(2)     Subject to sections 8F, 8FA and subsection (4), there must be included in or deducted from the income, as the case may be, of any covered person for any year of assessment all amounts in respect of financial assets and financial liabilities of that covered person that are recognised in profit or loss in the statement of comprehensive income in respect of financial assets and financial liabilities of that covered person that are measured at fair value in profit or loss in terms of IFRS 9 or, in the case of commodities, at fair value less cost to sell in profit or loss in terms of IFRS for that year of assessment, excluding any amount in respect of-

[Words preceding paragraph (a) substituted by section 44 of Act 17 of 2017 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]

(a)     a financial asset that is-

(i)      a share;

(ii)     an endowment policy;

(iii)    an interest held in a portfolio of a collective investment scheme;

[Subparagraph (iii) amended by section 43 of Act 43 of 2014 effective on 1 January 2014]

(iv)    an interest in a trust; or

[Subparagraph (iv) amended by section 43 of Act 43 of 2014 effective on 1 January 2014]

(v)     an interest in a partnership,

[Subparagraph (v) added by section 43 of Act 43 of 2014 effective on 1 January 2014]

if that financial asset does not constitute trading stock; or

[Words following subparagraph (v) substituted by section 44 of Act 17 of 2017 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]

(b)     a dividend or foreign dividend received by or accrued to a covered person; or

[Paragraph (b) amended by section 27(1) of Act 23 of 2020 effective on 1 January, 2021 and applicable to dividends declared on or after that date]

(c)     a dividend distributed.

[Paragraph (c) added by section 27(1) of Act 23 of 2020 effective on 1 January, 2021 and applicable to dividends declared on or after that date]

[Subsection (2) amended by section 44(1)(c) of Act 17 of 2017 effective on 1 January, 2018 and applicable in respect of years of assessment commencing on or after that date]

(2A)   A covered person must include in or deduct from income for a year of assessment a realised gain or a realised loss that is recognised in a statement of other comprehensive income as contemplated in IFRS 9 if that realised gain or realised loss is attributable to a change in the credit risk of the financial liability as contemplated in IFRS 9 and that instrument was issued in any year of assessment commencing on or after 1 January 2018.

[Subsection (2A) inserted by section 44 of Act 17 of 2017 and substituted by section 44 of Act 23 of 2018 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]

(2B)   Where a covered person has, during any year of assessment preceding the year of assessment commencing on or after 1 January 2018, included in or deducted from income any amount attributable to a change in the credit risk of a financial liability issued by that covered person measured at fair value through profit or loss in terms of subsection (2), such covered person must include in or deduct from income, as the case may be, any amount in respect of a change in credit risk of that financial liability recognised in other comprehensive income during any year of assessment commencing on or after 1 January 2018.

[Subsection (2B) inserted by section 44 of Act 17 of 2017 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]

(3)     Any amount required to be taken into account in determining the taxable income in terms of any provision of Part I of Chapter II, or in determining any assessed capital loss of a covered person in respect of a financial asset or a financial liability contemplated in subsection (2) must only be taken into account in terms of this section.

[Subsection (3) substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]

(4)     Subsection (2) does not apply to any amount in respect of a financial asset or a financial liability of a covered person where-

(a)     a covered person and another person that is not a covered person, are parties to an agreement in respect of a financial asset or financial liability; and

[Paragraph (a) substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]

(b)     the agreement contemplated in paragraph (a) was entered into solely or mainly for the purpose of a reduction, postponement or avoidance of liability for tax, which, but for that agreement, would have been or would become payable by the covered person.

(5)     In addition to any amount included in or deducted from the income of any person in terms of subsection (2), there must be included in or deducted from the income, as the case may be, of any person for the post-realisation years of that person an amount determined in terms of subsection (6).

(6)     For the purposes of subsection (5)-

(a)     if-

(i)      the financial reporting values of all financial assets of a nature as described in subsection (2) held by that person as at the end of the realisation year of that person exceed the tax base amount attributed to those financial assets as at the end of the realisation year of that person; or

[Subparagraph (i) substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]

(ii)     the tax base amount attributed to all financial liabilities of a nature as described in subsection (2) held by that person as at the end of the realisation year of that person exceeds the financial reporting values of those financial liabilities as at the end of the realisation year of that person,

[Subparagraph (ii) substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]

one-third of the excess must be included in the income of that person;

(b)     if-

(i)      the tax base amount attributed to all financial assets of a nature as described in subsection (2) held by that person as at the end of the realisation year of that person exceeds the financial reporting values of those financial assets as at the end of the realisation year of that person; or

[Subparagraph (i) substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]

(ii)     the financial reporting values of all financial liabilities of a nature as described in subsection (2) held by that person as at the end of the realisation year of that person exceed the tax base amount attributed to those financial liabilities as at the end of the realisation year of that person,

[Subparagraph (ii) substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]

one-third of the excess must be deducted from the income of that person.

(7)     If a person ceases to be a covered person before the expiry of the post-realisation years of that person, the amounts determined in terms of subsection (6) which have not been included in or deducted from, as the case may be, the income of that person, must be included in or deducted from the income of that person in the year of assessment that it ceases to be a covered person.

(8)     Where a person ceases to be a covered person, that person is deemed to have-

(a)     disposed of its financial assets and redeemed its financial liabilities that were subject to tax in terms of subsection (2); and

(b)     immediately reacquired those financial assets and incurred those financial liabilities,

at an amount equal to the market value of those financial assets on the last day of the year of assessment of that person before that person ceased to be a covered person.

(9)     Where a financial asset held by or financial liability owed by a covered person at the end of the year of assessment immediately preceding the year of assessment commencing on or after 1 January 2018 would have ceased to be subject to tax or would have become subject to tax in terms of subsection (2), had IFRS 9 applied on the last day of that immediately preceding year of assessment, that covered person is deemed to have-

(a)     disposed of that financial asset or redeemed that financial liability; and

(b)     immediately reacquired that financial asset or incurred that financial liability,

for an amount equal to the market value of that financial asset or financial liability on that day.

[Subsection (9) inserted by section 44 of Act 17 of 2017 effective on 1 January 2018 and applies in respect of years of assessment commencing on or after that date]