Category: Paragraph 12 (Eighth Schedule) – Events treated as disposals and acquisitions

Paragraph 12

 

  1. Subparagraph (1) substituted by section 72 of Act 60 of 2001, section 93 of Act 45 of 2003 and section 50 of Act 3 of 2008.

 

  1. Item (2)(a) substituted by section 93 of Act 45 of 2003 and section 56 of Act 32 of 2004, amended by section 67 of Act 31 of 2005, by section 50 of Act 3 of 2008, section 108 of Act 24 of 2011 and section 107(1)(a) of Act 22 of 2012 and substituted by section 107(1)(b) of Act 22 of 2012 effective on 8 May 2012.

 

  1. Words preceding subitem (b)(i) substituted by section 50 of Act 3 of 2008.

 

  1. Subparagraph (3) substituted by section 72 of Act 60 of 2001.

 

  1. Subparagraph (4) substituted by section 72 of Act 60 of 2001, section 67 of Act 31 of 2005, section 50 of Act 3 of 2008 and section 75 of Act 60 of 2008 effective on 21 Feb 2008.

 

  1. Subparagraph (5) amended by section 72 of Act 60 of 2001, substituted by section 68 of Act 74 of 2002, amended by section 93 of Act 45 of 2003, section 67 of Act 31 of 2005, section 71 of Act 35 of 2007, section 50 of Act 3 of 2008 and section 94 of Act 7 of 2010 and deleted by section 107 of Act 22 of 2012 effective on 1 January 2013.

Paragraph 12 (Eighth Schedule) – Events treated as disposals and acquisitions

Posted on by admin_kmos

12.     Events treated as disposals and acquisitions

(1)     Where an event described in subparagraph (2) occurs, a person must, subject to paragraph 24, be treated for the purposes of this Schedule as having disposed of an asset described in subparagraph (2) for an amount received or accrued equal to the market value of the asset at the time of the event and to have immediately reacquired the asset at an expenditure equal to that market value, which expenditure must be treated as an amount of expenditure actually incurred for the purposes of paragraph 20(1)(a).

[Subparagraph (1) substituted by section 72 of Act 60 of 2001, section 93 of Act 45 of 2003, section 50 of Act 3 of 2008 and section 81 of Act 43 of 2014 effective on 20 January 2015]

(2)     Subparagraph (1) applies, in the case of-

(a)     a person-

(i)      that commences to be a resident; or

[Subitem (i) substituted by section 81 of Act 43 of 2014 effective on 20 January 2015]

(ii)     that is a foreign company that commences to be a controlled foreign company,

[Subitem (ii) substituted by section 81 of Act 43 of 2014 effective on 20 January 2015]

(iii)    ……….

[Subitem (iii) deleted by section 81 of Act 43 of 2014 effective on 20 January 2015]

in respect of all assets of that person other than-

(aa)    assets in the Republic listed in paragraph 2(1)(b)(i) and (ii);

(bb)   any right to acquire any marketable security contemplated in section 8A;

(b)     an asset of a person that is not a resident, which asset-

(i)      becomes an asset of that person’s permanent establishment in the Republic otherwise than by way of acquisition; or

(ii)     ceases to be an asset of that person’s permanent establishment in the Republic otherwise than by way of a disposal contemplated in paragraph 11;

(c)     assets that are held by a person otherwise than as trading stock, when they commence to be held by that person as trading stock;

(d)     an asset which ceases to be held by a person as a personal-use asset otherwise than by way of a disposal contemplated in paragraph 11;

(e)     an asset which is held by a person otherwise than as a personal-use asset, when that asset commences to be held by that person as a personal-use asset; or

(f)      an asset transferred by an insurer contemplated in section 29A from one fund contemplated in section 29A(4) to any other such fund.

(3)     Where assets that are held by a person as trading stock cease to be held by that person as trading stock, otherwise than by way of a disposal contemplated in paragraph 11, that person will be treated as having disposed of those assets for a consideration equal to the amount included in that person’s income in terms of section 22(8) and to have immediately reacquired those assets for a cost equal to that amount, which cost must be treated as an amount of expenditure actually incurred for the purposes of paragraph 20(1)(a).

[Subparagraph (3) substituted by section 72(1)(b) of Act 60 of 2001 and by section 46(a) of Act 23 of 2020]

(4)     In the event of a person ceasing to be a controlled foreign company as a result of becoming a resident that person must, subject to paragraph 24, be treated for the purposes of this Schedule as having-

(a)     disposed of each of that person’s assets, other than-

(i)      assets in the Republic listed in paragraph 2(1)(b)(i) and (ii); and

(ii)     assets held by that person if any amount received or accrued from the disposal of those assets would have been taken into account for purposes of determining the net income as contemplated in section 9D of that person; and

(b)     immediately reacquired each of those assets at an expenditure equal to the market value of those assets immediately before the disposal, which expenditure must be treated as an amount of expenditure actually incurred for the purposes of paragraph 20(1)(a).

[Item (b) substituted by section 46(b) of Act 23 of 2020]