‘member’ in the case of a fidelity or indemnity fund includes a contributor to that fund;
Category: CHAPTER II – The Taxes (ITA)
“Entity” definition of section 30B of ITA
(1) For the purposes of this section-
‘entity’ means-
(a) any mutual loan association, fidelity or indemnity fund, trade union, chamber of commerce or industry (or an association of such chambers) or local publicity association; or
(b) any-
(i) non-profit company as defined in section 1 of the Companies Act;
(ii) society; or
(iii) other association of persons,
established to promote the common interests of persons (being members of the company, society or association of persons) carrying on any particular kind of business, profession or occupation,
approved by the Commissioner in accordance with subsection (2);
Section 37 (ITA) – Calculation of capital expenditure on sale, transfer, lease or cession of mining property
37. Calculation of capital expenditure on sale, transfer, lease or cession of mining property
(1) For the purposes of this Act, but subject to subsection (1A), whenever a taxpayer-
(a) sells, transfers, leases or cedes any mining property; and
(b) disposes of any assets contemplated in section 36(11) (hereinafter referred to as ‘the capital assets’) in consequence of the sale, transfer, lease or cession contemplated in paragraph (a),
the person acquiring those capital assets shall be deemed to have acquired such capital assets at a cost equal to the effective value of those capital assets to that person on the effective date of that agreement of sale, transfer, lease or cession of the mining property, and the said cost shall be deemed to be expenditure that is incurred by that person during the period of assessment during which that agreement takes effect and to be capital expenditure which is in respect of such period required to be taken into account for the purposes of the definition of ‘capital expenditure incurred’ in section 36(11).
(1A) Where any consideration is given by the person acquiring the assets disposed of by the taxpayer, as contemplated in subsection (1), and the effective value of all those assets (including any mining property) so acquired, exceeds that consideration, the amount of the cost and expenditure in respect of the capital assets shall, for the purposes of subsection ( 1), be deemed to be an amount which bears to the total amount of such consideration the same ratio as such effective value of those capital assets bears to the effective value to that person of all the assets (including any mining property) so disposed of to that person.
(2) For the purposes of paragraph (j) of the definition of ‘gross income’ in section 1 and section 36, the taxpayer who disposes of any capital assets contemplated in subsection (1), shall be deemed to have disposed of such capital assets for a consideration equal in value to the cost of those capital assets to the person acquiring such capital assets as determined under subsection (1) and (1A), and such consideration shall be deemed to have been received by or to have accrued to the said taxpayer on the effective date of the agreement of sale, transfer, lease or cession.
(3) If the value of the consideration given or the value of the property disposed of is in dispute, the value may, be fixed by the Commissioner and shall be determined –
(a) in the case of any mining property, in the same manner as if transfer duty were payable; or
(b) in the case of any capital asset, at the market value of such capital asset.
(4) The effective value on the effective date of the agreement of sale, transfer, lease or cession, of all the assets disposed of, shall be determined by the Director General for Minerals and Energy who shall, notwithstanding the repeal of the Second Schedule to the Transvaal Mining Leases and Mineral Law Amendment Act, 1918 (Act No. 30 of 1918), for the purposes of such determination have all the powers which were conferred upon him by the provisions of that Schedule.
(5) For the purpose of this section, ‘mining property’ means-
(a) any land on which mining is carried on; or
(b) any right to minerals (including any right to mine for minerals) and a lease or sub-lease of such a right.
Section 39 (ITA) – Redetermination of company’s status
39. Redetermination of company’s status
If owing to changes in the constitution or shareholding of any company which has been recognized as a public company under paragraph (a), (b) or (c) of subsection (2) of section 38, or for any other reason, the Commissioner is no longer satisfied of the matters of which he is in terms of the applicable paragraph required to be satisfied, or the company ceases to comply with the requirements of that paragraph, the Commissioner may notify the public officer of the company that it will as from the next succeeding specified date be recognized as a private company.
40. ……….
“Mutual loan association” definition of section 30B of ITA
‘mutual loan association’ means an association of which the sole or principal object is to function as a voluntary savings association where participants make regular contributions into a common pool managed by the members for the mutual financial benefit of those members.
Section 37A (ITA) – Closure rehabilitation company or trust
37A. Closure rehabilitation company or trust
(1) For purposes of determining the taxable income derived by a person from carrying on any trade, any cash paid during any year of assessment commencing on or after 2 November 2006 by that person to a company or trust shall be deducted from that person’s income if –
(a) the sole object of that company or trust is to apply its property solely for rehabilitation upon premature closure, decommissioning and final closure, and post closure coverage of any latent and residual environmental impacts on the area covered in terms of any permit, right, reservation or permission contemplated in paragraph (d)(i)(aa) to restore one or more areas to their natural or predetermined state, or to a land use which conforms to the generally accepted principle of sustainable development;
(b) that company or trust holds assets solely for purposes contemplated in paragraph (a);
(c) that company or trust makes distributions solely for purposes contemplated in paragraph (a), or subsection (3) or (4); and
(d) that person –
(i)
(aa) holds a permit or right in respect of prospecting, exploration, mining or production, an old order right or OP26 right as defined in item 1 of Schedule II or any reservation or permission for or right to the use of the surface of land as contemplated in item 9 of Schedule II to the Mineral and Petroleum Resources Development Act; or
(bb) is engaged in prospecting, exploration, mining or production in terms of any permit, right, reservation or permission as contemplated in item (aa); or
(ii) after approval by the Commissioner, paid any cash to that company or trust and that payment was not part of any transaction, operation or scheme designed solely or mainly for purposes of shifting the deduction contemplated in this subsection from another person to that person.
(2) The company or trust contemplated in subsection (1) may only hold –
(a) financial instruments issued by any –
(i) collective investment scheme as regulated in terms of the Collective Investment Schemes Control Act;
(ii) long-term insurer as regulated in terms of the Long-Term Insurance Act;
(iii) bank as regulated in terms of the Banks Act; or
(iv) mutual bank as regulated in terms of the Mutual Banks Act 1993 (Act No. 124 of 1993);
(b) financial instruments of a listed company unless –
(i) those financial instruments are issued by a person contemplated in subsection (1)(d); or
(ii) those financial instruments are issued by a person that is a connected person in relation to a person contemplated in subsection (1)(d);
(c) financial instruments issued by any sphere of government in the Republic; or
(d) any other investments which were held by that company or trust before 18 November 2003.
(3) To the extent that the Cabinet member for mineral resources is satisfied that all of the areas in terms of any permit, right, reservation or permission contemplated in subsection (1)(d)(i)(aa) that have been rehabilitated as contemplated in subsection (1)(a), the company or trust in respect of those areas must be wound-up or liquidated and its assets remaining after the satisfaction of its liabilities must be transferred to –
(a) another company or trust as contemplated in this section as approved by the Commissioner; or
(b) if no such company or trust has been established, to an account or trust prescribed by the Cabinet member for mineral resources as approved of by the Commissioner if the Commissioner is satisfied that such company or trust satisfies the objects of subsection (1)(a).
(4) If the Cabinet member for mineral resources is satisfied that a company or trust as contemplated in subsection (1)(a) –
(a) will be able to satisfy all of the liabilities of that company or trust; and
(b) such company or trust has sufficient assets to rehabilitate and restore, as contemplated in subsection (1)(a), all areas to which any permit, right, reservation or permission contemplated in subsection (1)(d)(i)(aa) relates, as the case may be,
that company or trust may transfer assets not required for purposes of paragraphs (a) and (b) to another company or trust established in terms of this section as approved by the Commissioner,
(5)
(a) The constitution of a company or the instrument establishing a trust contemplated in this section must incorporate the provisions of this section and any amendments thereto.
(b) Where the constitution of a company or the instrument establishing a trust contemplated in this section does not comply with this section, it shall be deemed to comply for a period not exceeding two years, if the person responsible in a fiduciary capacity for the funds and the assets of that company or trust, furnishes the Commissioner with a written undertaking that that company or trust will be administered in compliance with this section.
(6) If a company or trust holds a financial instrument or investment during any year of assessment-
(a) other than a financial instrument contemplated in subsection (2); or
(b) other than an investment contemplated in subsection (2)(d),
an amount equal to 50 per cent of the highest market value of that other financial instrument or other investment during that year of assessment must be deemed to be an amount of normal tax payable by the person contemplated in subsection (1)(d), subject to subsection (8), to the extent that the financial instrument or investment is directly or indirectly derived from any amount in cash paid by that person to that company or that trust.
[Subsection (6) amended by section 28 of Act 8 of 2007 and substituted by section 49 of Act 17 of 2017 effective on 18 December 2017]
(7) If a company or trust contemplated in subsection (1) during any year of assessment-
(a) distributes property from that company or trust for a purpose other than-
(i) rehabilitation upon premature closure;
(ii) decommissioning and final closure;
(iii) post closure coverage of any latent or residual environmental impacts; or
(iv) transfer to another company, trust, or account established for the purposes contemplated in subsection (1)(a); or
(b) uses property from that company or trust as security for any debt for a purpose other than a purpose contemplated in paragraph (a)(i) or (ii),
an amount equal to 50 per cent of the highest market value during that year of assessment of the property so distributed or used as security must be deemed to be an amount of normal tax payable by the person contemplated in subsection (1)(d), subject to subsection (8), in respect of that year of assessment.
[Subsection (7) amended by section 28 of Act 8 of 2007 and substituted by section 47 of Act 35 of 2007 and section 49 of Act 17 of 2017 effective on 18 December 2017]
(8) Any amount deemed to be an amount of normal tax payable by the person contemplated in subsection (1)(d) in terms of subsection (6) or (7) must, to the extent that the amount cannot be recovered from that person, be recovered from the trust or company contemplated in this section.
[Subsection (8) amended by section 28 of Act 8 of 2007 and substituted by section 49 of Act 17 of 2017 effective on 18 December 2017]
(9) Subsection (7) does not apply in respect of any amount deemed to be an amount of normal tax that is paid to the Commissioner by a company or trust contemplated in this section.
[Subsection (9) inserted by section 49 of Act 17 of 2017 effective on 18 December 2017]
(10) A company or trust contemplated in this section must-
(a) within three months after the end of any year of assessment submit a report to the Director-General of the National Treasury in respect of that year of assessment providing the Director-General of the National Treasury with information comprising-
(i) the total amount of contributions to the company or the trust;
(ii) the total amount of withdrawals from the company or the trust; and
(iii) the purposes for which any amount of those withdrawals were applied; and
(b) within seven days after receiving a request from the Director-General of the National Treasury provide such information as the Director-General may require.
[Subsection (10) inserted by section 49 of Act 17 of 2017 effective on 18 December 2017]
Section 40A (ITA) – Close corporations
40A. Close corporations
(1) Where any close corporation has been converted into a company, such company and such close corporation shall for the purposes of this Act be deemed to be and to have been one and the same company.
(2) ……….
(3) ……….
(4) ……….
Section 31 (ITA) – Tax payable in respect of international transactions to be based on arm’s length principle
31. Tax payable in respect of international transactions to be based on arm’s length principle
Section 40B (ITA) – Conversion of co-operative to company
40B. Conversion of co–operative to company
Where any co–operative is incorporated as a company in accordance with the provisions of section 161A or 161C of the Co-operatives Act, 1981 (Act No. 91 of 1981) or section 62 of the Co-operatives Act, 2005 (Act No. 14 of 2005), such co–operative and such company shall for the purposes of this Act be deemed to be and to have been one and the same company.
“Equity share” definition of section 41 of ITA
“equity share”, for the purposes of sections 42 and 44, includes a participatory interest in a portfolio of a collective investment scheme in securities or in a portfolio of a hedge fund collective investment scheme;
[Definition of “equity share” deleted by section 32 of Act 8 of 2007, inserted by section 47 of Act 17 of 2009 and substituted by section 61 of Act 25 of 2015 effective on 1 April 2015]