Category: CHAPTER II – The Taxes (ITA)

“Murabaha” definition of section 24JA of ITA

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‘murabaha’ means a sharia arrangement between a financier and a client of that financier, one of which is a bank or listed company whereby-

[Words preceding paragraph (a) substituted by section 45 of Act 25 of 2015 effective on 1 January 2016]

(a)     the financier will acquire an asset from a third party (the seller) for the benefit of the client on such terms and conditions as are agreed upon between the client and the seller;

(b)     the client-

(i)      will acquire the asset from the financier within 180 days after the acquisition of the asset by the financier contemplated in paragraph (a); and

(ii)     agrees to pay to the financier a total amount that-

(aa)   exceeds the amount payable by the financier to the seller as consideration to acquire the asset;

(bb)   is calculated with reference to the consideration payable by the financier to the seller in combination with the duration of the sharia arrangement; and

(cc)    may not exceed the amount agreed upon between the financier and the client when the sharia arrangement is entered into; and

(c)     no amount is received by or accrues to the financier in respect of that asset other than an amount contemplated in paragraph (b)(ii);

Section 25BA (ITA) – Amounts received by or accrued to certain portfolios of collective investment schemes and holders of participatory interests in portfolios

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25BA.    Amounts received by or accrued to certain portfolios of collective investment schemes and holders of participatory interests in portfolios

 

(1)     Any amount, other than an amount of a capital nature, received by or accrued to any portfolio of a collective investment scheme, other than a portfolio of a collective investment scheme in property, must-

 

(a)     to the extent that the amount is distributed by that portfolio-

 

(i)      to any person who is entitled to the distribution by virtue of the person being a holder of a participatory interest in that portfolio; and

 

(ii)     not later than 12 months after its accrual to or, in the case of interest, its receipt by that portfolio;

 

be deemed to have directly accrued to the person on the date of the distribution; and

 

(b)     to the extent that the amount is not distributed as contemplated in paragraph (a) within 12 months after its accrual to, or in the case of interest, its receipt by that portfolio-

 

(i)      be deemed to have accrued to that portfolio on the last day of the period of 12 months commencing on the date of its accrual to or receipt by that portfolio; and

 

(ii)     to the extent that the amount is attributable to a dividend received by or accrued to that portfolio, be deemed to be income of that portfolio.

 

(2)     Where a portfolio of a hedge fund collective investment scheme is constituted as a partnership any amount allocated by that portfolio to the partners in that partnership must for the purposes of subsection (1)(a) be treated as having been distributed by that portfolio to the partners in that partnership by virtue of those partners being holders of participatory interests in that portfolio.

“Mudaraba” definition of section 24JA of ITA

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‘mudaraba’ means a sharia arrangement between a bank and a client of that bank whereby-

 

(a)     funds are deposited with the bank by the client;

 

(b)     the anticipated return in respect of the sharia arrangement is dependent on the amount deposited by the client in combination with the duration of the period for which the funds are deposited;

 

(c)     the bank invests the funds deposited by the client in other sharia arrangements;

 

(d)     the client bears the risk of the loss in respect of the sharia arrangements contemplated in paragraph (c); and

 

(e)     the return in respect of the sharia arrangements contemplated in paragraph (c) is divided between the client and the bank as agreed at the time that the client deposits the funds with the bank;

Subsections 2 and 3 of section 24K of ITA

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(2)     Any amount contemplated in the definition of “interest rate agreement” in subsection (1) shall for the purposes of this Act be deemed to have been incurred by or accrued to, as the case may be, a person contemplated in such definition on a day to day basis during the period in respect of which it is calculated.

 

(3)     Where any amount contemplated in subsection (2) is to be calculated with reference to a variable rate for the purposes of such subsection, such amount shall be calculated with reference to the variable rate applicable on the date such amount is to be calculated to determine all amounts payable or receivable after such date.

“Transfer” definition of section 24J of ITA

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“transfer”, in relation to an instrument, includes –

 

(a)     the transfer, sale, assignment or disposal in any other manner of such instrument by the holder or issuer thereof, as the case may be; or

 

(b)     the acquisition of such instrument by the holder or issuer thereof, as the case may be, by way of a transfer, sale, assignment or disposal in any other manner,

 

but does not include the redemption of such instrument;

“Diminishing musharaka” definition of section 24JA of ITA

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‘diminishing musharaka’ means a sharia arrangement between a bank and a client of that bank whereby-

 

(a)

 

(i)      the bank and the client jointly acquire an asset from a third party (the seller); or

 

(ii)     the bank acquires an interest in an asset from the client;

 

(b)     the client will acquire the bank s interest in the asset after the acquisition of the asset by the bank as contemplated in paragraph (a); and

 

(c)     the amount of consideration payable by the client to the bank for the acquisition of the interest of the bank in the asset will be paid over a period of time as agreed between the client and the bank;

“Interest rate agreement” definition of section 24K of ITA

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(1)     For the purposes of this section “interest rate agreement” means any agreement in terms of which any person –

 

(a)     acquires the right to receive –

 

(i)      an amount calculated by applying any rate of interest to a notional principal amount specified or referred to in such agreement; or

 

(ii)     an amount calculated with reference to the difference between any combination of rates of interest applied to a notional principal amount specified or referred to in such agreement; or

 

(iii)    a fixed amount specified or referred to in such agreement as consideration in terms of such agreement whereunder the obligation is imposed to pay any other amount as contemplated in paragraph (b) (i) in terms of such agreement or an amount equal to the difference between such fixed amount and such other amount; or

 

(b)     becomes liable to pay –

 

(i)      an amount calculated by applying any rate of interest to a notional principal amount specified or referred to in such agreement; or

 

(ii)     an amount calculated with reference to the difference between any combination of rates of interest applied to a notional principal amount specified or referred to in such agreement; or

 

(iii)    a fixed amount specified or referred to in such agreement as consideration in terms of such agreement whereunder the right is acquired to receive any other amount as contemplated in paragraph (a) (i) in terms of such agreement or an amount equal to the difference between such fixed amount and such other amount.