner deems appropriate for the prevention or diminution of the relevant tax benefit.
(2) Subject to the time limits imposed by sections 99, 100 and 104(5)(b) of the Tax Administration Act, the Commissioner must make compensating adjustments that he or she is satisfied are necessary and appropriate to ensure the consistent treatment of all parties to the impermissible avoidance arrangement.
Section 80A (ITA) – Impermissible tax avoidance arrangements
80A. Impermissible tax avoidance arrangements
An avoidance arrangement is an impermissible avoidance arrangement if its sole or main purpose was to obtain a tax benefit and –
(a) in the context of business –
(i) it was entered into or carried out by means or in a manner which would not normally be employed for bona fide business purposes, other than obtaining a tax benefit; or
(ii) it lacks commercial substance, in whole or in part, taking into account the provisions of section 80C;
(b) in a context other than business, it was entered into or carried out by means or in a manner which would not normally be employed for a bona fide purpose, other than obtaining a tax benefit; or
(c) in any context –
(i) it has created rights or obligations that would not normally be created between persons dealing at arm’s length; or
(ii) it would result directly or indirectly in the misuse or abuse of the provisions of this Act (including the provisions of this Part).
PART IIA – Tax Avoidance (ITA)
Part IIA
Tax Avoidance
PART II – Assessments (ITA)
PART II
Assessments
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Section 72A (ITA) – Returns relating to controlled foreign company
72A. Return relating to controlled foreign company
(1) Every resident who on the last day of the foreign tax year of a controlled foreign company or immediately before a foreign company ceases to be a controlled foreign company directly or indirectly, together with any connected person in relation to that resident, holds at least 10 per cent of the participation rights in any controlled foreign company (otherwise than indirectly through a company which is a resident), must submit to the Commissioner a return.
(2) A resident must have available for submission to the Commissioner when so requested, a copy of the financial statements of the controlled foreign company for the relevant foreign tax year of that controlled foreign company.
(3) Where a person in respect of any year of assessment fails to comply with the provisions of-
(a) ……….
(b) subsection (2) and no reasonable grounds exist either for that failure which is outside the control of the person or for that person to believe that such person was not subject to that requirement-
(i) the proportional amount which must be included in the income of that person in terms of section 9D for that year shall be determined with reference only to the receipts and accruals of the controlled foreign company; and
(ii) the provisions of section 6quat shall not apply in respect of any tax proved to be payable to the government of any other country with respect to the proportional amount of the net income of that controlled foreign company which is included in the income of that person in terms of section 9D.
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Section 68 (ITA) – Income and capital gain of married persons and minor children
68. Income and capital gain of married persons and minor children
(1) Any –
(a) income received by or accrued to or in favour of any person married in or out of community of property which in terms of section 7(2) is deemed to be income received by or accrued to such person’s spouse; or
(b) capital gain which is in terms of paragraph 68 of the Eighth Schedule taken into account in the determination of the aggregate capital gain or aggregate capital loss of such person’s spouse,
shall be included by such spouse in returns of income required to be rendered by that spouse under this Act.
(2) In the event of the death of any person during any year in respect of which such income is chargeable or in which such capital gain is taken into account, the income or capital gain of such person’s spouse for the period elapsing between the date of such death and the last day of the year of assessment shall be returned as the separate income of such spouse.
(3)
(a) Every parent shall be required to include in his return –
(i) any income received by or accrued to or in favour of any of that parent’s minor children either directly or indirectly from that parent; or
(ii) any capital gain or capital loss in respect of any transaction entered into directly or indirectly by that parent, which is taken into account in the determination of the aggregate capital gain or aggregate capital loss of any of that parent’s minor children,
together with such particulars as may be required by the Commissioner.
(b) Every parent shall be required to include in that parent’s return any income deemed to be that parent’s income in terms of subsection (3) or (4) of section 7 or any capital gain deemed to be that parent’s capital gain in terms of paragraph 69 of the Eighth Schedule.
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Section 67 – Registration as taxpayer
67. Registration as taxpayer
(1) Every person who at any time becomes liable for any normal tax or who becomes liable to submit any return contemplated in section 66 must apply to the Commissioner to be registered as a taxpayer in accordance with Chapter 3 of the Tax Administration Act.
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