(2) An insurer must be deemed to have disposed of each asset held by that insurer on 29 February 2016, at the close of the day, in respect of all its policyholder funds, other than an asset that constitutes—
(a) an instrument as defined in section 24J(1);
(b) an interest rate agreement as defined in section 24K(1);
(c) a contractual right or obligation the value of which is determined directly or indirectly with reference to-
(i) an instrument contemplated in paragraph (a);
(ii) an interest rate agreement contemplated in paragraph (b);or
(iii) any specified rate of interest;
(d) trading stock; or
(e) a policy of reinsurance.
(3) Where an asset is deemed to have been disposed of by an insurer as contemplated in subsection (2) on the date contemplated in that subsection-
(a) that asset must be deemed to have been so disposed of on that date for an amount received or accrued equal to the market value of the asset on that date; and
(b) that insurer must be deemed to have immediately reacquired that asset at an expenditure equal to the market value contemplated in paragraph (a), which expenditure must be deemed to be an amount of expenditure actually incurred for the purposes of paragraph 20(1)(a) of the Eighth Schedule.
(4) Where an asset is deemed to have been disposed of by an insurer as contemplated in subsection (2) and that asset, in the hands of that insurer, constitutes an asset as defined in paragraph 1 of the Eighth Schedule, that disposal must not be taken into account for the purposes of determining the amount of any allowance or deduction-
(a) to which that insurer may be entitled in respect of that asset; or
(b) that is to be recovered or recouped by or included in the income of that insurer in respect of that asset.
(5)
(a) In addition to any inclusion in any aggregate capital gain or aggregate capital loss of the policyholder funds of an insurer, that insurer must, in respect of each of those policyholder funds, include in the aggregate capital gain or aggregate capital loss of each of those funds for the realisation year and each of the two years of assessment following that realisation year an amount equal to 27.75 per cent of an amount determined in terms of paragraph (b).
[Paragraph (a) substituted by section 9(1)(c) of Act 13 of 2016 deemed effective on 29 February, 2016]
(b) The amount to be determined for the purposes of paragraph (a) is an amount equal to the aggregate of all capital gains and capital losses determined in respect of the disposal of any asset as contemplated in subsection (2).
(c) Where a person ceases to conduct the business of an insurer prior to the expiration of the two years of assessment contemplated in paragraph (a), any amount determined in terms of paragraph (b) must, to the extent that the amount has not been included as contemplated in paragraph (a), be so included in the year of assessment during which the person ceases to conduct the business of an insurer.
[Paragraph (c) added by section 78(1)(d) of Act 31 of 2013 and substituted by section 9(1)(d) of Act 13 of 2016 deemed effective on 29 February, 2016]
(6) This section does not apply to any asset held by an insurer if the asset is administered by a Category III Financial Services Provider and that asset is held by that insurer solely for the purpose of providing a linked policy as defined in the Long-term Insurance Act.