Category: Definitions – ITA

“Connected person” definition of section 1 of ITA

Posted on by admin_kmos

connected person” means –

(a)     in relation to a natural person –

(i)      any relative; and

 

(ii)     any trust (other than a portfolio of a collective investment scheme) of which such natural person or such relative is a beneficiary;

[Subparagraph (ii) substituted by section 7 of Act 17 of 2009, section 2 of Act 22 of 2012 and section 3 of Act 25 of 2015 effective on 8 January 2016]

(b)     in relation to a trust (other than a portfolio of a collective investment scheme)-

[Words preceding subparagraph (i) substituted by section 7 of Act 17 of 2009, section 2 of Act 22 of 2012 and section 3 of Act 25 of 2015 effective on 8 January 2016]

(i)      any beneficiary of such trust; and

 

(ii)     any connected person in relation to such beneficiary;

(bA)  in relation to a connected person in relation to a trust (other than a portfolio of a collective investment scheme), any other person who is a connected person in relation to such trust;

 [Paragraph (bA) inserted by section 19 of Act 30 of 98 and substituted by section 6 of Act 74 of 2002, section 7 of Act 17 of 2009, section 2 of Act 22of 2012, section 3 of Act 25 of 2015 and section 5 of Act 15 fo 2016 effective on 19 January 2017]

(c)     in relation to a member of any partnership or foreign partnership –

(i)      any other member; and

 

(ii)     any connected person in relation to any member of such partnership or foreign partnership;

(d)     in relation to a company –

(i)      any other company that would be part of the same group of companies as that company if the expression ‘at least 70 per cent of the equity shares in’ in paragraphs (a) and (b) of the definition of ‘group of companies’ in this section were replaced by the expression ‘more than 50 per cent of the equity shares or voting rights in’;

 

(ii)     ……….

 

(iii)    ……….

 

(iv)    any person, other than a company as defined in section 1 of the Companies Act that alone or together with any connected person in relation to that person, holds, directly or indirectly, at least 20 per cent of-

 

(aa)    the equity shares in the company; or

 

(bb)    the voting rights in the company;

[Subparagraph (iv) substituted by section 2(1)(a) of Act 21 of 1994, by section 2(1)(b) of Act 28 of 1997 and by section 6(1)(e) of Act 7 of 2010 and amended by section 4(1)(i) of Act 31 of 2013 and by section 4(1)(b) of Act 20 of 2021]

(v)     any other company if at least 20 per cent of the equity shares or voting rights in the company are held by that other company, and no holder of shares holds the majority voting rights in the company;

 

(vA)  any other company if such other company is managed or controlled by –

 

(aa)   any person who or which is a connected person in relation to such company; or

 

(bb)   any person who or which is a connected person in relation to a person contemplated in item (aa); and

 

(vi)    where such company is a close corporation –

(aa)   any member;

 

(bb)   any relative of such member or any trust (other than a portfolio of a collective investment scheme) which is a connected person in relation to such member; and

[Item (bb) substituted by section 7 of Act 17 of 2009, section 2 of Act 22 of 2012 and section 3 of Act 25 of 2015 effective on 8 January 2016]

 

(cc)    any other close corporation or company which is a connected person in relation to –

(i)      any member contemplated in item (aa); or

 

(ii)     the relative or trust contemplated in item (bb); and

(e)    in relation to any person who is a connected person in relation to any other person in terms of the foregoing provisions of this definition, such other person;

: Provided that for the purposes of this definition, a company includes a portfolio of a collective investment scheme.

[Proviso added by section 7 of Act 17 of 2009 and substituted by section 2 of Act 17 of 2017 effective on 18 December 2017]

“Connected person” definition of section 9C of ITA

Posted on by admin_kmos

(1)     For the purposes of this section –

“connected person” means a connected person as defined in section 1, provided that the expression ‘and no holder of shares holds the majority voting rights in the company’ in paragraph (d)(v) of that definition shall be disregarded;

“Consideration” definition of section 8C of ITA

Posted on by admin_kmos

‘consideration’ in respect of an equity instrument means any amount given or to be given (otherwise man in the form of services rendered or to be rendered or anything done, to be done or not to be done) –

 

(a)     by the taxpayer in respect of that equity instrument;

 

(b)     by the taxpayer in respect of any other restricted equity instrument which had been disposed of by that taxpayer in exchange for that equity instrument, reduced by any amount attributable to the gain or loss determined in terms of subsection (4)(b); or

 

(c)     by any person contemplated in subsection (5) (a) or (b) in respect of that restricted equity instrument to the extent that the amount does not exceed the amount the taxpayer would have had to give to acquire that equity instrument had it not been disposed of or deemed to have been disposed of by him or her, but does not include any amount given or to be given by that person to the taxpayer to acquire that restricted equity instrument:

 

Provided that where a taxpayer acquires –

 

(a)     an equity instrument in exchange for any other equity instrument, as contemplated in subsection (4)(a), the market value of the equity instrument given in exchange must not be taken into account in determining the consideration in respect of the equity instrument so acquired; or

 

(b)     a right to acquire any marketable security in exchange for any other such right, as contemplated in section 8A(5), and the right so acquired constitutes an equity instrument acquired in the manner contemplated in subsection (1), the consideration for that equity instrument must be determined as if it was acquired in the manner contemplated in subsection (4)(a);

“Contributed tax capital” definition of section 1 of ITA

Posted on by admin_kmos

“contributed tax capital”, in relation to a class of shares in a company, means-

[Words preceding paragraph (a) substituted by section 1 of Act 43 of 2014 effective on 20 January 2015]

(a)     in relation to a class of shares issued by a company, in the case of a foreign company that becomes a resident on or after 1 January 2011, an amount equal to the sum of-

[Words preceding subparagraph (i) substituted by section 4 of Act 31 of 2013 and section 1 of Act 43 of 2014 effective on 20 January 2015]

(i)     the market value of all the shares in that company of that class immediately before the date on which that company becomes a reside:  Provided that the market value must be reduced by an amount equal to the difference between-

(aa)   the market value of the shares held by that foreign company in; and

(bb)   an amount equal to the percentage of shares held by that foreign company in a resident company, of the aggregate contributed tax capital in respect of each class of shares of,

each resident company in which that foreign company directly holds at least 50 per cent of the equity shares or voting rights immediately before the date on which that foreign company becomes a resident;

[Subparagraph (i) amended by section 1(1)(d) of Act 43 of 2014 and by section 1(1)(a) of Act 17 of 2023 with effect from 1 January 2024 and applicable in respect of any company that becomes a resident on or after that date]

(ii)     the consideration received by or accrued to that company for the issue of shares of that class on or after the date on which that company becomes a resident; and

[Subparagraph (ii) amended by section 1 of Act 43 of 2014 effective on 20 January 2015]

(iii)    if the shares of that class include or consist of shares that were converted from another class of shares of that company to that class of shares-

(aa)   any consideration received by or accrued to that company in respect of that conversion; and

(bb)   the amount contemplated in subparagraph (cc) that was determined in respect of shares of the other class of shares that were so converted,

[Subparagraph (iii) added by section 1 of Act 43 of 2014 effective on 20 January 2015]

reduced by so much of that amount as –

(aa)   the company has transferred on or after the date on which the company becomes a resident for the benefit of any person holding a share in that company of that class in respect of that share;

[Subparagraph (aa) substituted by section 1 of Act 43 of 2014 effective on 20 January 2015]

(bb)   has by the date of the transfer been determined by the directors of the company or by some other person or body of persons with comparable authority to be an amount so transferred; and

[Subparagraph (bb) substituted by section 1 of Act 43 of 2014 effective on 20 January 2015]

(cc)   in the case of a convertible class of shares some of the shares of which have been converted to another class of shares, so much of the amount contemplated in this paragraph in respect of that convertible class of shares immediately prior to that conversion as bears to that amount the same ratio as the number of shares so converted bears to the total number of that convertible class of shares prior to that conversion; or

[Subparagraph (cc) added by section 1 of Act 43 of 2014 effective on 20 January 2015]

(b)     in relation to a class of shares issued by a company, in the case of any other company, an amount equal to the sum of-

[Words preceding subparagraph (i) substituted by section 1 of Act 43 of 2014 effective on 20 January 2015]

(i)      the stated capital or share capital and share premium of that company immediately before 1 January 2011 in relation to shares in that company of that class issued by that company before that date, less so much of that stated capital or share capital and share premium as would have constituted a dividend, as defined before that date, had that stated capital or share capital and share premium been distributed by that company immediately before that date;

[Subparagraph (i) amended by section 1 of Act 43 of 2014 effective on 20 January 2015]

(ii)     the consideration received by or accrued to that company for the issue of shares of that class on or after 1 January 2011; and

[Subparagraph (ii) amended by section 1 of Act 43 of 2014 effective on 20 January 2015]

(iii)     if the shares of that class include or consist of shares that were converted from another class of shares of that company to that class of shares-

(aa)   any consideration received by or accrued to that company in respect of that conversion; and

(bb)   the amount contemplated in subparagraph (cc) that was determined in respect of shares of the other class of shares that were so converted,

[Subparagraph (iii) added by section 1 of Act 43 of 2014 effective on 20 January 2015]

reduced by so much of that amount as –

(aa)   the company has transferred on or after 1 January 2011 for the benefit of any person holding a share in that company of that class in respect of that share;

[Subparagraph (aa) substituted by section 1 of Act 43 of 2014 effective on 20 January 2015]

(bb)   has by the date of the transfer been determined by the directors of the company or by some other person or body of persons with comparable authority to be an amount so transferred; and

[Subparagraph (bb) substituted by section 1 of Act 43 of 2014 effective on 20 January 2015]

(cc)   in the case of a convertible class of shares some of the shares of which have been converted to another class of shares, so much of the amount contemplated in this paragraph in respect of that convertible class of shares immediately prior to that conversion as bears to that amount the same ratio as the number of shares so converted bears to the total number of that convertible class of shares prior to that conversion:

[Subparagraph (cc) added by section 1 of Act 43 of 2014 effective on 20 January 2015]

Provided that the amount transferred by a company as contemplated in paragraph (a) or (b) for the benefit of a person holding shares of any class of shares of that company must not exceed an amount that bears to the total of the amount of contributed tax capital attributable to that class of shares immediately before the transfer the same ratio as the number of shares of that class held by that person bears to the total number of shares of that class: Provided further that an amount transferred by a company as contemplated in paragraph (a) or (b) must comprise a transfer of contributed tax capital only where-

(i)     the shares in a class of shares, in respect of which—

(aa)   a distribution is made; or

(bb)   consideration for the acquisition, cancellation or redemption is paid or payable by that company,

are each transferred an equal amount of contributed tax capital in respect of that class of shares; and

(ii)     the amount of that transfer per share does not exceed the total amount of contributed tax capital in respect of that class of shares divided by the total number of issued shares within that class of shares;

[Definition of “contributed tax capital” inserted by section 4(1)(b) of Act 60 of 2008, amended by section 7(1)(g) of Act 17 of 2009, substituted by section 6(1)(f) of Act 7 of 2010 and by section 7(1)(b) and (c) of Act 24 of 2011 and amended by section 1(1)(b) of Act 43 of 2014 and by section 4(1)(c) of Act 20 of 2021 (as substituted by section 41(1) of Act 20 of 2022, deemed to have come into operation on 19 January 2022) effective on 1 January 2023]

“Controlled foreign company” definition of section 9D of ITA

Posted on by admin_kmos

(1)     For the purposes of this section-

“controlled foreign company” means-

(a)     any foreign company where more than 50 per cent of the total participation rights in that foreign company are directly or indirectly held, or more than 50 per cent of the voting rights in that foreign company are directly or indirectly exercisable, by one or more persons that are residents other than persons that are headquarter companies: Provided that-

(i)     no regard must be had to any voting rights in any foreign company-

(aa) which is a listed company; or

(bb) if the voting rights in that foreign company are exercisable indirectly through a listed company;

(ii)    any voting rights in a foreign company which can be exercised directly by any other controlled foreign company in which that resident (together with any connected person in relation to that resident) can directly or indirectly exercise more than 50 per cent of the voting rights are deemed for purposes of this definition to be exercisable directly by that resident; and

(iii)   a person is deemed not to be a resident for purposes of determining whether residents directly or indirectly hold more than 50 per cent of the participation rights or voting rights in a foreign company, if-

(aa) in the case of a listed company or a foreign company the participation rights of which are held by that person indirectly through a listed company, that person holds less than five per cent of the participation rights of that listed company; or

(bb) in the case of a scheme or arrangement contemplated in paragraph (e)(ii) of the definition of “company” in section 1 or a foreign company the participation rights of which are held and the voting rights of which may be exercised by that person indirectly through such a scheme or arrangement, that person-

(A)    holds less than five per cent of the participation rights of that scheme or arrangement; and

(B)    may not exercise at least five per cent of the voting rights in that scheme or arrangement,

unless more than 50 per cent of the participation rights or voting rights of that foreign company or other foreign company are held by persons who are connected persons in relation to each other; or

[Paragraph (a) amended by section 10(1)(a) of Act 34 of 2019]

(b)     any foreign company where the financial results of that foreign company are reflected in the consolidated financial statements, as contemplated in IFRS 10, of any company that is a resident, other than a headquarter company;

[Paragraph (b) substituted by section 18(a) of Act 23 of 2018 and by section 10(1)(b) of Act 34 of 2019]

[Definition of “controlled foreign company” substituted by section 14 of Act 31 of 2005, amended by section 15 of Act 35 of 2007 and section 16 of Act 7 of 2010 and substituted by section 15 of Act 17 of 2017 effective on 1 January 2018 and applies in respect of any year of assessment commencing on or after that date]