29.     Market value on valuation date

(1)     The market value on the valuation date of-

(a)     a financial instrument listed on a recognised exchange and for which a price was quoted on that exchange both before and after the valuation date is, subject to subparagraph (2) and (2A), in the case of a financial instrument listed on an exchange-

(i)      in the Republic, the price published by the Commissioner in the Gazette, which is the aggregate value of all transactions in that financial instrument as traded on that recognised exchange during the five business days preceding the valuation date, divided by the total quantity of that financial instrument traded during the same period; and

(ii)     outside the Republic and which is not listed on any exchange in the Republic, the ruling price in respect of that financial instrument on that recognised exchange on the last business day before valuation date;

(b)     an asset which is not listed on a recognised exchange and which constitutes a right of a unit holder or holder of a participatory interest, as the case may be, in-

(i)      any company contemplated in paragraph (e)(i) of the definition of “company” in section 1 of the Act, or any unit portfolio comprised in any unit trust scheme in property shares carried on in the Republic, the price published by the Commissioner in the Gazette, which is the average of the price at which a unit could be sold to the management company of the scheme for the last five trading days before valuation date; or

(ii)     any arrangement or scheme contemplated in paragraph (e)(ii) of the definition of “company”, the last price published before valuation date at which a participatory interest could be sold to the management company of the scheme or where there is not a management company the price which could have been obtained upon a sale of the asset between a willing buyer and a willing seller dealing at arm’s length in an open market on valuation date;

(c)     any other asset, the market value determined in terms of paragraph 31 on valuation date.

(2)   Where-

(a)     a person holds a controlling interest in a company the shares of which are listed on a recognised exchange, and that entire controlling interest is disposed of to another person (who is not a connected person in relation to that person), who acquires that entire controlling interest; and

(b)     the price per share for which that controlling interest has been so disposed of deviates from the ruling price in respect of that share on the date prior to the announcement of the transaction,

the valuation date market value of that share so disposed of, as determined in terms of subparagraph (1)(a), must be increased or decreased, as the case may be, by an amount which bears to that market value the same ratio as the deviation bears to that ruling price.

(2A)  Where-

(i)      a financial instrument listed on an exchange in the Republic was not traded during the last five business days preceding valuation date;

(ii)     a financial instrument listed on an exchange in the Republic is suspended for any period during September 2001; or

(iii)    the market value of a financial instrument determined in terms of subparagraph (1)(a)(i), exceeds the average of the ruling price of that financial instrument, determined for the first 14 business days of the month of September 2001, by five per cent or more,

the Commissioner must, after consultation with the recognised exchange and the Financial Services Board, determine the market value of that financial instrument having regard to the value of the financial instrument, circumstances surrounding the suspension of that financial instrument or reasons for the increase in the value of that financial instrument.

[Words following item (iii) substituted by section 85 of Act 43 of 2014 effective on 20 January 2015]

(3)     For the purposes of this paragraph “controlling interest” in a company means an interest in more than 35 per cent of the equity shares in that company.

(4)     For the purposes of paragraphs 26(1)(a) and 27(3), a person may only adopt or determine the market value as the valuation date value of that asset if –

(a)     in the case where the valuation date is 1 October 2001 –

(i)      that person has valued that asset on or before 30 September 2004;

(ii)     the price of that asset has been published by the Commissioner in terms of this paragraph in the Gazette; or

(iii)     that person has acquired that asset from that person’s spouse as contemplated in section 9HB and the transferor spouse had adopted or determined a market value in terms of this paragraph and for this purpose the transferee spouse must be treated as having adopted or determined that same market value; or

[Sub­item (iii) substituted by section 57 of Act 34 of 2019]

(b)     in the case where the valuation date is after 1 October 2001 –

(i)      that person has valued that asset within two years after valuation date; or

(ii)     that asset is one contemplated in paragraph 31(1)(a) or (c)(i) and the market value of that asset on valuation date is determined in terms of one of those paragraphs.

(5)     Despite subparagraph (4), where a person has valued an asset and-

(a)     the market value of that asset exceeds R10 million;

(b)     that asset is an intangible asset (excluding financial instruments) and the market value thereof exceeds R1 million, or

(c)     that asset is an unlisted share in a company and the market value of all the shares held by that person in that company exceeds R10 million,

that person may only adopt the market value as the valuation date value of that asset if that person has furnished proof of that valuation to the Commissioner in the form as the Commissioner may prescribe, with the first return submitted by that person after the date or period contemplated in subparagraph (4).

[Words following item (c) substituted by section 13 of Act 44 of 2014 and section 109 of Act 25 of 2015 effective on 8 January 2016]

(6)     Where a person disposes of-

(a)     an asset contemplated in subparagraph (5)(a), (b) or (c) which has been valued before proof of valuation is submitted as contemplated in that subparagraph; or

(b)     any other asset which has been valued,

that person must retain proof of that valuation.

[Words following item (b) substituted by section 13 of Act 44 of 2014 effective on 20 January 2015]

(7)     The Commissioner may, notwithstanding any proof of valuation submitted by a person to the Commissioner as contemplated in subparagraph (5) or (6)-

(a)     request any such further information or documents relating to that valuation; or

(b)     where the Commissioner is not satisfied with any value at which an asset has been valued, the Commissioner may adjust the value accordingly.

(8)     Where the valuation date of a person is after 1 October 2001 the provisions of subparagraphs (1)(a), (1)(b)(i), (2), (2A), (3), (5) and (6)(a) do not apply.

27.     Valuation date value where proceeds do not exceed expenditure

 

(1)     Subject to subparagraph (2), where the proceeds from the disposal of a pre-valuation date asset do not exceed the expenditure allowable in terms of paragraph 20 incurred before, on and after the valuation date in respect of that asset, the valuation date value of that asset must be determined in terms of this paragraph.

 

(2)     This paragraph does not apply in respect of any asset contemplated in paragraph 28 or in respect of which paragraph 32(3A) has been applied.

 

(3)     Where a person has determined the market value of an asset on the valuation date, as contemplated in paragraph 29, or the market value of an asset has been published in terms of that paragraph, and-

 

(a)     the expenditure allowable in terms of paragraph 20 incurred before the valuation date in respect of that asset-

 

(i)      is equal to or exceeds the proceeds from the disposal of that asset; and

 

(ii)     exceeds the market value of that asset on valuation date, the valuation date value of that asset must be the higher of-

 

(aa)   that market value; or

 

(bb)   those proceeds less the expenditure allowable in terms of paragraph 20 incurred on or after the valuation date in respect of that asset; or

 

(b)     the provisions of item (a) do not apply, the valuation date value of that asset must be the lower of-

 

(i)      that market value; or

 

(ii)     the time-apportionment base cost of that asset as contemplated in paragraph 30.

 

(4)     Where the provisions of subparagraph (3) do not apply, the valuation date value of that asset, contemplated in subparagraph (1), is the time-apportionment base cost of that asset, as contemplated in paragraph 30.

25.     Determination of base cost of pre-valuation date assets

 

(1)     The base cost of a pre-valuation date asset (other than an identical asset in respect of which paragraph 32(3A) has been applied), is the sum of the valuation date value of that asset, as determined in terms of paragraph 26, 27 or 28, and the expenditure allowable in terms of paragraph 20 incurred on or after the valuation date in respect of that asset.

 

(2)     If a person has determined the base cost as contemplated in subparagraph (1) of a pre-valuation date asset which was disposed of during any prior year of assessment and in the current year of assessment-

 

(a)     any amount of proceeds is received or accrued in respect of that disposal which has not been taken into account in any prior year in determining the capital gain or capital loss in respect of that disposal;

 

(b)     any amount of proceeds which was taken into account in determining the capital gain or capital loss in respect of that disposal has become irrecoverable, or has become repayable or that person is no longer entitled to those proceeds as a result of the cancellation, termination or variation of any agreement or due to the prescription or waiver of a claim or a release from an obligation or any other event during the current year;

 

(c)     any amount of expenditure is incurred which forms part of the base cost of that asset which has not been taken into account in any prior year in determining the capital gain or loss in respect of that disposal; or

 

(d)     any amount of base cost of that asset that has been taken into account in any prior year in determining the capital gain or capital loss in respect of that disposal, has been recovered or recouped,

 

that person must redetermine the base cost of that asset in terms of subparagraph (1) and the capital gain or capital loss from the disposal of that asset, having regard to the full amount of the proceeds and base cost so redetermined.

 

(3)     The amount of capital gain or capital loss redetermined in the current year of assessment in terms of subparagraph (2), must be taken into account in determining any capital gain or capital loss from that disposal in that current year, as contemplated in paragraph 3(b)(iii) or 4(b)(iii).

21.     Limitation of expenditure

 

(1)     Where, but for the provisions of this subparagraph, an amount qualifies or has qualified as an allowable expenditure or may otherwise be taken into account in determining a capital gain or capital loss under more than one provision of this Schedule, that amount or portion thereof, shall not be allowed as expenditure or be taken into account more than once in determining that capital gain or capital loss.

 

(2)     No expenditure shall be allowed under paragraph 20(1)(a) or (e) where any amount of that expenditure is allowable under any other provision of this Schedule, despite that that other provision imposes any limitation on the amount of the expenditure.