Section 80B (ITA) – Tax consequences of impermissible tax avoidance

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80B.     Tax consequences of impermissible tax avoidance

 

(1)     The Commissioner may determine the tax consequences under this Act of any impermissible avoidance arrangement for any party by –

 

(a)     disregarding, combining, or re-characterising any steps in or parts of the impermissible avoidance arrangement;

 

(b)     disregarding any accommodating or tax-indifferent party or treating any accommodating or tax-indifferent party and any other party as one and the same person;

 

(c)     deeming persons who are connected persons in relation to each other to be one and the same person for purposes of determining the tax treatment of any amount;

 

(d)     reallocating any gross income, receipt or accrual of a capital nature, expenditure or rebate amongst the parties;

 

(e)     re-characterising any gross income, receipt or accrual of a capital nature or expenditure; or

 

(f)      treating the impermissible avoidance arrangement as if it had not been entered into or carried out, or in such other manner as in the circumstances of the case the Commissioner deems appropriate for the prevention or diminution of the relevant tax benefit.

 

(2)     Subject to the time limits imposed by sections 99, 100 and 104(5)(b) of the Tax Administration Act, the Commissioner must make compensating adjustments that he or she is satisfied are necessary and appropriate to ensure the consistent treatment of all parties to the impermissible avoidance arrangement.

Section 80A (ITA) – Impermissible tax avoidance arrangements

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80A.    Impermissible tax avoidance arrangements

 

An avoidance arrangement is an impermissible avoidance arrangement if its sole or main purpose was to obtain a tax benefit and –

 

(a)     in the context of business –

 

(i)      it was entered into or carried out by means or in a manner which would not normally be employed for bona fide business purposes, other than obtaining a tax benefit; or

 

(ii)     it lacks commercial substance, in whole or in part, taking into account the provisions of section 80C;

 

(b)     in a context other than business, it was entered into or carried out by means or in a manner which would not normally be employed for a bona fide purpose, other than obtaining a tax benefit; or

 

(c)      in any context –

 

(i)      it has created rights or obligations that would not normally be created between persons dealing at arm’s length; or

 

(ii)     it would result directly or indirectly in the misuse or abuse of the provisions of this Act (including the provisions of this Part).

Section 72A (ITA) – Returns relating to controlled foreign company

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72A.    Return relating to controlled foreign company

 

(1)     Every resident who on the last day of the foreign tax year of a controlled foreign company or immediately before a foreign company ceases to be a controlled foreign company directly or indirectly, together with any connected person in relation to that resident, holds at least 10 per cent of the participation rights in any controlled foreign company (otherwise than indirectly through a company which is a resident), must submit to the Commissioner a return.

 

(2)     A resident must have available for submission to the Commissioner when so requested, a copy of the financial statements of the controlled foreign company for the relevant foreign tax year of that controlled foreign company.

 

(3)     Where a person in respect of any year of assessment fails to comply with the provisions of-

 

(a)     ……….

 

(b)     subsection (2) and no reasonable grounds exist either for that failure which is outside the control of the person or for that person to believe that such person was not subject to that requirement-

 

(i)      the proportional amount which must be included in the income of that person in terms of section 9D for that year shall be determined with reference only to the receipts and accruals of the controlled foreign company; and

 

(ii)     the provisions of section 6quat shall not apply in respect of any tax proved to be payable to the government of any other country with respect to the proportional amount of the net income of that controlled foreign company which is included in the income of that person in terms of section 9D.

 

73.  ……….

 

74.  ……….

 

75.  ……….

 

76.  ……….

Section 68 (ITA) – Income and capital gain of married persons and minor children

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68.     Income and capital gain of married persons and minor children

 

(1)     Any –

 

(a)     income received by or accrued to or in favour of any person married in or out of community of property which in terms of section 7(2) is deemed to be income received by or accrued to such person’s spouse; or


(b)     capital gain which is in terms of paragraph 68 of the Eighth Schedule taken into account in the determination of the aggregate capital gain or aggregate capital loss of such person’s spouse,


shall be included by such spouse in returns of income required to be rendered by that spouse under this Act.

 

(2)     In the event of the death of any person during any year in respect of which such income is chargeable or in which such capital gain is taken into account, the income or capital gain of such person’s spouse for the period elapsing between the date of such death and the last day of the year of assessment shall be returned as the separate income of such spouse.

 

(3)

 

(a)     Every parent shall be required to include in his return –

 

(i)      any income received by or accrued to or in favour of any of that parent’s minor children either directly or indirectly from that parent; or


(ii)     any capital gain or capital loss in respect of any transaction entered into directly or indirectly by that parent, which is taken into account in the determination of the aggregate capital gain or aggregate capital loss of any of that parent’s minor children,


together with such particulars as may be required by the Commissioner.

 

(b)     Every parent shall be required to include in that parent’s return any income deemed to be that parent’s income in terms of subsection (3) or (4) of section 7 or any capital gain deemed to be that parent’s capital gain in terms of paragraph 69 of the Eighth Schedule.

 

69.  ……….

 

70.  ……….

 

71.  ………..

 

72.  ………..

Section 66 (ITA) – Notice by Commissioner requiring returns for assessment of normal tax under this Act

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66.     Notice by Commissioner requiring returns for assessment of normal tax under this Act

(1)     The Commissioner must annually give public notice of the persons who are required by the Commissioner to furnish returns for the assessment of normal tax within the period prescribed in that notice.

(2)    ……….

(3)     ……….

(4)     The Commissioner may, prior to the issue of any such annual notice, require any person by notice in writing to render interim returns for any period he may designate in such notice, and may proceed to make an assessment in respect of that period.

(5)       ……….

(5A)  Any person who is not in terms of this section required to furnish a return in respect of any year of assessment may for the purpose of having that person’s liability for normal tax determined on assessment furnish such a return within three years after the end of such year of assessment.

(6)     ……….

(7)     ……….

(8)     ……….

(9)     ……….

(10)   ……….

(11)   ……….

(12)   ……….

(13)   The return for normal tax to be made by any person in respect of any year of assessment shall be a return –

(a)     in the case of a person (other than a company), for the whole period of twelve months ending upon the last day of February: Provided that where-

(i)      a person dies, a return shall be made for the period commencing on the first day of that period and ending on the date of death;

(ii)     the estate of a person is sequestrated, separate returns must be made for the periods-

(aa)   commencing on the first day of that period and ending on the date preceding the date of sequestration; and

(bb)   commencing on the date of sequestration and ending on the last day of that period; or

(iii)     a person ceases to be a resident, a return shall be made for the period commencing on the first day of that period and ending on the day preceding the date that the person ceases to be a resident; or.

[Paragraph (a) amended by section 61 of Act 45 of 2003 and section 271 of Act 28 of 2011 and substituted by section 2 of Act 22 of 2018 effective on 17 January 2019]


(b)     in the case of a company, for the whole period of the relevant financial year of that company comprising the year of assessment.


: Provided that where a company ceases to be a resident, a return shall be made for the period commencing on the first day of that financial year and ending on the day preceding the date that the company ceases to be a resident.

(13A) Where –

(a)     it is established to the satisfaction of the Commissioner that the whole or any portion of the income of any person to whom the provisions of subsection (13)(a) apply cannot be conveniently returned for any year of assessment, the Commissioner may, subject to such conditions as he or she may impose, accept accounts in respect of the whole or a portion of the taxpayer’s income drawn to a date agreed to by the Commissioner, whether for a longer or shorter period than the year of assessment under charge, and the income disclosed in any such accounts must be deemed to be income of that person in respect of that year under charge;


(b)     any such accounts are drawn to a date later than the last day of the year of assessment, no further regard shall be had to the income disclosed by those accounts for purposes of any subsequent year of assessment;


(c)     any such accounts are drawn to a date falling within the year of assessment and the person concerned dies or his or her estate is sequestrated during the interim period between that date and the last day of the year of assessment, any income received by or accrued to that person during that interim period must be deemed to be part of that person’s income for the year of assessment.

(13B) For the purposes of subsections (13A) and (13C), the word ‘income’ must be construed as including any aggregate capital gain or aggregate capital loss.

(13C) Where –

(a)     a company does not close its accounts on the last day of its financial year, the Commissioner may accept accounts in respect of the taxpayer’s income drawn to a fixed day approved by the Commissioner, which day shall fall within 10 days before or after the last day of the financial year;


(b)     such accounts are drawn to a date later than the last day of the year of assessment, no further regard shall be had to the income disclosed by those accounts for purposes of a subsequent year of assessment.

Section 64N – Rebate in respect of foreign taxes on dividends

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64N.    Rebate in respect of foreign taxes on dividends

 

(1)     A rebate determined in accordance with this section must be deducted from the dividends tax payable in respect of a dividend contemplated in paragraph (b) of the definition of ‘dividend’ in section 64D.

 

(2)     The amount of the rebate contemplated in subsection (1) is equal to the amount of any tax paid to any sphere of government of any country other than the Republic, without any right of recovery by any person, on a dividend contemplated in subsection (1).

 

(3)     The amount of the rebate contemplated in subsection (2) must not exceed the amount of the dividends tax imposed in respect of the dividend contemplated in subsection (1).

 

(4)     For the purposes of this section, the amount of any tax paid as contemplated in subsection (2) must be translated to the currency of the Republic by applying the exchange rate used to convert the amount of the dividend in respect of which that tax is paid to the currency of the Republic.

 

(5)     A company or regulated intermediary must obtain proof of any tax paid to any sphere of government of any country other than the Republic and deducted from the dividends tax payable in terms of this section, in the form and manner prescribed by the Commissioner.