Page 1146 - SAIT Compendium 2016 Volume2

EXPLANATORY MEMORANDUM ON THE TAXATION LAWS AMENDMENT BILL, 2015
CLAUSE 13
Income Tax: Amendment to section 9D
See notes on REINSTATEMENT OF THE CONTROLLED FOREIGN COMPANY DIVERSIONARY
INCOME RULES
CLAUSE 14
Income Tax: Amendment to section 9H
See notes on RELAXING CAPITAL GAINS TAX RULES APPLICABLE TO CROSS ISSUE OF SHARES
AND INTRODUCING COUNTER MEASURES FOR TAX FREE CORPORATE MIGRATIONS
CLAUSE 15
Income Tax: Insertion of section 9HA
See notes on REMOVING ANOMALIES FOR INCOME AND DISPOSAL TO AND FROM DECEASED
ESTATES
CLAUSE 16
Income Tax: Amendment to section 10
Sub-clause (a): Amendments to subsection (1)(gI) clarify the provisions of this section by adding the following words
‘any person insured in terms of that policy of insurance’.
Sub-clause (b): Amendment to subsection (1)(j) removes reference to the Commissioner’s discretion.
Sub-clause (c): Amendments to subsection (1)(l) corrects Afrikaans text to align it with internationally accepted
terminology.
Sub-clause (d): Amendments to subsection (1)(q) – See notes on BURSARY AND SCHOLARSHIP EXEMPTION
FOR BASIC EDUCATION: GRADE R TO 12.
Sub-clause (e): Amendment to subsection (1)(k)(gg): The amendment removes the words ‘of the same kind and of
the same or equivalent quality’ and replaces them with ‘identical shares’ in order to provide clarity in line with the introduction of the new de nition of ‘identical shares’ in section 1 of the Act and in line with the policy intent.
Sub-clause (f): Amendment to subsection (1)(k)(hh): The amendment removes the words ‘of the same kind and of the same or equivalent quality’ and replaces them with ‘identical shares’ in order to provide clarity in line with the introduction of the new de nition of ‘identical shares’ in section 1 of the Act and in line with the policy intent.
Sub-clause (g): Amendment to subsection (1)(k)(hh): In 2013, subsection (1)(k)(hh) was introduced to counter mismatches from various dividends/derivatives mismatches. As a result, dividends received or accrued to a company will no longer be exempt if used as an offset against deductible nancial payments, for example dividend amount applied to cover a deductible payment owe in respect of a share derivative. It is proposed that amendments be made to subsection (1)(k)(hh) by inserting a proviso to ensure that the provisions of this paragraph only apply to deny an exemption to the extent that the dividend exceeds the deductible expenditure.
Sub-clause (h): Amendment to subsection (1)(nB) removes reference to the Commissioner’s discretion.
Sub-clause (i): Insertion of paragraph (y) in subsection (1) reinstates the repealed provision of section 10(1)(y) in the Income Tax Act to allow the Minister of Finance to identify in the Government Gazette government grants to be tax exempt, more especially the Business Process Services government grant that was erroneously never gazetted. In order to identify a government grant in the Government Gazette (as secondary legislation) the enabling provision should be present in the Income Tax Act (as primary legislation).
Sub-clause (j): Deletion of subsection (1)(zI) - See notes on FURTHER RE- ALIGNMENT OF THE TAX TREATMENT OF GOVERNMENT GRANTS
CLAUSE 17
Income Tax: Amendment to section 10A
Deletion of subsection 8: Amendment deletes obsolete provisions.
CLAUSE 18
Income Tax: Amendment to section 11
Sub-clause (a): Amendment to paragraph (e) removes reference to the Commissioner’s discretion.
Sub-clause (b): Deletion of paragraph (iii) of the proviso to paragraph (e) - The proposed amendment deletes obsolete
provisions.
Sub-clause (c): Amendments to paragraphs (v), (vii) and (ix) of the proviso to paragraph (a) remove reference to the
Commissioner’s discretion.
Sub-clause (d): Amendments to paragraphs (bb) and (cc) of the proviso to paragraph (f) remove reference to the
Commissioner’s discretion.
Sub-clause (e): Amendments to paragraph (dd)(B) of the proviso to paragraph (f) – See notes on DEPRECIATION
ALLOWANCE IN RESPECT OF TRANSMISSION LINES OR CABLES USED FOR ELECTRONIC COMMUNICATIONS OUTSIDE SOUTH AFRICA
Sub-clause (f): Amendments to paragraphs (i) and (iii) of the proviso to paragraph (g) removes reference to the Commissioner’s discretion.
Sub-clause (g): Amendments to subparagraph (A) of paragraph (aa) of the proviso to paragraph (gA) removes reference to the Commissioner’s discretion.
Sub-clause (h): Amendments to paragraph (bb) of the proviso to paragraph (gA) remove reference to the Commissioner’s discretion.
Sub-clause (i): Amendments to paragraph (j) removes reference to the Commissioner’s discretion.
Sub-clause (j): Amendments to paragraph (aa) of the proviso to paragraph (o) delete reference to paragraph (iv) of the proviso paragraph (e) as paragraph (iv) of the proviso paragraph (e) was deleted in 2010.
1138 SAIT CompendIum oF TAx LegISLATIon VoLume 2