Category: CHAPTER II – The Taxes (ITA)

Subsections 2, 3, 4, 5, 7, 8, 9, 10 and 11 of section 28 of ITA

Posted on by admin_kmos

(2)     For the purpose of determining the taxable income derived during a year of assessment by any short-term insurer from carrying on short-term insurance business-

[Words preceding paragraph (a) substituted by section 50 of Act 23 of 2018 effective on 1 July 2018, applies to years of assessment ending on or after that date]

(a)     a premium received by or accrued to that person in respect of a short-term policy issued by that short-term insurer shall be deemed to be—

(i)      an amount equal to the sum of insurance revenue for insurance contracts and net earned premiums for investment contracts, which are determined in accordance with IFRS as reported by the insurer to shareholders in the audited financial statements, other than any reinsurance due to a cell owner as contemplated in the definition of “cell structure” in section 1 of the Insurance Act, which is included in that insurance revenue in accordance with IFRS; and

[Subparagraph (i) substituted by section 24(1)(a) of Act 42 of 2024 deemed to have come into operation on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

(ii)     premium income earned in relation to an investment contract entered into by a “cell captive insurer” as defined in section 1 of the Insurance Act in respect of “first party risks” as defined in that section of that Act, which does not form part of amounts contemplated in subparagraph (i);

[Paragraph (a) substituted by section 14(1)(a) of Act 20 of 2022 effective on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

(b)       . . . . . .

[Paragraph (b) deleted by section 14(1)(b) of Act 20 of 2022 effective on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

(c)     an amount of expenditure payable by that short-term insurer in respect of any claim in terms of a short-term policy-

(i)      may be deducted in terms of section 11(a) to the extent that the amount has been paid by that short-term insurer; and

(ii)     to the extent that the amount has been paid by the short-term insurer, sections 23(c) and 23H shall not apply to that expenditure; and

[Paragraph (c) amended by section 14(1)(b) of Act 20 of 2022 effective on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

(d)     section 23H shall not apply to expenditure (other than expenditure contemplated in paragraph (c)) incurred in respect of-

(i)      a short-term policy issued by that short-term insurer; or

(ii)      a policy of reinsurance if that short-term insurer is the holder of that policy;

[Paragraph (d) amended by section 14(1)(b) of Act 20 of 2022 effective on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

(e)       . . . . . .

[Subsection (2) amended by section 17 of Act 90 of 1962, by section 22 of Act 55 of 1966, by section 24 of Act 89 of 1969, by section 22 of Act 94 of 1983, by section 42(a)-(e) of Act 35 of 2007, by section 40 of Act 60 of 2008, by section 40(1)(a) of Act 17 of 2009 and by section 51(1)(a) of Act 7 of 2010, substituted by section 61(1)(b) of Act 22 of 2012 and by section 76(1)(c) of Act 31 of 2013 and amended by section 50(1)(d) of Act 23 of 2018 deemed effective on 1 July, 2018 and applicable in respect of years of assessment ending on or after that date. Paragraph (e) deleted by section 14(1)(b) of Act 20 of 2022 effective on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

(3)     Subject to subsection (3A) and notwithstanding section 23(e), for the purpose of determining the taxable income derived during any year of assessment by any short-term insurer from carrying on short-term insurance business, there shall be allowed as a deduction from the income of that short-term insurer an amount equal to-

(a)    the sum of liabilities for incurred claims relating to short-term insurance business in respect of the policies of the insurer, net of amounts recognised in respect of reinsurance contracts for liabilities for incurred claims; and

(b)     the liability for claims, net of amounts recognised in respect of reinsurance contracts, in relation to investment contracts entered into by a short-term insurer in the course of carrying on short-term insurance business,

which are determined in accordance with IFRS as reported by the insurer to shareholders in the audited annual financial statements: Provided that liabilities for incurred claims shall be-

(i)      increased by the amount of insurance and reinsurance receivable balances; and

(ii)     decreased by the amount of insurance and reinsurance creditor balances,

which are taken into account in the determination of the liabilities for incurred claims in accordance with IFRS as reported by the issuer to shareholders in the audited annual financial statements: Provided further that any amount that is payable to or receivable from a cell owner, referred to in the definition of “cell structure” in section 1 of the Insurance Act, which does not relate to a policy, must be disregarded.

[Subsection (3) substituted by section 21(1)(b) of Act 88 of 1971, amended by section 25(1)(c) of Act 101 of 1990, substituted by section 33(b) of Act 30 of 2000, deleted by section 42(f) of Act 35 of 2007, inserted by section 61(1)(b) of Act 22 of 2012, substituted by section 76(1)(c) of Act 31 of 2013 and by section 52(1)(d) of Act 25 of 2015, amended by section 49(1) of Act 15 of 2016 and by section 50(1)(e) of Act 23 of 2018 and substituted by section 33(1)(b) of Act 34 of 2019, by section 14(1)(c) of Act 20 of 2022 and by section 24(1)(b) of Act 42 of 2024 deemed to have come into operation on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

(3A)  Notwithstanding section 23(e), for the purpose of determining the taxable income derived during any year of assessment by any foreign reinsurer conducting insurance business through a branch in the Republic in terms of section 6 of the Insurance Act in respect of a branch policy, there shall be allowed as a deduction from the income of that foreign reinsurer an amount in respect of liabilities determined in accordance with the formula-

I = (L + LIC + DL) – DC + DR

in which formula-

(a)     “I” represents the amount to be determined;

(b)     “L” represents the aggregate amounts of-

(i)      insurance contract liabilities;

(ii)     investment contract liabilities; and

(iii)     reinsurance contract liabilities,

reduced by-

(aa)   insurance contract assets;

(bb)   reinsurance contract assets, and

(cc)   liability for incurred claims contemplated in paragraph (c),

the amounts of which are determined in accordance with IFRS as annually reported by the insurer to shareholders in the audited annual financial statements in respect of branch policies and in respect of subparagraphs (i), (iii), items (aa) and (bb) are limited to amounts relating to liabilities for incurred claims: Provided that any amount that is payable to or receivable from a cell owner, referred to in the definition of “cell structure” in section 1 of the Insurance Act, that does not relate to a policy, must be disregarded: Provided further that the amount may not be less than zero;

[Paragraph (b) amended by section 31(1)(a) of Act 17 of 2023 and by section 24(1)(c) of Act 42 of 2024 deemed to have come into operation on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

(c)     “LIC” represents the amount of the liability for incurred claims determined in accordance with IFRS 17 in respect of the policies of the insurer, net of amounts recognised in reinsurance contracts for liabilities for incurred claims, which are determined in accordance with IFRS as annually reported by the insurer to shareholders in the audited annual financial statements;

(d)     “DL” represents the amount of deferred tax liabilities, determined in accordance with IFRS as annually reported by the insurer to shareholders in the audited annual financial statements, in respect of branch policies;

(e)     “DC” represents the amount of deferred acquisition costs determined in accordance with IFRS as annually reported by the insurer to shareholders in the audited financial statements in respect of branch policies; and

f)       “DR” represents the amount of deferred revenue determined in accordance with IFRS as annually reported by the insurer to shareholders in the audited financial statements in respect of branch policies.

[Subsection (3A) inserted by section 33(1)(c) of Act 34 of 2019 and substituted by section 14(1)(d) of Act 20 of 2022 effective on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

(3B)

(a)     Where a person transfers short-term insurance policies as part of any short-term insurance business to another short-term insurer carrying on or to be carrying on short-term insurance business, that person may for purposes of section 11(a) deduct an amount equal to liabilities on investment contracts relating to short-term insurance business and amounts of insurance liabilities relating to premiums and claims transferred to the other short-term insurer.

(b)     An amount contemplated in paragraph (a) must be included in the income of the short-term insurer to which the liabilities were transferred as described in paragraph (a).

[Subsection (3B) inserted by section 21(1)(b) of Act 20 of 2021 effective on 1 January, 2022 and applicable in respect of years of assessment ending on or after that date]

(3C)  For the purpose of determining the taxable income derived by any short-term insurer from carrying on short-term insurance business, the short-term insurer must, in the first year of assessment commencing on or after 1 January 2023-

(a)     include in its income an amount equal to the amounts recoverable by that short-term insurer in respect of claims incurred under a short-term policy issued by that short-term insurer at the end of the latest year of assessment commencing on or after 1 January 2022, but before 1 January 2023, that has not been received by that short-term insurer by the end of that year of assessment;

[Paragraph (a) substituted by section 24(1)(d) of Act 42 of 2024 deemed to have come into operation on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

(b)     deduct the liabilities for remaining coverage, reduced by reinsurance, calculated for the latest year of assessment commencing on or after 1 January 2022, but before 1 January 2023, had IFRS 17 been applied at the end of that year of assessment or include in its income the liabilities for remaining coverage, net of reinsurance, calculated for the latest year of assessment commencing on or after 1 January 2022, but before 1 January 2023, had IFRS 17 been applied at the end of that year of assessment;

[Paragraph (b) substituted by section 31(1)(b) of Act 17 of 2023 and by section 24(1)(d) of Act 42 of 2024 deemed to have come into operation on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

(bA)  include in its income the absolute value whereby the amount of liabilities for remaining coverage is exceeded by the amount of reinsurance, calculated for the latest year of assessment commencing on or after 1 January 2022, but before 1 January 2023, had IFRS 17 been applied at the end of that year of assessment;

[Paragraph (bA) inserted by section 24(1)(e) of Act 42 of 2024 deemed to have come into operation on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

(c)     deduct the amounts of insurance premium or reinsurance premium debtors, reduced by amounts of reinsurance premium payable, taken into account in determining the liabilities for remaining coverage at the end of the latest year of assessment commencing on or after 1 January 2022, but before 1 January 2023, had IFRS 17 been applied at the end of that year of assessment; and

[Paragraph (c) substituted by section 24(1)(f) of Act 42 of 2024 deemed to have come into operation on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

(cA)  include in its income the absolute value whereby amounts of insurance premium or reinsurance premium debtors is exceeded by amounts of reinsurance premium payable, taken into account in determining the liabilities for remaining coverage at the end of the latest year of assessment commencing on or after 1 January 2022, but before 1 January 2023, had IFRS 17 been applied at the end of that year of assessment.

[Paragraph (cA) inserted by section 24(1)(g) of Act 42 of 2024 deemed to have come into operation on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

 [Subsection (3C) inserted by section 14(1)(e) of Act 20 of 2022 effective on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date] 

(3D)

(a)     For the purposes of determining the taxable income derived by any short-term insurer from carrying on short-term insurance business, there shall be allowed as a deduction from the income of that short-term insurer in respect of-

(i)      the first year of assessment commencing on or after 1 January 2023, 66.7 per cent of the phasing-in amount as determined under paragraph (c); and

(ii)     the second year of assessment commencing on or after 1 January 2023, 33.3 per cent of the phasing-in amount as determined under paragraph (c):

Provided that where an insurer ceases to conduct business during any year of assessment contemplated in subparagraphs (i) and (ii), the amount to be deducted in respect of the phasing-in amount in respect of that year of assessment must be nil.

(b)     For the purposes of determining the taxable income derived by any short-term insurer from carrying on any short-term insurance business, there shall be included in the income of that short-term insurer in respect of-

(i)      the first year of assessment commencing on or after 1 January 2023, 66.7 per cent of the phasing-in amount as determined under paragraph (d); and

(ii)     the second year of assessment commencing on or after 1 January 2023, 33.3 per cent of the phasing-in amount as determined under paragraph (d):

Provided that where an insurer ceases to conduct business during any year of assessment contemplated in subparagraphs (i) and (ii), the amount to be included in respect of the phasing-in amount in respect of that year of assessment must be nil.

(c)     For purposes of paragraph (a), “phasing-in amount” means the amount by which the amount of the deduction under subsection (3) or (3A), for the latest year of assessment commencing on or after 1 January 2022, but before 1 January 2023, exceeds the amount of the deductions under subsection (3) or (3A), and subsection (3C)(b) for the latest year of assessment commencing on or after 1 January 2022, but before 1 January 2023, had IFRS 17 and subsection (3) or (3A), as amended by the Taxation Laws Amendment Act, 2022, and subsection (3C)(b) been applied at the end of that year of assessment and when-

(i)

(aa)   the amount of insurance premium debtors and reinsurance premium debtors exceeds;

(bb)   the amount of reinsurance premiums payable,

other than amounts forming part of the liability for incurred claims, deduct the difference between items (aa) and (bb) at the end of the latest year of assessment commencing on or after 1 January 2022, but before 1 January 2023, had IFRS 17 been applied; or

(ii)

(aa)   the amount of reinsurance premium payable exceeds;

(bb)   the amount of insurance premium debtors and reinsurance premium debtors,

other than amounts forming part of the liability for incurred claims, add the difference between items (aa) and (bb) at the end of the latest year of assessment commencing on or after 1 January 2022, but before 1 January 2023, had IFRS 17 been applied, and add the amount determined under subsection (3C)(a).

[Paragraph (c) substituted by section 24(1)(h) of Act 42 of 2024 deemed to have come into operation on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

(d)     For purposes of paragraph (b), “phasing-in amount” means the amount by which the amount of the deductions under subsection (3) or (3A), and subsection (3C)(b) for the latest year of assessment commencing on or after 1 January 2022, but before 1 January 2023, had IFRS 17 and subsection (3) or (3A), as amended by the Taxation Laws Amendment Act, 2022, and subsection (3C)(b) been applied at the end of that year of assessment exceeds the amount of the deduction under subsection (3) or (3A), for the latest year of assessment commencing on or after 1 January 2022, but before 1 January 2023, and when-

(i)

(aa)   the amount of insurance premium debtors and reinsurance premium debtors exceeds;

(bb)   the amount of reinsurance premiums payable,

other than amounts forming part of the liability for incurred claims, add the difference between items (aa) and (bb), at the end of the latest year of assessment commencing on or after 1 January 2022, but before 1 January 2023, had IFRS 17 been applied; or

(ii)

(aa)   the amount of reinsurance premiums payable, exceeds,

(bb)   the amount of insurance premium debtors and reinsurance premium debtors,

other than amounts forming part of the liability for incurred claims, deduct the difference between items (aa) and (bb) at the end of the latest year of assessment commencing on or after 1 January 2022, but before 1 January 2023, had IFRS 17 been applied, and deduct the amount determined under subsection (3C)(a).

[Paragraph (d) substituted by section 24(1)(h) of Act 42 of 2024 deemed to have come into operation on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

 [Subsection (3D) inserted by section 14(1)(e) of Act 20 of 2022 effective on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date] 

(4)

(a)     The total of all amounts deducted from the income of a short-term insurer in respect of a year of assessment in terms of subsections (3), (3A) and (3D)(a) shall be included in the income of that short-term insurer in the immediately following year of assessment.

(b)     The amount included in the income of a short-term insurer in respect of a year of assessment in terms of subsection (3D)(b) shall be deducted from the income of that short-term insurer in the immediately following year of assessment.

[Subsection (4) amended by section 19(1) of Act 65 of 1973 and by section 33(c) and (d) of Act 30 of 2000, deleted by section 42(f) of Act 35 of 2007, inserted by section 61(1)(b) of Act 22 of 2012 and substituted by section 76(1)(c) of Act 31 of 2013, by section 21(1)(c) of Act 20 of 2021 and by section 14(1)(f) of Act 20 of 2022 effective on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

(5)      . . . . . .

[Subsection (5) added by section 42(g) of Act 35 of 2007, substituted by section 76(1)(c) of Act 31 of 2013 deemed effective on 1 January, 2013 and applicable in respect of years of assessment commencing on or after that date and deleted by section 61(1)(c) of Act 22 of 2012 effective on 1 January, 2014 and applicable in respect of years of assessment commencing on or after that date]

(6)       ……….

(7)     ……….

[Subsection (7) added by section 40 of Act 17 of 2009, amended by section 51 of Act 7 of 2010 and section 61 of Act 22 of 2012 and deleted by section 52 of Act 25 of 2015 effective on the date on which the Insurance Act 2016, comes into operation, 1 July 2018, and apply to years of assessment ending on or after that date]

(8)     ……….

[Subsection (8) added by section 40 of Act 17 of 2009, amended by section 61 of Act 22 of 2012 and deleted by section 52 of Act 25 of 2015 effective on the date on which the Insurance Act 2016, 1 July 2018, comes into operation and apply to years of assessment ending on or after that date]

(9)     ……….

[Subsection (9) added by section 40 of Act 17 of 2009, substituted by section 51 of Act 7 of 2010 and section 61 of Act 22 of 2012 and deleted by section 52 of Act 25 of 2015 effective on the date on which the Insurance Act 2016, comes into operation, 1 July 2018, and apply to years of assessment ending on or after that date]

(10)   ……….

[Subsection (10) added by section 40 of Act 17 of 2009 and deleted by section 52 of Act 25 of 2015 effective on the date on which the Insurance Act 2016, comes into operation, 1 July 2018, and apply to years of assessment ending on or after that date]

(11)   ……….

[Subsection (11) added by section 40 of Act 17 of 2009, and deleted by section 52 of Act 25 of 2015 effective on the date on which the Insurance Act 2016, comes into operation, 1 July 2018, and apply to years of assessment ending on or after that date]

“Short-term policy” definition of section 28 of ITA

Posted on by admin_kmos

‘short-term policy’ means-

(a)     a short-term policy as defined in the Short-term Insurance Act;

(b)     a policy issued by a micro-insurer as defined in section 1 of the Insurance Act; or

(c)     a policy issued by a foreign reinsurer as contemplated in paragraph (c) in the definition of ‘short-term insurer’.

[Definition of ‘short-term policy’ substituted by section 76 of Act 31 of 2013 and section 52 of Act 25 of 2015 (substitution by section 52 of Act 25 of 2015 deleted by section 107 of Act 23 of 2018 effective on 8 January 2016) and substituted by section 50 of Act 23 of 2018 effective on 1 July 2018, applies to years of assessment ending on or after that date]

“Short-term insurer” definition of section 28 of ITA

Posted on by admin_kmos

‘short-term insurer’ means-

(a)     a company that is licensed under the Insurance Act and is conducting non-life insurance business as defined in that Act;

[Paragraph (a) substituted by section 21(1)(a) of Act 20 of 2021]

(b)     a micro-insurer as defined in section 1 of the Insurance Act; or

(c)     a foreign reinsurer conducting insurance business through a branch in the Republic in terms of section 6 of the Insurance Act;

[Definition of “short-term insurer” substituted by section 52 of Act 25 of 2015 (substitution by section 52 of Act 25 of 2015 deleted by section 107 of Act 23 of 2018 effective on 8 January 2016) and substituted by section 50 of Act 23 of 2018 effective on 1 July 2018, applies to years of assessment ending on or after that date]

“Entity” definition of section 30B of ITA

Posted on by admin_kmos

(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 37A (ITA) – Closure rehabilitation company or trust

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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]