(3)

(a)     If a shareholder acquires equity shares (hereinafter referred to as ‘unbundled shares’) in terms of an unbundling transaction –

(i)      that shareholder must –

(aa)   allocate a portion of the expenditure and any market value attributable to the equity shares held in the unbundling company (hereinafter referred to as the ‘unbundling shares’) to the unbundled shares in accordance with subparagraph (v); and

(bb)   reduce the expenditure and market value attributable to the unbundling shares by the amount so allocated to the unbundled shares;

(ii)     the unbundled shares must, other than for purposes of determining whether a share has been held for at least three years for the purposes of section 9C(2), be deemed to have been acquired on the same date as the unbundling shares;

[Subparagraph (ii) substituted by section 57 of Act 35 of 2007 and section 54 of Act 17 of 2017 effective on 1 January 2016]

(iii)    the unbundled shares must be deemed to have been acquired as –

(aa)    trading stock, if the unbundling shares were held as trading stock;

(bb)   capital assets, if the unbundling shares were held as capital assets;

(iv)    any expenditure allocated to the unbundled shares must be deemed to have been incurred on the date on which the expenditure was incurred in respect of the unbundling shares; and

(v)     the proportionate amount of the expenditure and market value to be allocated to the unbundled shares in terms of subparagraph (i)(aa) must be determined in accordance with the ratio that the market value of the unbundled shares, as at the end of the day after that distribution, bears to the sum of the market value, as at the end of that day, of the unbundling shares and of the unbundled shares: Provided that a shareholder that acquires unbundled shares in terms of an unbundling transaction shall, in addition to any expenditure allocated to unbundled shares in accordance with this subparagraph, be treated as having incurred an amount equal to any amount of tax payable by the unbundling company arising in respect of all equity shares to which this section does not apply as contemplated in subsection (7) the same ratio as the number of equity shares held by that shareholder in that unbundled company bears to the number of all the issued equity shares in that unbundled company immediately after that unbundling transaction.

[Subparagraph (v) amended by section 37(1)(b) of Act 17 of 2023 with effect from 1 January, 2024 and applicable in respect of the allocation of expenditure to unbundled shares acquired on or after that date]