“premium or discount on a forward exchange contract” ……….
[Definition of “premium or discount on a forward exchange contract” deleted by section 44 of Act 25 of 2015 effective on 8 January 2016]
Category: CHAPTER II – The Taxes (ITA)
“Interest” definition of section 24J of ITA
“interest” includes the –
(a) gross amount of any interest or similar finance charges, discount or premium payable or receivable in terms of or in respect of a financial arrangement;
[Paragraph (a) substituted by section 45 of Act 15 of 2016 effective on 19 January 2017]
(b) amount (or portion thereof) payable by a borrower to the lender in terms of any lending arrangement as represents compensation for any amount to which the lender would, but for such lending arrangement, have been entitled; and
(c) absolute value of the difference between all amounts receivable and payable by a person in terms of a sale and leaseback arrangement as contemplated in section 23G throughout the full term of such arrangement, to which such person is a party,
irrespective of whether such amount is –
(i) calculated with reference to a fixed rate of interest or a variable rate of interest; or
(ii) payable or receivable as a lump sum or in unequal instalments during the term of the financial arrangement;
“Option strike rate” definition of section 24I of ITA
“option strike rate” means the specified exchange rate as referred to in the definition of “foreign currency option contract”;
“Instrument” definition of section 24J of ITA
“instrument” means–
(a) ……….
(b) ……….
(c) any interest-bearing arrangement or debt;
(d) any acquisition or disposal of any right to receive interest or the obligation to pay any interest, as the case may be, in terms of any other interest–bearing arrangement; or
(e) any repurchase agreement or resale agreement,
which was –
(i) issued or deemed to have been issued after 15 March 1995;
(ii) issued on or before 15 March 1995 and transferred on or after 19 July 1995; or
(iii) in so far as it relates to the holder thereof, issued on or before 15 March 1995 and was unredeemed on 14 March 1996 (excluding any arrangement contemplated in subparagraphs (i) and (ii)),
but excluding any lease agreement (other than a sale and leaseback arrangement as contemplated in section 23G) or any policy issued by an insurer as defined in section 29A;
[Words following subparagraph (iii) substituted by section 41 of Act 43 of 2014 effective on 1 Janaury 1996]
“Market value” definition of section 24I of ITA
“market value”, in relation to a foreign currency option contract, means –
(a) in the case of a person who for accounting purposes uses a market–related valuation method in terms of a practice consistently applied by him to determine the value of all his foreign currency option contracts, the market–related value so determined; or
(b) in the case of any other person, the intrinsic value of such foreign currency option contract;
“Initial amount” definition of section 24J of ITA
“initial amount” means the issue price or transfer price, as the case may be, in relation to an instrument;
“Local currency” definition of section 24I of ITA
“local currency” means in relation to-
(a) any person in respect of an exchange item which is attributable to any permanent establishment outside the Republic, the functional currency of that permanent establishment: Provided that for purposes of this paragraph any exchange item shall be deemed not to be attributable to any such permanent establishment if the functional currency of that permanent establishment is the currency of a country which has an official rate of inflation of 100 per cent or more throughout the relevant year of assessment;
(b) any resident, other than a headquarter company, a domestic treasury management company and an international shipping company as defined in section 12Q(1), in respect of an exchange item which is not attributable to a permanent establishment outside the Republic, the currency of the Republic;
[Paragraph (b) substituted by section 30 of Act 34 of 2019]
(c) any person that is not a resident in respect of any exchange item which is attributable to a permanent establishment in the Republic, the currency of the Republic;
(d) any headquarter company in respect of an exchange item which is not attributable to a permanent establishment outside the Republic, the functional currency of that headquarter company;
(e) any domestic treasury management company in respect of an exchange item which is not attributable to a permanent establishment outside the Republic, the functional currency of that domestic treasury management company;
(f) any international shipping company defined in section 12Q, in respect of an amount which is not attributable to a permanent establishment outside the Republic, the functional currency of that international shipping company;
“Income instrument” definition of section 24J of ITA
“income instrument” means –
(a) in the case of any person other than a company, any instrument –
(i) the term of which will, or is reasonably likely to, exceed one year; and
(ii) which is issued or acquired at a discount or premium or bears deferred interest; and
(b) in the case of any company, any instrument;
“Intrinsic value” definition of section 24I of ITA
“intrinsic value”, in relation to a foreign currency option contract, means the value for the holder or writer thereof, as the case may be, determined by applying the difference between –
(a) the spot rate on translation date or the date on which the foreign currency option contract is realised, as the case may be; and
(b) the option strike rate,
to the amount of foreign currency as specified in such foreign currency option contract: Provided that such foreign currency option contract shall have a nil value for the holder or writer thereof if such holder thereof would have sustained a loss had he exercised his right in terms of such foreign currency option contract on such translation date or date realised due to the unfavourable difference between the option strike rate and the spot rate on such translation date or date realised;
“Holder” definition of section 24J of ITA
“holder”, in relation to an income instrument –
(a) means any person who has become entitled to any interest or amount receivable in terms of such income instrument; or
(b) at any particular time, means any person who, if any interest payable in terms of such income instrument was due and payable at that time, would be entitled to receive payment of such interest;