60. Gambling, games and competitions
(1) A person must disregard a capital gain or capital loss determined in respect of a disposal relating to any form of gambling, game or competition.
(2) Notwithstanding subparagraph (1), a capital gain may not be disregarded-
(a) by any person other than a natural person; or
(b) by any natural person, unless that form of gambling, game or competition is authorised by, and conducted in terms of, the laws of the Republic.
59. Compensation for personal injury, illness or defamation
A natural person or a special trust must disregard a capital gain or a capital loss determined in respect of a disposal that resulted in that person or that special trust, as the case may be, receiving compensation for personal injury, illness or defamation of that person or a beneficiary of that special trust.
58. Exercise of options
Where, as a result of the exercise by a person of an option, that person acquires or disposes of an asset in respect of which that option was granted, that person must disregard any capital gain or capital loss determined in respect of the exercise of that option.
57A. Disposal of micro business assets
A registered micro business as defined in terms of the Sixth Schedule must disregard any capital gain or capital loss in respect of the disposal by that business of any asset used mainly for business purposes.
[Paragraph 57A inserted by section 80 of Act 60 of 2008, amended by section 140 of Act 31 of 2013, substituted by section 116 of Act 25 of 2015 effective on 8 January 2016]
(2) Subject to subparagraphs (3), (4) and (5), a natural person must, when determining an aggregate capital gain or aggregate capital loss, disregard a capital gain determined in respect of the disposal of-
(a) an active business asset of a small business owned by that natural person as a sole proprietor; or
(b) an interest in each of the active business assets of a business, which qualifies as a small business, owned by a partnership, upon that natural person’s withdrawal from that partnership to the extent of his or her interest in that partnership; or
(c) an entire direct interest in a company (which consists of at least 10 per cent of the equity of that company), to the extent that the interest relates to active business assets of the business, which qualifies as a small business, of that company,
if that person at the time of that disposal held for his or her own benefit that active business asset, interest in the partnership, or interest in the company (as the case may be) for a continuous period of at least five years prior to that disposal and was substantially involved in the operations of the business of that small business during that period, and-
(i) has attained the age of 55 years; or
(ii) the disposal is in consequence of ill-health, other infirmity, superannuation or death.
(3) The sum of the amounts to be disregarded by a natural person as contemplated in subparagraph (2) may not exceed R1,8 million during that natural person’s lifetime.
(4) A natural person must realise all capital gains qualifying in terms of subparagraph (2) within a period of 24 months commencing on the date of the first disposal contemplated in subparagraph (2).
(5) Where a natural person operates more than one small business either by way of a sole proprietorship, a partnership interest or a direct interest in the equity of a company consisting of at least 10 per cent, then he or she may subject to subparagraphs (4) and (6), include every such small business in the determination of the amount to be disregarded in terms of subparagraph (2).
(6) The provisions of this paragraph do not apply where a person owns more than one business either by way of a sole proprietorship, apartnership interest or a direct interest in the equity of a company consisting of at least 10 per cent, and the total market value of all assets in respect of all those businesses exceeds R10 million.
(7)
(a) The Minister may announce in the national annual budget contemplated in section 27(1) of the Public Finance Management Act, that, with effect from a date or dates mentioned in that announcement, the market value of all assets referred to in the definition of ‘small business’ in subparagraph (1), the sum of the amounts referred to in subparagraph (3) or the total market value of all assets referred to in subparagraph (6) will be altered to the extent mentioned in the announcement.
(b) If the Minister makes an announcement of an alteration contemplated in paragraph (a), that alteration comes into effect on the date or dates determined by the Minister in that announcement and continues to apply for a period of 12 months from that date or those dates subject to Parliament passing legislation giving effect to that announcement within that period of 12 months.
[Subparagraph (7) added by section 83 of Act 23 of 2018 effective on 17 January 2019]
“small business” means a business of which the market value of all its assets, as at the date of the disposal of the asset or interest contemplated in subparagraph (2), does not exceed R10 million.
(1) For purposes of this paragraph,
“active business asset” means –
(a) an asset which constitutes immovable property, to the extent that it is used for business purposes; or
(b) an asset (other than immovable property) used or held wholly and exclusively for business purposes, but excludes –
(i) a financial instrument; and
(ii) an asset held in the course of, carrying on a business mainly to derive any income in the form of an annuity, rental income, a foreign exchange gain or royalty or any income of a similar nature;
57. Disposal of small business assets
56. Disposal by creditor of debt owed by connected person
(1) Where a creditor disposes of a debt owed by a debtor, who is a connected person in relation to that creditor, that creditor must disregard any capital loss determined in consequence of that disposal.
(2) Despite paragraph 39, subparagraph (1) does not apply in respect of any capital loss determined in consequence of the disposal by a creditor of a debt owed by a debtor, to the extent that the amount of that debt so disposed of represents-
(a) an amount-
(i) which is applied to reduce the expenditure in respect of an asset of the debtor in terms of section 19(3) or paragraph 12A(3); or
(ii) which must be taken into account by the debtor as a capital gain in terms of paragraph 12A(4);
[Item (a) substituted by section 119(1)(c) of Act 22 of 2012, amended by section 138(1)(a) of Act 31 of 2013 and substituted by section 63(1) of Act 34 of 2019 deemed effective on 1 January, 2018 and applicable in respect of years of assessment commencing on or after that date]
(b) an amount which the creditor proves must be or was included in the gross income of any acquirer of that debt;
(c) an amount that must be or was included in the gross income or income of the debtor or taken into account in the determination of the balance of assessed loss of the debtor in terms of section 20(1)(a); or
(d) a capital gain which the creditor proves must be or was included in the determination of the aggregate capital gain or aggregate capital loss of any acquirer of the debt.
55. Long-term assurance
(1) A person must disregard any capital gain or capital loss determined in respect of a disposal that resulted in the receipt by or accrual to that person of an amount-
(a) in respect of a policy, where that person-
(i) is the original beneficial owner or one of the original beneficial owners of the policy;
(ii) is the spouse, nominee, dependant as contemplated in the Pension Funds Act, or deceased estate of the original beneficial owner of the relevant policy and no amount was paid or is payable or will become payable, whether directly or indirectly, in respect of any cession of that policy from the beneficial owner of that policy to that spouse, nominee or dependant; or
[Subitem (ii) substituted by section 98 of Act 60 of 2001 and section 115 of Act 25 of 2015 effective on 8 January 2016]
(iii) is the former spouse of the original beneficial owner and that policy was ceded to that spouse in consequence of a divorce order or, in the case of a union contemplated in paragraph (b) or (c) of the definition of “spouse” in section 1 of this Act, an agreement of division of assets which has been made an order of court;
(b) in respect of any policy, where that person is or was an employee or director whose life was insured in terms of that policy and any premiums paid by that person’s employer were deducted in terms of section 11(w);
(c) in respect of a policy that was taken out to insure against the death, disability or illness of that person by any other person who was a partner of that person, or held any shares or similar interest in a company in which that person held any share or similar interest, for the purpose of enabling that other person to acquire, upon the death, disability or illness of that person, the whole or part of-
[Words preceding subitem (i) substituted by section 73 of Act 17 of 2017 and section 82 of Act 23 of 2018 effective on 17 January 2019]
(i) that person’s interest in the partnership concerned; or
(ii) that person’s share or similar interest in that company and any claim by that person against that company, and no premium on the policy was paid or borne by that person while that other person was the beneficial owner of the policy;
(d) in respect of a policy originally taken out on the life of a person, where that policy is provided to that person or dependant by or in consequence of that person’s membership of a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund;
(e) in respect of a risk policy with no cash value or surrender value; or
(f) if the amount received or accrued constitutes an amount contemplated in section 10(1)(gG) or (gH).
(2) For the purposes of subparagraph (1), “policy” means a policy as defined in section 29A with an insurer.