Category: Definitions – ITA

“Active business asset” definition of paragraph 57 of Eighth Schedule

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(1)     For purposes of this paragraph,

 

“active business asset” means –

 

(a)     an asset which constitutes immovable property, to the extent that it is used for business purposes; or

 

(b)     an asset (other than immovable property) used or held wholly and exclusively for business purposes, but excludes –

 

(i)      a financial instrument; and

 

(ii)     an asset held in the course of, carrying on a business mainly to derive any income in the form of an annuity, rental income, a foreign exchange gain or royalty or any income of a similar nature;

“Adjusted gain on transfer or redemption of an instrument” definition of section 24J of ITA

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“adjusted gain 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 transfer price or redemption payment of such income instrument in relation to such holder and any payments received by such holder in terms of such income instrument during the accrual period in which such income instrument is transferred or redeemed, exceeds the sum of the adjusted initial amount in relation to such income instrument and the accrual amount in relation to such accrual period and any payments made by such holder in terms of such income instrument during such accrual period; or

 

(ii)     an alternate method has been applied, the amount by which the sum of the transfer price or redemption payment of 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, exceeds 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; 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 adjusted initial amount in relation to such instrument and the accrual amount in relation to the accrual period during which such instrument is transferred or redeemed and any payments received by such issuer in terms of such instrument during the accrual period, exceeds the sum of the transfer price or redemption payment in relation to such instrument in relation to such issuer and any payments made 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 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, exceeds the sum of the transfer price or redemption payment in relation to 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;

“Adjusted initial amount” definition of section 24J of ITA

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“adjusted initial amount” means –

  

(a)     in relation to the holder of an income instrument with regard to a particular accrual period, the sum of the initial amount and the accrual amounts in relation to all previous accrual periods and any other payments made by such holder during all such previous accrual periods less any payments received by such holder during all such previous accrual periods, in terms of such income instrument; or

  

(b)     in relation to the issuer of an instrument with regard to a particular accrual period, the sum of the initial amount and the accrual amounts in relation to all previous accrual periods and any other payments received by such issuer during all such previous accrual periods less any payments made by such issuer during all such previous accrual periods, in terms of such instrument: Provided that where that instrument forms part of any transaction, operation or scheme –

 

(i)      any payments made by the issuer to any other person pursuant to that transaction, operation or scheme with a purpose or with the probable effect of making payment directly or indirectly to the holder or a connected person in relation to the holder, must be deducted for purposes of this paragraph; and

 

(ii)     in the case where any party to that transaction, operation or scheme is a connected person in relation to that issuer, any payments made by that connected person to any other person pursuant to that transaction, operation or scheme with a purpose or with the probable effect of making payment directly or indirectly to the holder or a connected person in relation to die holder, must be deducted for purposes of this paragraph;

“Adjusted loss on transfer or redemption of an instrument” definition of section 24J of ITA

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“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;

“Adjusted taxable income” definition of section 23N of ITA

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‘adjusted taxable income’ means taxable income calculated before applying this section-

[Words preceding paragraph (a) substituted by section 42 of Act 23 of 2018 effective on 17 January 2019]

(a)     reduced by-

(i)      any amount of interest received or accrued that forms part of taxable income;

[Subsection (i) substituted by section 42 of Act 23 of 2018 effective on 17 January 2019]

(ii)     any amount included in the income of a person as contemplated in section 9D(2);

(iii)    any amount recovered or recouped in respect of an allowance contemplated in this Act in respect of a capital asset as defined in section 19; and

[Subparagraph (iii) amended by section 38 of Act 43 of 2014 effective on 1 January 2015]

(b)     with the addition of-

(i)      any amount of interest incurred that has been allowed as a deduction from income;

[Subsection (i) substituted by section 42 of Act 23 of 2018 effective on 17 January 2019]

(ii)     any amount allowed as a deduction in terms of this Act in respect of a capital asset as defined in section 19 for purposes other than the determination of any capital gain or capital loss;

[Subparagraph (ii) amended by section 38 of Act 43 of 2014 effective on 1 January 2015]

(iii)    75 per cent of the receipts or accruals derived from the letting of any immovable property; and

[Subparagraph (iii) amended by section 38 of Act 43 of 2014 effective on 1 January 2015]

(iv)    any assessed loss or balance of assessed loss allowed to be set off against income in terms of section 20;

[Subparagraph (iv) added by section 38 of Act 43 of 2014 effective on 1 January 2015]

“Affected asset” definition of section 12D of ITA

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(1)     For the purposes of this section –

 

“affected asset” means any –

 

(a)     pipeline used for the transportation of natural oil;

 

(aA)   pipeline for the transportation of water used by power stations in the process of generating electricity;

 

(b)     line or cable used for the transmission of electricity;

 

(c)     line or cable used for the transmission of electronic communications; and

 

(d)     railway line used for the transportation of persons, goods or things,

 

and includes any earthworks or supporting structures and equipment forming part of or ancillary to such pipeline, transmission line or cable or railway line and any improvement to such pipeline, transmission line or cable or railway line;

“Affected asset” definition of section 23A of ITA

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(1)     For the purposes of this section –

 

“affected asset” means any machinery, plant, implement, utensil, article, aircraft or ship which has been let and in respect of which the lessor is or was entitled to an allowance under section 11(e), 12B, 12BA, 12C, 12DA or 37B(2)(a), whether in the current or a previous year of assessment, but excluding any such asset let by the lessor under an operating lease or any such asset which was during the year of assessment mainly used by the taxpayer in the course of any trade carried on by the taxpayer, other than the letting of any such asset;

[Definition of “affected asset” amended by section 22(1)(a) of Act 101 of 1990, by section 34 of Act 30 of 1998, by section 32(1)(a) of Act 60 of 2001 and by section 33 of Act 35 of 2007 and substituted by section 25(a) of Act 23 of 2020 and by section 24(1)(a) of Act 17 of 2023 effective on 1 March, 2023 and applicable in respect of assets brought into use on or after that date]

“Affected contract” definition of section 24I of ITA

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“affected contract” means any foreign currency option contract or forward exchange contract to the extent that the foreign currency option contract or forward exchange contract has been entered into by any person during any year of assessment to serve as a hedge in respect of a debt, where-

(a)     that debt-

(i)      is to be utilised by that person for the purposes of acquiring any asset or for financing any expenditure; or

(ii)     will arise from the sale of any asset or supply of any services,

in terms of an agreement entered into by that person in the ordinary course of the person’s trade prior to the end of the current year of assessment; and

(b)     that debt has not yet been incurred by such person or the amount payable in respect of such debt has not yet accrued during that current year of assessment;

[Definition of “affected forward exchange contract” inserted by section 18 of Act 21 of 1994, substituted by section 13 of Act 36 of 1996, amended by section 35 of Act 30 of 1998 and substituted by section 53 of Act 22 of 2012 and section 42 of Act 17 of 2017 effective on 18 December 2017]

“Affected transaction” definition of section 31 of ITA

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(1)     For the purposes of this section-

‘affected transaction’ means any transaction, operation, scheme, agreement or understanding where-

(a)     that transaction, operation, scheme, agreement or understanding has been directly or indirectly entered into or effected between or for the benefit of either or both-

(i)

(aa)    a person that is a resident; and

(bb)   any other person that is not a resident;

(ii)

(aa)    a person that is not a resident; and

(bb)   any other person that is not a resident that has a permanent establishment in the Republic to which the transaction, operation, scheme, agreement or understanding relates;

(iii)

(aa)    a person that is a resident; and

(bb)   any other person that is a resident that has a permanent establishment outside the Republic to which the transaction, operation, scheme, agreement or understanding relates; or

(iv)

(aa)    a person that is not a resident; and

(bb)   any other person that is a controlled foreign company in relation to any resident,

and those persons are connected persons or associated enterprises in relation to one another; and

[Subparagraph (iv) amended by section 37(1)(a) of Act 34 of 2019 effective on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date (effective date in section 37(2) of Act 34 of 2019 as substituted by section 78(1) of Act 23 of 2020 and by section 66(1) of Act 20 of 2021)]

(b)     any term or condition of that transaction, operation, scheme, agreement or understanding is different from any term or condition that would have existed had those persons been independent persons dealing at arm’s length;