“repurchase agreement” means the obtaining of money (which money shall for the purposes of this section be deemed to have been so obtained by way of a loan) through the disposal of an asset by any person to any other person subject to an agreement in terms of which such person undertakes to acquire from such other person at a future date the asset so disposed of or any other asset issued by the issuer of, and which has been so issued subject to the same conditions regarding term, interest rate and price as, the asset so disposed of;
Category: PART I – Normal Tax (ITA)
“Limited partner” definition of section 24H of ITA
(1) For the purposes of this section, ‘limited partner’ means any member of a partnership en commandite, an anonymous partnership, any similar partnership or a foreign partnership, if such member’s liability towards a creditor of the partnership is limited to the amount which the member has contributed or undertaken to contribute to the partnership or is in any other way limited.
“Exchange item” definition of section 24I of ITA
“exchange item” of or in relation to a person means an amount in a foreign currency-
(a) which constitutes any unit of currency acquired and not disposed of by that person;
(b) owing by or to that person in respect of a debt incurred by or payable to such person;
(c) owed by or to that person in respect of a forward exchange contract;
[Paragraph (c) substituted by section 20(1)(a) of Act 42 of 2024 effective on 1 January, 2025 and applicable in respect of years of assessment commencing on or after that date]
(d) where that person has the right or contingent obligation to buy or sell that amount in terms of a foreign currency option contract; or
[Paragraph (d) substituted by section 20(1)(a) of Act 42 of 2024 effective on 1 January, 2025 and applicable in respect of years of assessment commencing on or after that date]
(e) that constitutes a preference share as defined in section 8EA(1), in a foreign company;
[Paragraph (e) added by section 20(1)(b) of Act 42 of 2024 effective on 1 January, 2025 and applicable in respect of years of assessment commencing on or after that date]
[Definition of “exchange item” amended by section 18(1)(b) of Act 21 of 1994 and substituted by section 36(1)(a) of Act 60 of 2001 deemed to have come into operation on 1 October, 2001]
“Redemption payment” definition of section 24J of ITA
“redemption payment”, in relation to an instrument, means any payment made or received which has the effect of redeeming such instrument;
“Adjusted loss on transfer or redemption of an instrument” definition of section 24J of ITA
“adjusted loss on transfer or redemption of an instrument” means –
(a) in relation to the holder of any income instrument, where –
(i) an alternative method has not been applied, the amount by which the sum of the adjusted initial amount in relation to such income instrument and the accrual amount in relation to the accrual period during which such income instrument is transferred or redeemed and any payments made by such holder in terms of such income instrument during such accrual period, exceeds the sum of the transfer price or redemption payment in relation to such income instrument in relation to such holder and any payments received by such holder in terms of such income instrument during such accrual period; or
(ii) an alternative method has been applied, the amount by which the sum of the initial amount and all amounts determined in accordance with such alternative method and any other payments made by such holder in terms of such income instrument during the period from acquisition until transfer or redemption of such income instrument by such holder, exceeds the sum of the transfer price or redemption payment in relation to such income instrument in relation to such holder and any payments received by such holder in terms of such income instrument during the period from acquisition until transfer or redemption of such income instrument by such holder; or
(b) in relation to the issuer of any instrument, where –
(i) an alternative method has not been applied, the amount by which the sum of the transfer price or redemption payment of such instrument in relation to such issuer and any payments made by such issuer in terms of such instrument during the accrual period during which such instrument is transferred or redeemed, exceeds the sum of the adjusted initial amount in relation to such instrument and the accrual amount in relation to such accrual period and any payments received by such issuer in terms of such instrument during such accrual period; or
(ii) an alternative method has been applied, the amount by which the sum of the transfer price or redemption payment of such instrument in relation to such issuer and any payments made by such issuer in terms of such instrument during the period from issue or acquisition until transfer or redemption of such instrument by such issuer, exceeds the sum of the initial amount and all amounts determined in accordance with such alternative method and any other payments received by such issuer in terms of such instrument during the period from issue or acquisition until transfer or redemption of such instrument by such issuer;
“Realisation year” definition of section 24JB of ITA
‘realisation year’, in relation to a person, means-
(a) where that person is a covered person, the year of assessment of that person immediately preceding the year of assessment ending on or after 1 January 2014; or
(b) where that person becomes a covered person during any year of assessment ending after 1 January 2014, the year of assessment of that person that precedes the first year of assessment of that person in which that person becomes a covered person;
Section 24N (ITA) – Incurral and accrual of amounts in respect of disposal or acquisition of equity shares
24N. Incurral and accrual of amounts in respect of disposal or acquisition of equity shares
(1) Where a person (hereinafter referred to as ‘the seller’) during a year of assessment disposes of equity shares to any other person (hereinafter referred to as ‘the purchaser’) in the circumstances contemplated in subsection (2), any quantified or quantifiable amount payable by the purchaser to the seller must –
(a) to the extent that it is not due and payable to the seller during that year, be deemed for purposes of this Act –
(i) not to have been accrued to the seller in that year; and
(ii) not to have been incurred by the purchaser during that year; and
(b) to the extent that it becomes due and payable to the seller in any subsequent year of assessment, be deemed for purposes of this Act –
(i) to have been accrued to the seller during that subsequent year; and
(ii) to have been incurred by the purchaser during that subsequent year.
(2) Subsection (1) applies in respect of the disposal by a seller to a purchaser of any equity shares in a company where –
(a) more than 25 per cent of the amount payable for those shares becomes due and payable by the purchaser after the end of the year of assessment of the seller and the amount payable is based on the future profits of that company;
(b) the value of the equity shares in that company which have in aggregate been disposed of during that year and in respect of which the provisions of this section apply, exceeds 25 per cent of the total value of equity shares in that company;
(c) the purchaser and seller are not connected persons in relation to each other after that disposal;
(d) the purchaser is obliged to return the equity shares to the seller in the event of failure by the purchaser to pay any amount when due; and
(e) the amount is not payable by the purchaser to the seller in terms of a financial instrument which is payable on demand and which is readily tradeable in the open market.
Section 25D (ITA) – Determination of taxable income in foreign currency
25D. Determination of taxable income in foreign currency
(1) Subject to subsections (2), (3) and (4), any amount received by or accrued to, or expenditure or loss incurred by, a person during any year of assessment in any currency other than the currency of the Republic must be translated to the currency of the Republic by applying the spot rate on the date on which that amount was so received or accrued or expenditure or loss was so incurred.
(2) Any amounts received by or accrued to, or expenditure incurred by, a person in any currency other than the currency of the Republic which are attributable to a permanent establishment of that person outside the Republic must be determined in the functional currency of that permanent establishment (other than the currency of any country in the common monetary area) and be translated to the currency of the Republic by applying the average exchange rate for the relevant year of assessment.
(2A) Subsection (2) shall not apply to the extent that-
(a) the other currency contemplated in that subsection is not the functional currency of that permanent establishment; and
(b) the functional currency is the currency of a country which has an official rate of inflation of 100 per cent or more throughout the relevant year of assessment.
(3) Notwithstanding subsection (1), a natural person or a trust (other than a trust which carries on any trade) may elect that all amounts received by or accrued to, or expenditure or losses incurred by that person or trust in any currency other than the currency of the Republic, be translated to the currency of the Republic by applying the average exchange rate for the relevant year of assessment.
(4) Where, during any year of assessment-
(a) any amount-
(i) is received by or accrued to; or
(ii) of expenditure is incurred by,
a headquarter company in any currency other than the functional currency of the headquarter company; and
(b) the functional currency of that headquarter company is a currency other than the currency of the Republic,that amount must be determined in the functional currency of the headquarter company and must be translated to the currency of the Republic by applying the average exchange rate for that year of assessment.
(5) Where, during any year of assessment-
(a) any amount-
(i) is received by or accrues to; or
(ii) of expenditure is incurred by,
a domestic treasury management company in any currency other than the functional currency of the domestic treasury management company; and
(b) the functional currency of that domestic treasury management company is a currency other than the currency of the Republic,
that amount must be determined in the functional currency of the domestic treasury management company and must be translated to the currency of the Republic by applying the average exchange rate for that year of assessment.
(6) Where, during any year of assessment-
(a) any amount-
(i) is received by or accrues to; or
(ii) of expenditure is incurred by,
an international shipping company in any currency other than the functional currency of the international shipping company; and
(b) the functional currency of that international shipping company is a currency other than the currency of the Republic,
that amount must be determined in the functional currency of the international shipping company and must be translated to the currency of the Republic by applying the average exchange rate for that year of assessment.
[Subsection (6) added by section 75 of Act 31 of 2013 and substituted by section 46 of Act 43 of 2014 effective on 1 April 2014]
(7) Any amounts received by or accrued to, or expenditure incurred by-
(a) a headquarter company contemplated in subsection (4); or
(b) a domestic treasury management company contemplated in subsection (5); or
(c) an international shipping company contemplated in subsection (6),
during any year of assessment in a functional currency that is a currency other than the currency of the Republic must be translated to the currency of the Republic by applying the average exchange rate for the relevant year of assessment.
[Subsection (7) added by section 46 of Act 43 of 2014 effective on 20 January 2015]
“Post-realisation years” definition of section 24JB of ITA
‘post-realisation years’, in relation to a covered person, means-
(a) the year of assessment immediately succeeding the realisation year;
(b) the year of assessment immediately succeeding the year of assessment contemplated in paragraph (a);and
(c) the year of assessment immediately succeeding the year of assessment contemplated in paragraph (b);
Section 24O (ITA) – Incurral of interest in terms of certain debts deemed to be in production of income
24O. Incurral of interest in terms of certain debts deemed to be in production of income