Category: CHAPTER II – The Taxes (ITA)

Subsection 3(a) of section 46

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(3)

(a)     If a shareholder acquires equity shares (hereinafter referred to as ‘unbundled shares’) in terms of an unbundling transaction –

(i)      that shareholder must –

(aa)   allocate a portion of the expenditure and any market value attributable to the equity shares held in the unbundling company (hereinafter referred to as the ‘unbundling shares’) to the unbundled shares in accordance with subparagraph (v); and

(bb)   reduce the expenditure and market value attributable to the unbundling shares by the amount so allocated to the unbundled shares;

(ii)     the unbundled shares must, other than for purposes of determining whether a share has been held for at least three years for the purposes of section 9C(2), be deemed to have been acquired on the same date as the unbundling shares;

[Subparagraph (ii) substituted by section 57 of Act 35 of 2007 and section 54 of Act 17 of 2017 effective on 1 January 2016]

(iii)    the unbundled shares must be deemed to have been acquired as –

(aa)    trading stock, if the unbundling shares were held as trading stock;

(bb)   capital assets, if the unbundling shares were held as capital assets;

(iv)    any expenditure allocated to the unbundled shares must be deemed to have been incurred on the date on which the expenditure was incurred in respect of the unbundling shares; and

(v)     the proportionate amount of the expenditure and market value to be allocated to the unbundled shares in terms of subparagraph (i)(aa) must be determined in accordance with the ratio that the market value of the unbundled shares, as at the end of the day after that distribution, bears to the sum of the market value, as at the end of that day, of the unbundling shares and of the unbundled shares: Provided that a shareholder that acquires unbundled shares in terms of an unbundling transaction shall, in addition to any expenditure allocated to unbundled shares in accordance with this subparagraph, be treated as having incurred an amount equal to any amount of tax payable by the unbundling company arising in respect of all equity shares to which this section does not apply as contemplated in subsection (7) the same ratio as the number of equity shares held by that shareholder in that unbundled company bears to the number of all the issued equity shares in that unbundled company immediately after that unbundling transaction.

[Subparagraph (v) amended by section 37(1)(b) of Act 17 of 2023 with effect from 1 January, 2024 and applicable in respect of the allocation of expenditure to unbundled shares acquired on or after that date]

Section 47G (ITA) – Personal liability of resident

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47G.    Personal liability of resident

(1)     A resident who –

(a)     fails to deduct or withhold an amount of tax in terms of section 47D from any payment made to a taxpayer: or

(b)     deducts or withholds an amount of tax but fails to pay that amount over in terms of section 47E,

is personally liable for payment of that amount of tax in accordance with Part A of Chapter 10 of the Tax Administration Act.

(2)     ……….

(3)     Subsection (1)(a) does not apply where the taxpayer has in terms of section 47C(1) paid to the Commissioner the amount of tax payable under this Part in respect of the payment from which the resident has so failed to deduct or withhold the tax.


47H.  . . . . . .



47I.   . . . . . .

[Wording of section 47I prior to amendment by Act 28 of 2011 applicable to the extent it relates to interest]

Section 49G – Refund of withholding tax on royalties

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49G.    Refund of withholding tax on royalties

 

(1)     Notwithstanding  Chapter 13 of the Tax Administration Act, if-

 

(a)     an amount is withheld from a payment of a royalty as contemplated in section 49E(1);

 

(b)     a declaration contemplated in section 49E(2) or (3) in respect of that royalty is not submitted to the person paying that royalty by the date of the payment of that royalty; and

 

(c)     a declaration contemplated in section 49E(2) or (3) is submitted to the Commissioner within three years after the payment of the royalty in respect of which the declaration is made,

 

so much of that amount as would not have been withheld had that declaration been submitted by the date contemplated in the relevant subsection is refundable by the Commissioner to the person to which the royalty was paid.

[Subsection (1) inserted by section 12(1) of Act 21 of 2012 and renumbered by section 5 of Act 24 of 2020]

 

(2)     Notwithstanding Chapter 13 of the Tax Administration Act, if—

 

(a)     an amount of withholding tax on royalties is paid as contemplated in section 49E(1) in respect of an amount of royalties that became due and payable; and

 

(b)     the amount of royalties subsequently becomes irrecoverable,

 

so much of that amount as would not have been paid had the royalties not become due and payable is refundable by the Commissioner to the person who paid the tax.

[Subsection (2) added by section 5 of Act 24 of 2020]

Section 62 (ITA) – Value of property disposed of under donations

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62.    Value of property disposed of under donations

 

(1)     For the purposes of donations tax the value of any property shall be deemed to be –

 

(a)     in the case of any fiduciary, usufructuary or other like interest in property, an amount determined by capitalizing at twelve per cent. the annual value of the right of enjoyment of the property over which such interest was or is held, to the extent to which the donee becomes entitled to such right of enjoyment, over the expectation of life of the donor, or if such right of enjoyment is to be held for a lesser period than the life of the donor, over such lesser period;

 

(b)     in the case of any right to any annuity, an amount equal to the value of the annuity capitalized at twelve per cent. over the expectation of life of the donor, or if such right is to be held by the donee for a lesser period than the life of the donor, over such lesser period;

 

(c)     in the case of a right of ownership in any movable or immovable property which is subject to a usufructuary or other like interest in favour of any person, the amount by which the fair market value of the full ownership of such property exceeds the value of such interest, determined –

 

(i)      in the case of a usufructuary interest, by capitalizing at twelve per cent. the annual value of the right of enjoyment of the property subject to such usufructuary interest over the expectation of life of the person entitled to such interest, or, if such right of enjoyment is to be held for a lesser period than the life of such person, over such lesser period;

 

(ii)     in the case of an annuity charged upon the property, by capitalizing at twelve per cent. the amount of the annuity over the expectation of life of the person entitled to such annuity, or, if it is to be held for a lesser period than the life of such person, over such lesser period; or

 

(iii)    in the case of any other interest, by capitalizing at twelve per cent such amount as the Commissioner may consider reasonable as representing the annual yield of such interest, over the expectation of life of the person entitled to such interest, or, if such interest is to be held for a lesser period than the life of such person, over such lesser period;

 

(d)     in the case of any other property, the fair market value of such property as at the date upon which the donation takes effect: Provided that in any case in which, as a result of conditions which in the opinion of the Commissioner were imposed by or at the instance of the donor, the value of any property is reduced in consequence of the donation, the value of such property shall be determined as though the conditions in terms of which the value of the said property is reduced in consequence of the donation, had not been imposed.

 

(1A)  Where any company not quoted on any stock exchange owns immovable property on which bona fide farming operations are being carried on in the Republic, the value of such immovable property shall, in so far as it is relevant for the purposes of determining the value of any shares in such company, be determined in the manner prescribed in the definition of “fair market value” in section 55(1).

 

(2)     For the purposes of paragraphs (a) and (c) of subsection (1) the annual value of the right of enjoyment of a property means an amount equal to twelve per cent. upon the value of the full ownership of the property which is subject to any fiduciary, usufructuary or other like interest: Provided that –

 

(a)     where the Commissioner is satisfied that the property which is subject to any such interest could not reasonably be expected to produce an annual yield equal to 12 per cent on such value of the property, the Commissioner may fix such sum as representing the annual yield as may seem to him to be reasonable, and the sum so fixed shall for the purposes of paragraphs (a) and (c) of subsection (1) be deemed to be the annual value of the enjoyment of such property;

 

(b)     where the property which is subject to any such interest consists of books, pictures, statuary or other objects of art, the annual value of the right of enjoyment shall for the purposes of paragraph (a) of subsection (1) be deemed to be the average net receipts (if any) derived by the person entitled to such right of enjoyment of such property during the three years immediately preceding the date on which the donation took effect.

 

(3)     Where for the purposes of subsection (1) any calculation is required to be made over the expectation of life of any person, such calculation shall, in the case of a person who is not a natural person, be made over a period of fifty years.

 

(4)     If the Commissioner is of the opinion that the amount shown in any return as the fair market value of any property is less than the fair market value of that property, he or she may fix the fair market value of that property, and the value so fixed is deemed for the purposes of this Part to be the fair market value of such property.

 

(5)     In fixing the fair market value of any property in terms of subsection (4), the Commissioner shall have regard inter alia –

 

(a)     to the municipal or divisional council valuation (if any) of such property;

 

(b)     to any sworn valuation of such property furnished by or on behalf of the donor or the donee; and

 

(c)     to any valuation of such property made by any competent and disinterested person appointed by the Commissioner.

 

63.  ……….

Section 64F (ITA) – Exemption from tax in respect of dividends other than dividends comprising distribution of assets in specie

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64F.  Exemption from tax in respect of dividends other than dividends comprising distribution of assets in specie

[Heading of section 64F substituted by section 78 of Act 24 of 2011 and section 62 of Act 23 of 2018 effective on 17 January 2019]

(1)     Any dividend is exempt from the dividends tax to the extent that it does not consist of a dividend that comprises a distribution of an asset in specie if the beneficial owner is-

[Words preceding paragraph (a) substituted by section 78 of Act 24 of 2011 and section 62 of Act 23 of 2018 effective on 17 January 2019]

(a)     a company which is a resident;

(b)     the government of the Republic in the national, provincial or local sphere;

[Paragraph (b) substituted by section 70 of Act 43 of 2014 effective on 20 January 2015]

(c)     a public benefit organisation approved by the Commissioner in terms of section 30(3);

(d)     a trust contemplated in section 37A;

(e)     an institution, board or body contemplated in section 10(1)(cA);

(f)      a fund contemplated in section 10(1)(d)(i) or (ii);

(g)     a person contemplated in section 10(1)(t);

(h)     a holder of shares in a registered micro business, as defined in the Sixth Schedule, paying that dividend, to the extent that the aggregate amount of dividends paid by that registered micro business to all holders of shares in that registered micro business during the year of assessment in which that dividend is paid does not exceed the amount of R200 000;

(i)      a small business funding entity as contemplated in section 10(1)(cQ);

[Paragraph (i) substituted by section 72 of Act 7 of 2010, deleted by section 78 of Act 24 of 2011, re-inserted by section 70 of Act 43 of 2014 effective on 1 March 2015]

(iA)   ……….

(j)      a person that is not a resident and the dividend is a dividend contemplated in paragraph (b) of the definition of ‘dividend’ in section 64D;

(k)     ……….

[Paragraph (k) added by section 86 of Act 22 of 2012 and deleted by section 62 of Act 23 of 2018 effective on 17 January 2019]

(l)      any person to the extent that the dividend constitutes income of that person; or

(m)    any person to the extent that the dividend was subject to the secondary tax on companies;

[Paragraph (m) added by section 86(1)(b) of Act 22 of 2012, amended by section 86(1)(c) of Act 22 of 2012 and section 70 of Act 43 of 2014 effective on 1 March 2015]

(n)     any fidelity or indemnity fund contemplated in section 10(1)(d)(iii); or

[Paragraph (n) added by section 86 of Act 22 of 2012, amended by section 70 of Act 43 of 2014 effective on 1 March 2015]

(o)     a natural person or deceased estate or insolvent estate of that person in respect of a dividend paid in respect of a tax free investment as contemplated in section 12T(1).

[Paragraph (o) added by section 70 of Act 43 of 2014 effective on 1 March 2015, substituted by section 75 of Act 25 of 2015 effective on 1 March 2015]

(2)     Any dividend paid by a REIT or a controlled company, as defined in section 25BB, and received or accrued before 1 January 2014 is exempt from the dividends tax to the extent that the dividend does not consist of a dividend that comprises a distribution of an asset in specie.

[Subsection (2) added by section 86 of Act 22 of 2012 and substituted by section 104 of Act 31 of 2013 and section 62 of Act 23 of 2018 effective on 17 January 2019]

Section 64 (ITA) – Rate of donations tax

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64.    Rate of donations tax

 

(1)     The rate of the donations tax chargeable under section 54 in respect of the value of any property disposed of under a donation shall be-

 

(a)

 

(i)      20 per cent of that value if the aggregate of that value and the value of any other property disposed of under a taxable donation on or after 1 March 2018 until the date of that donation does not exceed R30 million; and

[Subparagraph (i) substituted by section 35(1) of Act 23 of 2020 deemed effective on 1 March, 2018]

 

(ii)     25 per cent of that value to the extent that that value is not taxed under subparagraph (i); or

[Paragraph (a) substituted by section 5 of Act 21 of 2018 effective on 1 March 2018]

 

(b)     such percentage of such value as the Minister may announce in the national annual budget contemplated in section 27(1) of the Public Finance Management Act, with effect from a date mentioned in that Announcement.

 

(2)     If the Minister makes an announcement contemplated in subsection (1)(b), that rate comes into effect on the date determined by the Minister in that announcement and continues to apply for a period of 12 months from that date subject to Parliament passing legislation giving effect to that announcement within that period of 12 months.

[Section 64 substituted by section 30 of Act 90 of 1988, amended by section 19 of Act 36 of 1996 and substituted by section 59 of Act 17 of 2017 effective on 18 December 2017]

Section 54 (ITA) – Levy of donations tax

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54.    Levy of donations tax

 

Subject to the provisions of section 56, there shall be paid for the benefit of the National Revenue Fund a tax (in this Act referred to as donations tax) on the value of any property disposed of (whether directly or indirectly and whether in trust or not) under any donation by any resident (in this Part referred to as the donor).