Category: Paragraph 38 (Eighth Schedule) – Disposal by way of donation, consideration not measurable in money and transactions between connected persons not at arm’s length price

Paragraph 38

 

  1. Words preceding item (1)(a) substituted by section 114 of Act 22 of 2012 effective on 1 January 2012.

 

  1. Item (1)(a) substituted by section 63 of Act 32 of 2004.

 

  1. Subparagraph (1) amended by section 87 of Act 60 of 2001 and section 81 of Act 74 of 2002.

 

  1. Item (2)(a) amended by section 134 of Act 31 of 2013 effective on 1 April 2013.

 

  1. Item (2)(c) amended by section 134 of Act 31 of 2013 effective on 1 April 2013.

 

  1. Item (2)(d) substituted by section 72 of Act 31 of 2005 effective on 26 October 2004 and deleted by section 98 of Act 7 of 2010.

 

  1. Item (2)(e) substituted by section 134 of Act 31 of 2013 effective on 1 April 2013.

 

  1. Subparagraph (2) added by section 87 of Act 60 of 2001 and substituted by section 63 of Act 32 of 2004.

Paragraph 38 (Eighth Schedule) – Disposal by way of donation, consideration not measurable in money and transactions between connected persons not at arm’s length price

Posted on by admin_kmos

38.    Disposal by way of donation, consideration not measurable in money and transactions between connected persons not at an arm’s length price

(1)    Subject to subparagraph (2) and section 9HB, where a person disposed of an asset by means of a donation or for a consideration not measurable in money or to a person who is a connected person immediately prior to or immediately after that disposal in relation to that person for a consideration which does not reflect an arm’s length price-

[Sub­paragraph (1) (previously paragraph 38) amended by section 87(1)(a) of Act 60 of 2001, by section 81 of Act 74 of 2002, by section 114(1) of Act 22 of 2012 and by section 59(a) of Act 34 of 2019]

(a)     the person who disposed of that asset must be treated as having disposed of that asset for an amount received or accrued equal to the market value of that asset as at the date of that disposal; and

(b)     the person who acquired that asset must be treated as having acquired that asset at a cost equal to that market value, which cost must be treated as an amount of expenditure actually incurred for the purposes of paragraph 20(1)(a).

[Item (b) substituted by section 87(1)(b) of Act 60 of 2001 and by section 59(b) of Act 34 of 2019]

(2)     Subparagraph (1) does not apply in respect of the disposal of-

(a)     a right contemplated in section 8A;

(b)     an asset in the circumstances contemplated in section 10(1)(nE);

(c)     a qualifying equity share contemplated in section 8B by an employer, associated institution or any other person by arrangement with the employer, as contemplated in paragraph 1 of the Seventh Schedule, to an employee; or

(d)     ……….

(e)     any asset in respect of which section 40CA applies;

[Item (e) substituted by section 134 of Act 31 of 2013 and amended by section 71 of Act 15 of 2016 effective on 1 March 2015, applies in respect of years of assessment commencing on or after that date]

(f)     any land from the date on which that land becomes declared land as defined in section 37D(1).

[Paragraph (f) added by section 71 of Act 15 of 2016 effective on 1 March 2015, applies in respect of years of assessment commencing on or after that date]