Author: admin_kmos

Paragraph 97 (Eighth Schedule) – Transactions during transitional period

Posted on by admin_kmos

97.    Transactions during transitional period

 

(1)     For purposes of this paragraph “transitional period” means the period from 23 February 2000 until and including the day before the valuation date.

 

(2)     Subject to subparagraph (3), where a person-

 

(a)     acquired an asset during the transitional period by means of a non-arm’s length transaction, that person shall for purposes of paragraph 30 be treated as having acquired that asset-

 

(i)      at the time when the person who disposed of that asset acquired that asset; and

 

(ii)     at a cost equal to the base cost of that asset in the hands of the person who disposed of it; or

 

(b)     acquired an asset during the transitional period directly or indirectly from a person who was a connected person in relation to that person at-

 

(i)      the time of that acquisition; or

 

(ii)     any time during the period from the date of that acquisition up to a subsequent disposal of that asset by that person within three years of that acquisition,

 

that person shall for purposes of paragraph 30 be treated as having acquired that asset-

 

(aa)   at the time when that connected person acquired that asset, or is treated as having acquired that asset in terms of this paragraph; and

 

(bb)   at a cost equal to the base cost of that asset in the hands of that connected person, or an amount which is treated as the base cost of that asset in the hands of that connected person in terms of this paragraph; or

 

(c)     reacquired an asset within a period of ninety days after its disposal during the transitional period-

 

(i)      by means of a non-arm’s length transaction; or

 

(ii)     directly or indirectly to a connected person in relation to that person,

 

that person shall for the purposes of paragraph 30 be treated as having reacquired that asset-

 

(aa)    at the time when that person originally acquired that asset prior to that disposal; and

 

(bb)   at a cost equal to the base cost of that asset at the time of that disposal; or

 

(d)     acquired an asset within a period of ninety days after the disposal, during the transitional period, of a substantially similar asset that was disposed of-

 

(i)      by means of a non-arm’s length transaction; or

 

(ii)     directly or indirectly to a connected person in relation to that person, in order to replace the asset so disposed of,

 

that person shall for the purposes of paragraph 30 be treated as having acquired that asset-

 

(aa)    at the time when that person acquired the substantially similar asset; and

 

(bb)   at a cost equal to the base cost of that substantially similar asset at the time of that disposal.

 

(3)     The provisions of this paragraph do not apply to any disposal of an asset by a fund contemplated in section 29A(4) to any other such fund in terms of section 29A(6) or (7).

Paragraph 83 (Eighth Schedule) – Insolvent estate of person

Posted on by admin_kmos

83.    Insolvent estate of person

(1)     For the purposes of this Schedule, the disposal of an asset by the insolvent estate of a person shall be treated in the same manner as if that asset had been disposed of by that person.

(2)     No person whose estate has been voluntarily or compulsorily sequestrated may carry forward any assessed capital loss incurred prior to the date of sequestration.


84.    ……….

85.    ……….

86.    ……….

87.    ……….

88.    ……….



89.    ……….

90.    ……….

91.    ……….

92.    ……….

93.    ……….

94.    ……….

95.    ……….

96.    ……….

Paragraph 82 (Eighth Schedule) – Death of beneficiary of special trust

Posted on by admin_kmos

82.    Death of beneficiary of special trust

Where a beneficiary of a special trust dies, that trust must continue to be treated as a special trust for the purposes of this Schedule until the earlier of the disposal of all assets held by that trust or two years after the date of death of that beneficiary.

Paragraph 80 (Eighth Schedule) – Capital gain attributed to beneficiary

Posted on by admin_kmos

80. Capital gain attributed to beneficiary

(1)     Subject to paragraphs 68, 69 and 71, where a trust vests an asset in a beneficiary of that trust (other than any person contemplated in paragraph 62(a) to (e) or a person who acquires that asset as an equity instrument as contemplated in section 8C(1)) who is a resident, and determines a capital gain in respect of that disposal or, if that trust is not a resident, would have determined a capital gain in respect of that disposal had it been a resident-

(a)     that capital gain must be disregarded for the purpose of calculating the aggregate capital gain or aggregate capital loss of the trust; and

(b)     that capital gain or the amount that would have been determined as a capital gain must be taken into account as a capital gain for the purpose of calculating the aggregate capital gain or aggregate capital loss of the beneficiary to whom that asset was so disposed of.

(2)     Subject to paragraphs 64E, 68, 69 and 71, where a trust determines a capital gain in respect of the disposal of an asset in a year of assessment during which a beneficiary of that trust (other than any person contemplated in paragraph 62(a) to (e)) who is a resident has a vested right or acquires a vested right (including a right created by the exercise of a discretion) to an amount derived from that capital gain but not to the asset disposed of, an amount that is equal to so much of the amount to which that beneficiary of that trust is entitled in terms of that right—

(a)     must be disregarded for the purpose of calculating the aggregate capital gain or aggregate capital loss of the trust; and

(b)     must be taken into account as a capital gain for the purpose of calculating the aggregate capital gain or aggregate capital loss of that beneficiary.

[Subparagraph (2) substituted by section 52(a) of Act 23 of 2020]

(2A)

(a)     Subject to paragraphs 64E, 68, 69 and 71, this subparagraph applies where—

(i)      a beneficiary who is a resident (other than any person contemplated in paragraph 62(a) to (e)) derives an amount through vesting during a year of assessment from a trust that is not a resident; and

(ii)     that amount was derived directly or indirectly from that trust or another trust which is not a resident in respect of the disposal of an asset during the same year of assessment and that amount would have constituted a capital gain had the trust that disposed of the asset been a resident.

(b)    Where item (a) applies, the amount derived by the beneficiary must be taken into account as a capital gain for the purpose of calculating that beneficiary’s aggregate capital gain or aggregate capital loss for that year of assessment.

[Subparagraph (2A) inserted by section 52(b) of Act 23 of 2020]

(3)     Where during any year of assessment any resident acquires a vested right to any amount representing capital of any trust which is not a resident, and-

(a)     that capital consists of or is derived, directly or indirectly, from an amount-

(i)      determined as a capital gain of that trust; or

(ii)     which would have been determined as a capital gain of that trust had that trust been a resident,

in any previous year of assessment during which that resident had a contingent right to that capital; and

(b)     that capital gain or the amount that would have been determined as a capital gain has not been subject to tax in the Republic in terms of the provisions of this Act,

that amount must be taken into account as a capital gain when determining the aggregate capital gain or aggregate capital loss of that resident in respect of the year of assessment in which that resident acquired that vested right.

(4)     In determining, for purposes of subparagraph (1), (2A) or (3), whether an amount would have constituted a capital gain had the trust been a resident, the provisions of paragraph 64B(1) and (4) must be disregarded in respect of an amount derived by that trust, directly or indirectly, from the disposal or in respect of an equity share in a foreign company if-

(a)     more than 50 per cent of the total participation rights, as defined in section 9D(1), or of the voting rights in that company are directly or indirectly held or are exercisable, as the case may be, by that trust whether alone or together with any one or more persons that are connected persons in relation to that trust; and

(b)     to the extent to which that amount is not derived from an amount that must be included in the income of or attributed to—

(i)      the resident to whom an amount is attributed in terms of subparagraph (1), (2A) or (3); or

(ii)     a resident who is a connected person in relation to the resident referred to in subitem (i).

[Subparagraph (4) amended by section 64 of Act 34 of 2019 and substituted by section 36 of Act 42 of 2024]

 [Paragraph 80 amended by section 108(1) of Act 60 of 2001, by section 58 of Act 20 of 2006, by section 62 of Act 3 of 2008, by section 86(a)-(b) of Act 60 of 2008, by section 80 of Act 17 of 2009, by section 150(a)-(b) of Act 31 of 2013, by section 123(1)(a)-(b) of Act 25 of 2015 and by section 75(1)(a)-(b) of Act 17 of 2017 and substituted by section 87(1) of Act 23 of 2018 effective on 1 March, 2019 and applicable in respect of disposals on or after that date] 

Paragraph 77 (Eighth Schedule) – Distributions in liquidation or deregistration received by holders of shares

Posted on by admin_kmos

77. Distributions in liquidation or deregistration received by holders of shares

[Heading of paragraph 77 substituted by section 92 of Act 43 of 2014 effective on 20 January 2015] 

(1)     A holder of shares in a company that is being wound up, liquidated or deregistered must be treated as having disposed of all the shares held by that holder in that company at the earlier of-

(a)     the date of dissolution or deregistration; or


(b)     in the case of a liquidation or winding-up, the date when the liquidator declares in writing that no reasonable grounds exist to believe that the holder of shares in the company (or holders of shares holding the same class of shares) will receive any further distributions in the course of the liquidation or winding-up of that company.

(2)     Where-

(a)     a return of capital or foreign return of capital by way of a distribution of cash or assets in specie is received by or accrues to a holder of shares contemplated in subparagraph (1) in respect of a share that is treated as having been disposed of in terms of that subparagraph; and


(b)     that return of capital or foreign return of capital is received by or accrues to that holder after the date contemplated in subparagraph (1)(a) or (b),


the return of capital or foreign return of capital must be treated as a capital gain in determining that holder’s aggregate capital gain or aggregate capital loss for that year of assessment.

78.    …………

79.     …………

Paragraph 76B (Eighth Schedule) – Reduction in base cost of shares as result of distributions

Posted on by admin_kmos

76B.   Reduction in base cost of shares as result of distributions

(1)       Where-

(a)     a return of capital or foreign return of capital by way of a distribution of cash or an asset in specie is received by or accrues to a holder of a share in respect of that share;


(b)     that return of capital or foreign return of capital is received by or accrues to the holder of that share on or after 1 April 2012 and prior to the disposal of that share; and


(c)     that share constitutes a pre-valuation date asset in relation to the holder of that share,


for purposes of determining the date of acquisition of that share and the expenditure in respect of the cost of acquisition of that share, the holder of that share must be treated as-

(i)      having disposed of that share at a time immediately before the return of capital or foreign return of capital is received or accrues for an amount equal to the market value of the share at that time; and


(ii)     having immediately reacquired that share at that time at an expenditure equal to that market value-


(aa)   less any capital gain that would have been determined had the share been disposed of at market value at that time; and


(bb)   increased by any capital loss that would have been determined had the share been disposed of at market value at that time,


which expenditure must be treated as an amount of expenditure actually incurred for the purposes of paragraph 20(1)(a):


: Provided that the market value of a share listed on a recognised exchange and for which a price was quoted on that exchange is equal to the sum of-

(i)      the ruling price of that share at the close of business on the last business day before the accrual of the return of capital or foreign return of capital; and

(ii)     the amount of the return of capital or foreign return of capital.

[Proviso to subparagraph (1) added by section 79 of Act 15 of 2016 effective on 19 January 2017]

(2)     Where-

(a)     a return of capital or foreign return of capital by way of a distribution of cash or an asset in specie is received by or accrues to a holder of a share in respect of that share; and

(b)     that return of capital or foreign return of capital is received by or accrues to the holder of that share on or after 1 April 2012 and prior to the disposal of that share,


the holder of that share must reduce the expenditure in respect of the share by the amount of that cash or the market value of that asset on the date that the asset or that cash is received by or accrues to the holder of that share.

[Words following item (b) substituted by section 122 of Act 25 of 2015 effective on 8 January 2016]

(3)     Where the amount of a return of capital or foreign return of capital contemplated in subparagraph (2) exceeds the expenditure in respect of the share in respect of which that return of capital or foreign return of capital is received or accrues, the amount of the excess must be treated as a capital gain in determining the aggregate capital gain or aggregate capital loss of the holder of that share for the year of assessment in which that return of capital or foreign return of capital is received by or accrues to the holder of that share.