Category: PART I – Normal Tax (ITA)

Section 9K (ITA) – Listing of security on exchange outside Republic

Posted on by admin_kmos

9K.    Listing of security on exchange outside Republic

(1)     Where a natural person or a trust that is a resident holds a security in a company and that security is delisted on an exchange as defined in section 1 of the Financial Markets Act and licenced under section 9 of that Act, and subsequent to that delisting that security is listed on an exchange outside the Republic, that person must be treated as having—

(a)     disposed of that security for an amount received or accrued equal to the market value of that security as contemplated in the definition of “market value” in section 9H(1) on the day that the security is listed on the exchange outside the Republic; and

(b)     reacquired that security on the same day on which that security is treated as having been disposed of under paragraph (a) for expenditure in an amount equal to that market value.

(2)     For the purposes of section 9C(2), a security that is listed on an exchange outside the Republic as contemplated in subsection (1) must be treated to be one and the same security that is delisted.

[Section 9K inserted by section 9(1) of Act 23 of 2020 effective on 1 March, 2021 and applicable in respect of any security listed on an exchange outside the Republic on or after that date]

“Branch policy” definition of section 28 of ITA

Posted on by admin_kmos

(1)     For the purposes of this section-

“branch policy” means a policy contemplated in paragraph (c) of the definition of “short­term policy” that is also a long­term policy as defined in section 1 of the Long­term Insurance Act;

[Definition of “branch policy” inserted by section 33(1)(a) of Act 34 of 2019]

“Issue price” definition of section 8E of ITA

Posted on by admin_kmos

“issue price” in relation to a share in a company means the amount that was received by or that accrued to that company in respect of the issue of that share;

[Definition of “issue price” inserted by section 8(1)(d) of Act 34 of 2019 deemed effective on 21 July, 2019 and applicable in respect of years of assessment ending on or after that date]

Section 10(1)(gJ) of ITA

Posted on by admin_kmos

(gJ)   any amount received by or accrued to a person who is a member of a bargaining council that is established in terms of section 27 of the Labour Relations Act, 1995 (Act No. 66 of 1995), from a scheme or fund as contemplated in section 28(1)(g) of that Act, other than an amount from a pension fund or a provident fund;

[Paragraph (gJ) inserted by section 22 of Act 23 of 2018 effective on 1 March 2019]

“Market value” definition of section 19 of ITA

Posted on by admin_kmos

‘market value’, in relation to shares acquired or held by reason or as a result of implementing a concession or compromise in respect of a debt, means the market value of those shares immediately after the implementation of that concession or compromise.

[Definition of “market value” inserted by section 36 of Act 23 of 2018 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]

Section 9J (ITA) – Interest of non-resident persons in immovable property

Posted on by admin_kmos

9J.     Interest of non-resident persons in immovable property

(1)     Any amount received or accrued in respect of the disposal by a person of trading stock consisting of-

(a)     immovable property situated in the Republic held by that person; or

(b)     any interest or right of whatever nature of that person to or in immovable property situated in the Republic,

shall be an amount received or accrued from a source within the Republic.

(2)     For purposes of subsection (1), any interest or right in immovable property situated in the Republic includes-

(a)     rights to variable or fixed payments as consideration for the working of, or the right to work mineral deposits, sources and other natural resources; or

(b)     any equity shares held by a person in a company or ownership or the right to ownership of a person in any other entity or a vested interest of a person in any assets of any trust, if-

(i)      80 per cent or more of the market value of those equity shares, ownership or right to ownership or vested interest, as the case may be, at the time of disposal thereof is attributable directly or indirectly to immovable property situated in the Republic or any interest or right of whatever nature in or to immovable property situated in the Republic including rights to variable or fixed payments as consideration for the working of, or the right to work mineral deposits, sources and other natural resources in the Republic; and

[Subparagraph (i) substituted by section 8 of Act 23 of 2020]

(ii)     in the case of a company or other entity, that person (whether alone or together with any connected person in relation to that person), directly or indirectly, holds at least 20 per cent of the equity shares in that company or ownership or right to ownership of that other entity.

[Section 9J inserted by section 21 of Act 23 of 2018 effective on 17 January 2019]

Section 9HB (ITA) – Transfer of asset between spouses

Posted on by admin_kmos

9HB. Transfer of asset between spouses

(1)

(a)     A person (hereinafter referred to as ‘the transferor’) must disregard any capital gain or capital loss determined in respect of the disposal of an asset to his or her spouse (hereinafter referred to as ‘the transferee’).

(b)     The transferee must be treated as having-

(i)   acquired the asset on the same date that such asset was acquired by the transferor;

[Sub­paragraph (i) substituted by section 12(1) of Act 34 of 2019 deemed effective on 17 January, 2019]

(ii)     incurred an amount of expenditure equal to the expenditure contemplated in paragraph 20 of the Eighth Schedule that was incurred by that transferor in respect of that asset;

(iii)    incurred that expenditure on the same date and in the same currency that it was incurred by the transferor;

(iv)    used that asset in the same manner that it was used by the transferor; and

(v)     received an amount equal to any amount received by or accrued to that transferor in respect of that asset that would have constituted proceeds on disposal of that asset had that transferor disposed of it to a person other than the transferee.

(2)       For the purposes of subsection (1)-

(a)     a person whose spouse dies must be treated as having disposed of an asset to that spouse immediately before the date of death of that spouse, if ownership of that asset is acquired by the deceased estate of that spouse in settlement of a claim arising under section 3 of the Matrimonial Property Act, 1984 (Act No. 88 of 1984); or

(b)     a person must be treated as having disposed of an asset to his or her spouse, if that asset is transferred to that spouse in consequence of a divorce order or, in the case of a union contemplated in paragraph (b) or (c) of the definition of ‘spouse’ in section 1, an agreement of division of assets which has been made an order of court.

(3)      A person who disposes of an asset consisting of trading stock, livestock or produce contemplated in the First Schedule to his or her spouse, must be treated as having disposed of that asset for an amount received or accrued that is equal to the amount that was allowed as a deduction in respect of that asset for purposes of determining that person’s taxable income, before the inclusion of any taxable capital gain.

(4)     Where a person acquires an asset consisting of trading stock, livestock or produce contemplated in the First Schedule from his or her spouse, that person and his or her spouse must, for purposes of determining any taxable income derived by that person, be deemed to be one and the same person with respect to the date of acquisition of that asset by that person and the amount and date of incurral by that spouse of any cost or expenditure incurred in respect of that asset as contemplated in section 11(a) or 22(1) or (2).

(5)     This section must not apply in respect of the disposal of an asset by a person to his or her spouse who is not a resident, unless the asset disposed of is an asset contemplated in section 9J or in paragraph 2(1)(b) of the Eighth Schedule.

[Section 9HB inserted by section 20 of Act 23 of 2018 effective on 17 January 2019]

Section 7F (ITA) – Deduction of interest to SARS

Posted on by admin_kmos

7F. Deduction of interest repaid to SARS

In determining the taxable income derived by any person during a year of assessment, any amount of interest paid by SARS to that person under a tax Act and deemed to have accrued to that person in terms of section 7E that has to be repaid by that person to SARS, to the extent that the amount of interest is or was included in the taxable income of that person, must be deducted from that person’s income in the year of assessment during which that amount is repaid to SARS.

[Section 7F inserted by section 11(1) of Act 23 of 2018 and substituted by section 5 of Act 34 of 2019]