46. Size of residential property qualifying for exclusion
Where a primary residence and the land on which it is situated is disposed of by a person, the provisions of paragraph 45 apply in respect of so much of that land, including unconsolidated adjacent land, as-
(a) does not exceed two hectares;
(b) is used mainly for domestic or private purposes together with that residence; and
(c) is disposed of at the same time and to the same person as that residence.
45. General principle
(1) Subject to subparagraphs (2), (3) and (4), a natural person or a special trust must, when determining an aggregate capital gain or aggregate capital loss, disregard –
(a) so much of a capital gain or capital loss determined in respect of the disposal of the primary residence of that person or that special trust as does not exceed R2 million; or
(b) a capital gain determined in respect of the disposal of the primary residence of that person or that special trust if the proceeds from the disposal of that primary residence do not exceed R2 million.
(1A)
(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 amount of the capital gain or capital loss determined in terms of subparagraph (1)(a) or the amount of the capital gain determined in terms of subparagraph (1)(b) 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 (1A) inserted by section 81 of Act 23 of 2018 effective on 17 January 2019]
(2) Where more than one natural person or special trust jointly holds an interest in a primary residence at the same time, the amount to be disregarded in terms of subparagraph (1) must be apportioned in relation to each interest so held.
(3) Subject to paragraph 48, only one residence may be a primary residence of a person or a special trust for any period during which that person or special trust held an interest in more than one residence.
(4) Subparagraph (1)(b) does not apply where a natural person or a special trust disposes of an interest in a residence which is or was a primary residence, and that person or a beneficiary of that special trust or a spouse of that person or beneficiary –
(a) was not ordinarily resident in that residence throughout the period commencing on or after the valuation date during which that person or special trust held that interest; or
(b) used that residence or a part thereof for the purposes of carrying on a trade for any portion of the period commencing on or after the valuation date during which that person or special trust held that interest.
“residence” means any structure, including a boat, caravan or mobile home, which is used as a place of residence by a natural person, together with any appurtenance belonging thereto and enjoyed therewith.
“primary residence” means a residence-
(a) in which a natural person or a special trust holds an interest; and
(b) which that person or a beneficiary of that special trust or a spouse of that person or beneficiary-
(i) ordinarily resides or resided in as his or her main residence; and
(ii) uses or used mainly for domestic purposes;
“an interest” means-
(a) any real or statutory right; or
(b) a share owned directly in a share block company as defined in the Share Blocks Control Act or a share or interest in a similar entity which is not a resident; or
[Paragraph (b) substituted by section 89 of Act 43 of 2014 effective on 20 January 2015]
(c) a right of use or occupation,
but excluding –
(i) a right under a mortgage bond; or
(ii) a right or interest of whatever nature in a trust or an asset of a trust, other than a right of a lessee who is not a connected person in relation to that trust;
44. Definitions
In this Part, unless the context otherwise indicates-
PART VII
Primary residence exclusion
43B. Base cost of assets of controlled foreign companies
Where the functional currency of a controlled foreign company –
(a) was the currency of a country which-
(i) abandoned its currency; and
(ii) had an official rate of inflation of 100 per cent or more for the foreign tax year preceding the abandonment of the currency; and
(b) the controlled foreign company adopted a new functional currency as a consequence of the abandonment contemplated in subparagraph (a)(i),
the controlled foreign company must, for the purposes of determining the base cost of an asset of the controlled foreign company, be deemed to have acquired the asset in that new currency-
(A) on the first day of the foreign tax year of the controlled foreign company in which; and
(B) for an amount equal to the market value of the asset on the date on which,
the new currency was adopted by the controlled foreign company.
43A. Dividends treated as proceeds on disposal of certain shares
(1) For the purposes of this paragraph-
[Words preceding the definition of “exempt dividend” substituted by section 80 of Act 23 of 2018 effective on 17 January 2019]
43. Assets disposed of or acquired in foreign currency
(1) Where, during any year of assessment, a person that is a natural person or a trust that is not carrying on a trade disposes of an asset for proceeds in a foreign currency after having incurred expenditure in respect of that asset in the same currency, that person must determine the capital gain or capital loss on the disposal in that currency and that capital gain or capital loss must be translated to the local currency by applying the average exchange rate for the year of assessment in which that asset was disposed of or by applying the spot rate on the date of disposal of that asset.
(1A) Where, during any year of assessment, a person disposes of an asset (other than a disposal contemplated in subparagraph (1)) for proceeds in a foreign currency or after having incurred expenditure in respect of that asset in a foreign currency, that person must, for the purposes of determining the capital gain or capital loss on the disposal of that asset, translate-
(a) the proceeds into the local currency at the average exchange rate for the year of assessment in which that asset was disposed of or at the spot rate on the date of disposal of that asset; and
(b) the expenditure incurred in respect of that asset into the local currency at the average exchange rate for the year of assessment during which that expenditure was incurred or at the spot rate on the date on which that expenditure was incurred.
Provided that the amount of any capital gain or capital loss determined under this subparagraph in respect of an exchange item contemplated in section 24I must be taken into account in terms of this paragraph only to the extent to which it exceeds the amounts determined in respect of that exchange item under section 24I.
[Subparagraph (1A) inserted by section 117(1)(b) of Act 22 of 2012, substituted by section 136(1)(b) of Act 31 of 2013 and amended by section 61(a) of Act 34 of 2019]
(2) ………..
(3) ……….
(4) ……….
(5) Where a person is treated as having derived an amount of proceeds from the disposal of any asset and the expenditure incurred to acquire that asset is determined in any foreign currency-
(a) the amount of those proceeds must be treated as being denominated in the currency of the expenditure incurred to acquire that asset; and
(b) the expenditure incurred by a person acquiring that asset must for purposes of sections 9HA and 25 and paragraph s 12, 38 and 40 be treated as being denominated in that currency.
[Item (b) substituted by section 114(a) of Act 25 of 2015, by section 72(1) of Act 15 of 2016 and by section 61(b) of Act 34 of 2019]
[Paragraph (5) amended by section 101 of Act 45 of 2003 and substituted by section 88 of Act 43 of 2014 effective on 1 January 2015]
(6) Where a person has adopted the market value as the valuation date value of any asset contemplated in this paragraph, that market value must be determined in the currency of the expenditure incurred to acquire that asset and for purposes of the application of subparagraph (1A) be translated to the local currency by applying the spot rate on valuation date.
[Subparagraph (6) amended by section 75 of Act 31 of 2005, substituted by section 136 of Act 31 of 2013, section 88 of Act 43 of 2014 and section 114 of Act 25 of 2015 effective on 8 January 2016]
(6A)…
[Subparagraph (6A) inserted by section 117(1)(d) of Act 22 of 2012, amended by section 136(1)(f)(i) of Act 31 of 2013 and deleted by section 61(c) of Act 34 of 2019]