Category: Section 41 (ITA) – General

Section 41

 

  1. Heading substituted by section 51 of Act 35 of 2007 and section 72 of Act 22 of 2012 effective on 1 January 2013.

 

  1. Definition of “allowance asset” substituted by section 49 of Act 45 of 2003 and section 61 of Act 7 of 2010 effective on 1 January 2010.

 

  1. Definition of “associated group of companies” inserted by section 37 of Act 31 of 2005 effective on 8 November 2005.

 

  1. Definition of “base cost” amended by section 32 of Act 8 of 2007 and section 52 of Act 35 of 2007.

 

  1. Definition of “company” inserted by section 47 of Act 17 of 2009 effective on 1 January 2010 and substituted by section 67 of Act 24 of 2011 effective on 1 January 2012.

 

  1. Definition of “disposal” substituted by section 37 of Act 31 of 2005 effective on 8 November 2005.

 

  1. Subparagraph (b)(i) of definition of “domestic financial instrument holding company” substituted by section 90 of Act 31 of 2013 effective on 12 December 2013.

 

  1. Subparagraph (b)(ii) of definition of “domestic financial instrument holding company” substituted by section 90 of Act 31 of 2013 effective on 12 December 2013.

 

  1. Subparagraph (b)(iii) of definition of “domestic financial instrument holding company” substituted by section 90 of Act 31 of 2013 effective on 12 December 2013.

 

  1. Subparagraph (b)(iv) of definition of “domestic financial instrument holding company” substituted by section 90 of Act 31 of 2013 effective on 12 December 2013.

 

  1. Subparagraph (b)(vi) of definition of “domestic financial instrument holding company” substituted by section 90 of Act 31 of 2013 effective on 12 December 2013.

 

  1. Subparagraph (c)(ii)(bb) of definition of “domestic financial instrument holding company” substituted by section 28 of Act 20 of 2006.

 

  1. Paragraph (c)(iii) of definition of “domestic financial instrument holding company” substituted by section 28 of Act 20 of 2006.

 

  1. Paragraph (c)(iv) of definition of “domestic financial instrument holding company” added by section 28 of Act 20 of 2006.

 

  1. Definition of “domestic financial instrument holding company” amended by section 49 of Act 45 of 2003 and section 32 of Act 32 of 2004 and substituted by section 37 of Act 31 of 2005 effective on 8 November 2005.

 

  1. Definition of “equity share” deleted by section 32 of Act 8 of 2007 and inserted by section 47 of Act 17 of 2009 effective on 1 January 2010.

 

  1. Words preceding paragraph (a) of definition of “foreign financial instrument holding company” substituted by section 61 of Act 7 of 2010.

 

  1. Subparagraph (b)(i) of definition of “foreign financial instrument holding company” substituted by section 28 of Act 20 of 2006.

 

  1. Subparagraph (b)(ii) of definition of “foreign financial instrument holding company” substituted by section 28 of Act 20 of 2006.

 

  1. Paragraph (b) of definition of “foreign financial instrument holding company” amended by section 28 of Act 20 of 2006.

 

  1. Paragraph (c) of definition of “foreign financial instrument holding company” substituted by section 32 of Act 8 of 2007.

 

  1. Words preceding paragraph (c)(i) of definition of “foreign financial instrument holding company” substituted by section 25 of Act 3 of 2008.

 

  1. Item (c)(i)(bb)(B) of definition of “foreign financial instrument holding company” substituted by section 28 of Act 20 of 2006.

 

  1. Subparagraph (c)(i)(dd) inserted by section 28 of Act 20 of 2006.

 

  1. Definition of “foreign financial instrument holding company” substituted by section 49 of Act 45 of 2003, amended by section 32 of Act 32 of 2004, substituted by section 37 of Act 31 of 2005 and amended by section 32 of Act 8 of 2007.

 

  1. Subparagraph (i)(aa) of definition of “group of companies” substituted by section 25 of Act 3 of 2008.

 

  1. Subparagraph (i)(bb) of definition of “group of companies” substituted by section 61 of Act 7 of 2010 effective on 1 January 2011 and section 90 of Act 31 of 2013 effective on 12 December 2013.

 

  1. Subparagraph (i)(cc) of definition of “group of companies” amended by section 25 of Act 3 of 2008.

 

  1. Subparagraph (i)(dd) of definition of “group of companies” amended by section 25 of Act 3 of 2008 and section 90 of Act 31 of 2013 effective on 1 January 2013.

 

  1. Subparagraph (i)(ee) of definition of “group of companies” added by section 25 of Act 3 of 2008 and amended by section 90 of Act 31 of 2013 effective on 1 January 2013.

 

  1. Subparagraph (i)(ff) of definition of “group of companies” added by section 90 of Act 31 of 2013 effective on 1 January 2013.

 

  1. Definition of “group of companies” inserted by section 52 of Act 35 of 2007, with effective dates as follows:
  2. To the extent that it applies for purposes of – (a) the definition of “dividend” in section 1 of the Income Tax Act, 1962 (Act No. 58 of 1962), is deemed to have come into operation on 1 October 2007 and shall apply in respect of any amount distributed on or after that date; (b) Part III of that Act, operational on 1 January 2009;  (c) Part VII of that Act, is deemed to have come into operation on 1 October 2007 and shall apply in respect of any dividend declared on or after that date;  and (d) paragraph 12 of the Eighth Schedule to that Act, is deemed to have come into operation on 1 October 2007 and shall apply in respect of any disposal on or after that date..

 

  1. Proviso to paragraph (a) of definition of “prescribed proportion” substituted by section 61 of Act 7 of 2010.

 

  1. Paragraph (a) of definition of “prescribed proportion” substituted by section 52 of Act 35 of 2007.

 

  1. Words preceding subparagraph (b)(i) of definition of “prescribed proportion” substituted by section 61 of Act 7 of 2010 effective on 1 January 2011.

 

  1. Definition of “prescribed proportion” inserted by section 37 of Act 31 of 2005 and amended by section 32 of Act 8 of 2007.

 

  1. Definition of “qualifying interest” amended by section 37 of Act 31 of 2005 and deleted by section 25 of Act 3 of 2008.

 

  1. Definition of “resident” inserted by section 61 of Act 7 of 2010 effective on 1 January 2011 and deleted by section 67 of Act 24 of 2011 effective on 1 January 2012.

 

  1. Definition of “shareholder” substituted by section 49 of Act 45 of 2003 and section 90 of Act 31 of 2013 effective on 24 October 2013.

 

  1. Paragraph (a) of definition of “trading stock” amended by section 61 of Act 7 of 2010.

 

  1. Paragraph (b) of definition of “trading stock” deleted by section 61 of Act 7 of 2010 effective on 1 January 2010.

 

  1. Definition of “trading stock” inserted by section 49 of Act 45 of 2003 and substituted by section 52 of Act 35 of 2007.

 

  1. Subsection (2) substituted by section 49 of Act 45 of 2003, section 32 of Act 32 of 2004, section 28 of Act 20 of 2006, section 52 of Act 35 of 2007, section 67 of Act 24 of 2011 effective on 21 October 2008, section 73 of Act 22 of 2012 effective on 1 January 2013, section 90(1)(g) of Act 31 of 2013 effective on 1 January 2013 and section 90(1)(h) of Act 31 of 2013 effective on 1 April 2013.

 

  1. Subsection (3) deleted by section 37 of Act 31 of 2005 and inserted by section 52 of Act 35 of 2007.

 

  1. Item (4)(a)(i)(aa) substituted by section 90 of Act 31 of 2013 effective on 12 December 2013.

 

  1. Subparagraph (4)(a)(i) substituted by section 67 of Act 24 of 2011 effective on 1 January 2011.

 

  1. Subparagraph (4)(a)(ii) substituted by section 49 of Act 45 of 2003, section 32 of Act 8 of 2007 and section 52 of Act 35 of 2007.

 

  1. Subparagraph (4)(a)(iii) added by section 90 of Act 31 of 2013 effective on 24 October 2013.

 

  1. Subparagraph (4)(b)(i) substituted by section 90 of Act 31 of 2013 effective on 12 December 2013.

 

  1. Paragraph (4)(b) substituted by section 67 of Act 24 of 2011 effective on 1 January 2011.

 

  1. Paragraph (4)(c) substituted by section 67 of Act 24 of 2011 effective on 1 January 2011.

 

  1. Paragraph (4)(d) substituted by section 32 of Act 8 of 2007.

 

  1. Subsection (5) deleted by section 52 of Act 35 of 2007 and inserted by section 25 of Act 3 of 2008.

 

  1. Subsection (6) deleted by section 37 of Act 31 of 2005.

 

  1. Subsection (7) added by section 37 of Act 31 of 2005 effective on 8 November 2005 and substituted by section 61 of Act 7 of 2010 effective on 2 November 2010.

 

  1. Subsection (8) added by section 37 of Act 31 of 2005, amended by section 52 of Act 35 of 2007 and section 67 of Act 24 of 2011 and deleted by section 90 of Act 31 of 2013 effective on 1 January 2013.

 

  1. Section (9) inserted by section 48 of Act 60 of 2008 effective on 1 Jan 2009.

 

  1. Section 41 amended by section 17 of Act 103 of 1976, repealed by section 25 of Act 21 of 1995, inserted by section 44 of Act 60 of 2001 and substituted by section 34 of Act 74 of 2002.

Subsections 2, 3, 4, 5, 7 and 9 of section 41 of ITA

Posted on by admin_kmos

(2)     The provisions of this Part must, subject to subsection (3), apply in respect of an asset-for-share transaction, a substitutive share-for-share transaction, an amalgamation transaction, an intra-group transaction, an unbundling transaction and a liquidation distribution as contemplated in sections 42, 43, 44, 45, 46 and 47, respectively, notwithstanding any provision to the contrary contained in the Act, other than sections 24BA, 24I, 25BB (5), 40CA (b) and 103, Part IIA of Chapter III and paragraph 11(1)(g) of the Eighth Schedule and any adjusted gain on transfer or redemption of an instrument, as defined in section 24J (1) and any adjusted loss on transfer or redemption of an instrument as defined in section 24J (1).

[Subsection (2) substituted by section 49(1)(i) of Act 45 of 2003, by section 32(1)(d) of Act 32 of 2004, by section 28(1)(j) of Act 20 of 2006, by section 52(1)(e) of Act 35 of 2007, by section 67(1)(c) of Act 24 of 2011, by section 73(1) of Act 22 of 2012, by section 90(1)(g) and (h) of Act 31 of 2013, by section 50(b) of Act 17 of 2017, by section 54(1)(a) of Act 23 of 2018, by section 54(1)(b) of Act 23 of 2018, by section 39(a) of Act 34 of 2019 and by section 24 of Act 20 of 2021]

(3)     The provisions of this Part shall not apply in respect of any transaction in terms of which any asset is disposed of to an insurer as defined in section 29A if the asset is to be held in the insurer’s untaxed policyholder fund as contemplated in subsection (4)(a) of that section.

(4)     A company must for the purposes of this Part, be deemed to have taken steps to liquidate, wind up or deregister, where-

(a)     in the case of a liquidation or winding-up-

(i)      that company has lodged a resolution authorising the voluntary winding-up of that company in terms of-

(aa)   section 80(2) of the Companies Act in the case of a company to which that section applies;

(bb)   Regulation 21 of the Regulations under the Co-operatives Act, 2005 (Act No. 14 of 2005), published under section 95 of that Act in Government Notice R. 366 of 30 April 2007, in the case of a co-operative; or

(cc)   a similar provision contained in any foreign law relating to the liquidation of companies, in the case where that company is incorporated in a country other than the Republic, if such foreign law so requires; and

(ii)     that company has disposed of all assets and has settled all liabilities (other than assets required to satisfy any reasonably anticipated liabilities to any sphere of government of any country and costs of administration relating to the liquidation or winding-up); and

(iii)    the manager, trustee or custodian of the portfolio of the collective investment scheme in property has in terms of section 102(1) or(2) of the Collective Investment Schemes Control Act applied for the winding up of that portfolio;

(b)       in the case of a deregistration of a company—

(i)

(aa)   a request for the deregistration of that company has in terms of section 82(3)(b)(ii) of the Companies Act been lodged; or

(bb) a notice of amalgamation or merger has in terms of section 116 of the Companies Act been filed in respect of that company,

in the prescribed form and manner with the Companies and Intellectual Property Commission; or

(ii)     in the case where that company is incorporated in a country other than the Republic, a request or notice in respect of that company has been lodged with a person who, in terms of any similar provision contained in any foreign law, exercises the powers and performs the duties assigned to the Commission contemplated in subparagraph (i), if such foreign law so requires;

[Paragraph (b) substituted by section 67(1)(e) of Act 24 of 2011, amended section 90(1)(k) of Act 31 of 2013 and substituted by section 39(b) of Act 34 of 2019]

(c)     that company has submitted a copy of the resolution contemplated in paragraph (a)(i) or the request or notice contemplated in paragraph (b) to the Commissioner; and

[Paragraph (c) substituted by section 67(1)(e) of Act 24 of 2011 and by section 39(b) of Act 34 of 2019]

(d)     all the returns or information required to be submitted or furnished to the Commissioner in terms of any Act administered by the Commissioner by the end of the relevant period within which the steps contemplated in this subsection must be taken, have been submitted or furnished or arrangements have been made with the Commissioner for the submission of any outstanding returns or furnishing of information.

(5)     The Commissioner may prescribe the circumstances under which a person entering into any asset-for-share transaction, amalgamation transaction, intra-group transaction, unbundling transaction or liquidation distribution contemplated in sections 42, 44, 45, 46 and 47, respectively, must furnish a return to the Commissioner of that transaction or distribution.

(6)     ……….

(7)     An amount contemplated in paragraph (j) of the definition of ‘gross income’ in section 1 and an amount to be included in gross income in terms of paragraph 14 of the First Schedule must for purposes of this Part be deemed to be an allowance that must be recovered or recouped.

(8)     ……….

(9)     Where a person has made an election in respect of an asset under paragraph 65 or 66 of the Eighth Schedule and disposes of or distributes any replacement asset in relation to that asset in terms of section 42, 44, 45 or 47–

(a)     the person so disposing of or distributing that replacement asset must disregard any capital gain or amount recovered or recouped which was apportioned to that asset under paragraph 65 or 66 of the Eighth Schedule or section 8(4)(e) and (eA), as the case may be, and which otherwise would have had to be brought to account at the time of that disposal or distribution; and

(b)     the company acquiring that replacement asset and the person referred to in paragraph (a) must be treated as one and the same person for the purposes of section 8(4)(eB), (eC) or (eD) and paragraphs 65 and 66 of the Eighth Schedule.

(10)   For the purposes of this Part, a contingent liability is deemed to be a debt actually incurred.

[Subsection (10) added by section 50 of Act 17 of 2017 effective on 18 December 2017]