Category: Eighth Schedule – Determination of taxable capital gains and assessed capital losses

EIGHTH SCHEDULE

 

Eighth Schedule inserted by section 38 of Act 5 of 2001.

Paragraph 2 (Eighth Schedule) – Application

Posted on by admin_kmos

2.  Application

(1)     Subject to paragraph 97, this Schedule applies to the disposal on or after valuation date of –

(a)     any asset of a resident; and

(b)     the following assets of a person who is not a resident, namely-

(i)      immovable property situated in the Republic held by that person or any interest or right of whatever nature of that person to or in immovable property situated in the Republic including rights to variable or fixed payments as consideration for the working of, or the right to work mineral deposits, sources and other natural resources; or

[Subitem (i) substituted by section 102 of Act 25 of 2015 effective on 1 January 2016] 

(ii)     any asset effectively connected with a permanent establishment of that person in the Republic.

[Subitem (ii) substituted by section 102 of Act 25 of 2015 effective on 1 January 2016] 

(2)     For purposes of subparagraph (1)(b)(i), an interest in immovable property situated in the Republic includes any equity shares held by a person in a company or ownership or the right to ownership of a person in any other entity or a vested interest of a person in any assets of any trust, if –

(a)     80 per cent or more of the market value of those equity shares, ownership or right to ownership or vested interest, as the case may be, at the time of disposal thereof is attributable directly or indirectly to immovable property situated in the Republic or any interest or right of whatever nature to or in immovable property situated in the Republic including rights to variable or fixed payments as consideration for the working of, or the right to work mineral deposits, sources and other natural resources in the Republic; and

[Item (a) substituted by section 74 of Act 23 of 2018 and by section 45 of Act 23 of 2020]

(b)     in the case of a company or other entity, that person (whether alone or together with any connected person in relation to that person), directly or indirectly, holds at least 20 per cent of the equity shares in that company or ownership or right to ownership of that other entity.

“Debt” definition of Eighth Schedule

Posted on by admin_kmos

‘debt’ means any amount that is owed by a person in respect of-

(a)     expenditure incurred by that person; or

(b)     a loan, advance or credit that was used, directly or indirectly, to fund any expenditure incurred by that person,

but does not include a tax debt as defined in section 1 of the Tax Administration Act;

[Definition of ‘debt’ substituted by section 77 of Act 23 of 2018 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]

Paragraph 3 (Eighth Schedule) – Capital gain

Posted on by admin_kmos

3.     Capital gain

A person’s capital gain for a year of assessment, in respect of the disposal of an asset-

(a)     during that year, is equal to the amount by which the proceeds received or accrued in respect of that disposal exceed the base cost of that asset;

[Subparagraph (a) substituted by section 67 of Act 60 of 2001 and amended by section 103 of Act 25 of 2015 effective on 1 January 2016]

(b)     in a previous year of assessment, other than a disposal contemplated in subparagraph (c), is equal to-

[Words preceding item (i) substituted by section 103 of Act 25 of 2015 effective on 1 January 2016] 

(i)      so much of any amount received by or accrued to that person during the current year of assessment, as constitutes part of the proceeds of that disposal which has not been taken into account –

(aa)    during any year in determining the capital gain or capital loss in respect of that disposal; or

(bb)   in the redetermination of the capital gain or capital loss in terms of paragraph 25(2); or

(ii)     so much of the base cost of that asset that has been taken into account in determining the capital gain or capital loss in respect of that disposal as has been recovered or recouped during the current year of assessment, otherwise than by way of any reduction of any debt owed by that person, and which has not been taken into account in the redetermination of the capital gain or capital loss in terms of paragraph 25(2); or

(iii)    the sum of –

(aa)   any capital gain redetermined in terms of paragraph 25(2) in the current year of assessment in respect of that disposal; and

(bb)   any capital loss (if any) determined in respect of that disposal in terms of paragraph 25 for the last year of assessment during which that paragraph applied in respect of that disposal; or

[Subitem (bb) amended by section 103 of Act 25 of 2015 effective on 1 January 2016]

(c)     in a previous year of assessment that has been reacquired as contemplated in paragraph 20(4), is equal to any capital loss determined in respect of that disposal.

[Subparagraph (c) added by section 103 of Act 25 of 2015 effective on 1 January 2016]