(1) For the purposes of this section- ‘bank’ means any-
(a) bank as defined in section 1 of the Banks Act;
(b) mutual bank as defined in section 1 of the Mutual Banks Act, 1993 (Act No. 124 of 1993); or
(c) co-operative bank as defined in section 1 of the Co-operative Banks Act, 2007 (Act No. 40 of 2007);
24M. Incurral and accrual of amounts in respect of assets acquired or disposed of for unquantified amount
(1) If a person during any year of assessment disposes of an asset for consideration which consists of or includes an amount which cannot be quantified in that year of assessment, so much of that consideration as –
(a) cannot be quantified in that year must for purposes of this Act be deemed not to have accrued to that person in that year; and
(b) becomes quantifiable during any subsequent year of assessment must for purposes of mis Act be deemed to have been accrued to that person from that disposal in that subsequent year.
(2) If a person during any year of assessment acquires an asset for consideration which consists of or includes an amount which cannot be quantified in that year of assessment, so much of that consideration as –
(a) cannot be quantified in that year must for purposes of this Act be deemed not to have been incurred by that person in that year; and
(b) becomes quantifiable during any subsequent year of assessment must for purposes of this Act be deemed to have been incurred by that person in respect of the acquisition of that asset in that subsequent year.
(3) The amount of any recovery or recoupment by a person of any amount allowed as a deduction in respect of any asset contemplated in subsection (1) must, for purposes of section 8(4), be determined with reference to the amounts received by or accrued to that taxpayer in terms of this section.
(4) If an asset which was acquired by a person during any year of assessment as contemplated in subsection (2) –
(a) constitutes a depreciable asset; and
(b) any amount is in terms of subsection (2)(b) deemed to have been actually incurred by that person in any subsequent year of assessment which has not been taken into account in determining the amount of any allowance in respect of that depreciable asset in any previous year and would have been so taken into account had that amount been actually incurred by that person,
so much of the amount as would have been so allowed as an allowance in any previous year must be allowed in that subsequent year of assessment.
“rental income” means an amount calculated in accordance with the formula-
RI = PI + EG
in which formula-
(a) “RI” represents the amount to be determined;
(b) “PI” represents the aggregate of all amounts received or accrued-
(i) in respect of the use of immovable property, including a penalty or interest in respect of late payment of any such amount;
(ii) as a dividend (other than a dividend contemplated in paragraph (b) of the definition of “dividend”) from a company that is a REIT at the time of the distribution of that dividend;
(iii) as a qualifying distribution from a company that is a controlled company at the time of that distribution;
(iv) as a dividend or foreign dividend from a company that is a property company at the time of that distribution; and
(v) any amount recovered or recouped in terms of section 8(4) in respect of an amount of an allowance previously deducted in terms of section 11(g), 12B, 12BA, 13, 13bis, 13ter, 13quat, 13quin or 13sex; and
[Subparagraph (v) substituted by section 22(a) of Act 42 of 2024]
(c) “EG” represents the total of foreign exchange gains contemplated in the definition of “exchange difference” in section 24I(1), determined in terms of that section in respect of the amounts referred to in paragraph (b) that constitute exchange items or any exchange item serving as a hedge in respect of amounts referred to in that paragraph.
[Definition of “rental income” amended by section 48(1)(a) of Act 15 of 2016 and substituted by section 32 of Act 34 of 2019]
24L. Incurral and accrual of amounts in respect of option contracts
“qualifying distribution”, in respect of a year of assessment of a company that is a REIT or a controlled company as at the end of a year of assessment, means any dividend (other than a dividend contemplated in paragraph (b) of the definition of “dividend”) paid or payable in respect of an equity share, or interest incurred in respect of a debenture forming part of a linked unit in that company, if the amount thereof is determined with reference to the financial results of that company as reflected in the financial statements prepared for that year of assessment if-
[Definition of “qualifying distribution” amended by section 45(a) of Act 17 of 2017 and by section 29(1)(a) of Act 23 of 2020 effective on 1 January, 2021 and applicable in respect of years of assessment commencing on or after that date]
(a) that year of assessment is the first year of assessment and at least 75 per cent of the gross income received by or accrued to a company during that first year of assessment that the company qualifies as a REIT or controlled company, consists of rental income; and
[Paragraph (a) substituted by section 50 of Act 25 of 2015 and section 49 of Act 23 of 2018 effective on 17 January 2019]
(b) in any other case, at least 75 per cent of the gross income received by or accrued to a REIT or a controlled company in the preceding year of assessment consists of rental income:
Provided that any amount that must be included in the income of the REIT or controlled company in terms of section 9D(2) must not be included in the gross income of the REIT or controlled company in respect of that year of assessment for the purposes of this definition;
24JB. Taxation in respect of financial assets and liabilities of certain persons
[Heading of section 24JB substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]
(2) The amount of –
(a) any premium or like consideration paid or payable by a person in terms of an option contract; or
(b) any consideration paid or payable by a person in respect of the acquisition of an option contract by such person,
shall for purposes of this Act be deemed to have been incurred by such person on a day to day basis during the term of such option contract: Provided that –
(i) where such option contract is exercised, terminated or is disposed of, the portion of the amount attributable to the period from the date of exercise, termination or disposal until the end of the original term of the option contract shall be deemed to have been incurred by such person on the date of exercise, termination or disposal of the option contract;
(ii) the provisions of this section shall not be applied to an option contract held by a person as trading stock;
(iii) where such amount includes an amount representing the intrinsic value in relation to an option contract, so much of such amount so representing the intrinsic value shall for the purposes of this Act be deemed to have been incurred by such person on the date of exercise, termination or disposal of the option contract.
(3) The amount of any premium or like consideration received or receivable by a person in terms of an option contract, other than an amount of a capital nature, shall for the purposes of this Act be deemed to have accrued to such person on a day to day basis during the term of such option contract: Provided that where such option contract is exercised, terminated or disposed of, the portion of the amount attributable to the period from the date of exercise, termination or disposal of such option contract until the end of the original term of the option contract shall be deemed to have accrued to such person on the date of exercise, termination or disposal of the option contract.
[Words preceding the proviso substituted by section 45 of Act 23 of 2018 effective on 1 January 2019, applies in respect of years of assessment commencing on or after that date]
‘property company’ means a company-
(a) in which 20 per cent or more of the equity shares or linked units are held by a REIT or a controlled company (whether alone or together with any other company forming part of the same group of companies as that REIT or that controlled company); and
(b) of which at the end of the previous year of assessment 80 per cent or more of the value of the assets, reflected in the annual financial statements prepared in accordance with the Companies Act or IFRS for the previous year of assessment, is directly or indirectly attributable to immovable property;
[Paragraph (b) substituted by section 45 of Act 43 of 2014 effective on 1 April 2013]
(2) Subject to sections 8F, 8FA and subsection (4), there must be included in or deducted from the income, as the case may be, of any covered person for any year of assessment all amounts in respect of financial assets and financial liabilities of that covered person that are recognised in profit or loss in the statement of comprehensive income in respect of financial assets and financial liabilities of that covered person that are measured at fair value in profit or loss in terms of IFRS 9 or, in the case of commodities, at fair value less cost to sell in profit or loss in terms of IFRS for that year of assessment, excluding any amount in respect of-
[Words preceding paragraph (a) substituted by section 44 of Act 17 of 2017 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]
(a) a financial asset that is-
(i) a share;
(ii) an endowment policy;
(iii) an interest held in a portfolio of a collective investment scheme;
[Subparagraph (iii) amended by section 43 of Act 43 of 2014 effective on 1 January 2014]
(iv) an interest in a trust; or
[Subparagraph (iv) amended by section 43 of Act 43 of 2014 effective on 1 January 2014]
(v) an interest in a partnership,
[Subparagraph (v) added by section 43 of Act 43 of 2014 effective on 1 January 2014]
if that financial asset does not constitute trading stock; or
[Words following subparagraph (v) substituted by section 44 of Act 17 of 2017 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]
(b) a dividend or foreign dividend received by or accrued to a covered person; or
[Paragraph (b) amended by section 27(1) of Act 23 of 2020 effective on 1 January, 2021 and applicable to dividends declared on or after that date]
(c) a dividend distributed.
[Paragraph (c) added by section 27(1) of Act 23 of 2020 effective on 1 January, 2021 and applicable to dividends declared on or after that date]
[Subsection (2) amended by section 44(1)(c) of Act 17 of 2017 effective on 1 January, 2018 and applicable in respect of years of assessment commencing on or after that date]
(2A) A covered person must include in or deduct from income for a year of assessment a realised gain or a realised loss that is recognised in a statement of other comprehensive income as contemplated in IFRS 9 if that realised gain or realised loss is attributable to a change in the credit risk of the financial liability as contemplated in IFRS 9 and that instrument was issued in any year of assessment commencing on or after 1 January 2018.
[Subsection (2A) inserted by section 44 of Act 17 of 2017 and substituted by section 44 of Act 23 of 2018 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]
(2B) Where a covered person has, during any year of assessment preceding the year of assessment commencing on or after 1 January 2018, included in or deducted from income any amount attributable to a change in the credit risk of a financial liability issued by that covered person measured at fair value through profit or loss in terms of subsection (2), such covered person must include in or deduct from income, as the case may be, any amount in respect of a change in credit risk of that financial liability recognised in other comprehensive income during any year of assessment commencing on or after 1 January 2018.
[Subsection (2B) inserted by section 44 of Act 17 of 2017 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]
(3) Any amount contemplated in the definition of “gross income” or any amount required to be taken into account in determining the taxable income in terms of any provision of Part I of Chapter II, or in determining any assessed capital loss of a covered person in respect of a financial asset or a financial liability contemplated in subsection (2) must only be taken into account in terms of this section
[Subsection (3) substituted by section 43(1)(f) of Act 43 of 2014 and by section 21(1) of Act 42 of 2024 deemed to have come into operation on 31 December, 2024 and applicable in respect of years of assessment ending on or after that date]
(4) Subsection (2) does not apply to any amount in respect of a financial asset or a financial liability of a covered person where-
(a) a covered person and another person that is not a covered person, are parties to an agreement in respect of a financial asset or financial liability; and
[Paragraph (a) substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]
(b) the agreement contemplated in paragraph (a) was entered into solely or mainly for the purpose of a reduction, postponement or avoidance of liability for tax, which, but for that agreement, would have been or would become payable by the covered person.
(5) In addition to any amount included in or deducted from the income of any person in terms of subsection (2), there must be included in or deducted from the income, as the case may be, of any person for the post-realisation years of that person an amount determined in terms of subsection (6).
(6) For the purposes of subsection (5)-
(a) if-
(i) the financial reporting values of all financial assets of a nature as described in subsection (2) held by that person as at the end of the realisation year of that person exceed the tax base amount attributed to those financial assets as at the end of the realisation year of that person; or
[Subparagraph (i) substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]
(ii) the tax base amount attributed to all financial liabilities of a nature as described in subsection (2) held by that person as at the end of the realisation year of that person exceeds the financial reporting values of those financial liabilities as at the end of the realisation year of that person,
[Subparagraph (ii) substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]
one-third of the excess must be included in the income of that person;
(b) if-
(i) the tax base amount attributed to all financial assets of a nature as described in subsection (2) held by that person as at the end of the realisation year of that person exceeds the financial reporting values of those financial assets as at the end of the realisation year of that person; or
[Subparagraph (i) substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]
(ii) the financial reporting values of all financial liabilities of a nature as described in subsection (2) held by that person as at the end of the realisation year of that person exceed the tax base amount attributed to those financial liabilities as at the end of the realisation year of that person,
[Subparagraph (ii) substituted by section 43 of Act 43 of 2014 effective on 1 January 2014]
one-third of the excess must be deducted from the income of that person.
(7) If a person ceases to be a covered person before the expiry of the post-realisation years of that person, the amounts determined in terms of subsection (6) which have not been included in or deducted from, as the case may be, the income of that person, must be included in or deducted from the income of that person in the year of assessment that it ceases to be a covered person.
(8) Where a person ceases to be a covered person, that person is deemed to have-
(a) disposed of its financial assets and redeemed its financial liabilities that were subject to tax in terms of subsection (2); and
(b) immediately reacquired those financial assets and incurred those financial liabilities,
at an amount equal to the market value of those financial assets on the last day of the year of assessment of that person before that person ceased to be a covered person.
(9) Where a financial asset held by or financial liability owed by a covered person at the end of the year of assessment immediately preceding the year of assessment commencing on or after 1 January 2018 would have ceased to be subject to tax or would have become subject to tax in terms of subsection (2), had IFRS 9 applied on the last day of that immediately preceding year of assessment, that covered person is deemed to have-
(a) disposed of that financial asset or redeemed that financial liability; and
(b) immediately reacquired that financial asset or incurred that financial liability,
for an amount equal to the market value of that financial asset or financial liability on that day.
[Subsection (9) inserted by section 44 of Act 17 of 2017 effective on 1 January 2018 and applies in respect of years of assessment commencing on or after that date]
“option contract” means an agreement the effect of which is that any person acquires the option (excluding a foreign currency option contract as defined in section 24I(1)) –
(a) to buy from or to sell to another person a certain quantity of corporeal or incorporeal things before or on a future date at a pre–arranged price; or
(b) that an amount of money will be paid to or received from another person before or on a future date depending on whether the value or price of an asset, index, currency, rate of interest or any other factor is higher or lower before or on that future date than a pre–arranged value or price.