Category: PRELIMINARY (ITA)

“Financial instrument” definition of section 1 of ITA

Posted on by admin_kmos

“financial instrument” includes –

(a)     a loan, advance, debt, bond, debenture, bill, share, promissory note, banker’s acceptance, negotiable certificate of deposit, deposit with a financial institution, a participatory interest in a portfolio of a collective investment scheme, or a similar instrument;

(b)     any repurchase or resale agreement, forward purchase arrangement, forward sale arrangement, futures contract, option contract or swap contract;

(c)     any other contractual right or obligation the value of which is determined directly or indirectly with reference to –

(i)      a debt security or equity;

(ii)     any commodity as quoted on an exchange; or

(iii)    a rate index or a specified index;

(d)     any interest-bearing arrangement;

[Paragraph (d) amended by section 1 of Act 23 of 2018 effective on 17 January 2019]

(e)     any financial arrangement based on or determined with reference to the time value of money or cash flow or the exchange or transfer of an asset; and

[Paragraph (e) amended by section 1 of Act 23 of 2018 effective on 17 January 2019]

(f)      any crypto asset;

[Definition of “financial instrument” inserted by section 6(1)(h) of Act 74 of 2002 effective on the date of promulgation of that Act, 13 December, 2002. Paragraph (f) added by section 1(1)(c) of Act 23 of 2018 and substituted by section 2(1)(c) of Act 23 of 2020]

“Financial year” definition of section 1 of ITA

Posted on by admin_kmos

“financial year”, in relation to any company, means –

(a)     the period, whether of 12 months or not, commencing upon the date of incorporation or creation of such company and ending upon the last day of February immediately succeeding such date or upon such other date as the Commissioner having regard to the circumstances of the case may approve; or

(b)     any period subsequent to the period referred to in paragraph (a), whether of 12 months or not, commencing immediately after the last day of the immediately preceding financial year of such company and ending upon the first anniversary of such last day or upon such other date as the Commissioner having regard to the circumstances of the case may approve;

“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]

“Foreign dividend” definition of section 1 of ITA

Posted on by admin_kmos

“foreign dividend” means any amount that is paid or payable by a foreign company in respect of a share in that foreign company where that amount is treated as a dividend or similar payment by that foreign company for the purposes of the laws relating to-

(a)     tax on income on companies of the country in which that foreign company has its place of effective management; or

(b)     companies of the country in which that foreign company is incorporated, formed or established, where the country in which that foreign company has its place of effective management does not have any applicable laws relating to tax on income,

but does not include any amount so paid or payable that-

(i)      constitutes a redemption or other disposal of a participatory interest in an arrangement or scheme contemplated in paragraph (e)(ii) of the definition of “company” to that arrangement or scheme or to the management company of that arrangement or scheme; or

[Paragraph (i) substituted by section 1(1)(a) of Act 20 of 2022]

 

(ii)     ……….

 

(iii)     constitutes a share in that foreign company;