Page 1151 - SAIT Compendium 2016 Volume2

EXPLANATORY MEMORANDUM ON THE TAXATION LAWS AMENDMENT BILL, 2015
CLAUSE 61
Income Tax: Amendment to section 41
Sub-clause (a): De nition of ‘company’ in subsection (1) - See notes on TRANSITIONAL TAX ISSUES
RESULTING FROM THE REGULATION OF HEDGE FUNDS
Sub-clause (b): De nition of ‘equity share’ in subsection (1) - See notes on TRANSITIONAL TAX ISSUES
RESULTING FROM THE REGULATION OF HEDGE FUNDS
CLAUSE 62
Income Tax: Amendment to section 42
Sub-clause (a): Amendments in proviso to paragraph (a)(ii) of the de nition of ‘asset for share’ in subsection (1) - See
notes on TRANSITIONAL TAX ISSUES RESULTING FROM THE REGULATION OF HEDGE FUNDS Sub-clause (b): Amendments to the de nition of ‘qualifying interest’ in subsection (1) - See notes on TRANSITIONAL
TAX ISSUES RESULTING FROM THE REGULATION OF HEDGE FUNDS
Sub-clause (c): Amendments in subsection (3)(c) - The debtor’s allowances granted in terms of section 24 relate to trade debts. For purposes of the re-organisation rules, such debts are considered allowance assets in respect of which allowances may be enjoyed by the transferee and have, as a result, always quali ed for roll-over treatment. This amendment is purely meant to clarify this position.
Sub-clause (d): Amendments to the proviso to subsection (3A) - See notes on TRANSITIONAL TAX ISSUES RESULTING FROM THE REGULATION OF HEDGE FUNDS
Sub-clause (e): Amendments in subparagraph (b) of subsection (5) - See notes on ANTI-AVOIDANCE RULE IN RESPECT OF ASSET FOR SHARE TRANSACTIONS
CLAUSE 63
Income Tax: Amendment to section 44
Sub-clause (a): Amendments in subsection (3)(b) - The debtor’s allowances granted in terms of section 24 relate
to trade debts. For purposes of the re-organisation rules, such debts are considered allowance assets in respect of which allowances may be enjoyed by the transferee and have, as a result, always quali ed for roll-over treatment. This amendment is purely meant to clarify this position.
Sub-clause (b): Insertion of new paragraph (bB) of subsection (14) - See notes on TRANSITIONAL TAX ISSUES RESULTING FROM THE REGULATION OF HEDGE FUNDS
CLAUSE 64
Income Tax: Amendment to section 45
Sub-clause (a): Amendments in subsection (3)(b) - The debtor’s allowances granted in terms of section 24 relate
to trade debts. For purposes of the re-organisation rules, such debts are considered allowance assets in respect of which allowances may be enjoyed by the transferee and have, as a result, always quali ed for roll-over treatment. This amendment is purely meant to clarify this position.
Sub-clause (b): Amendment in paragraph (c) of subsection (3A) – In 2012, section 45(3A) of the Income Tax Act was amended to clarify that the section also applies to cross-border intra-group transactions. However, subparagraph (c) of this section was inadvertently not amended, which creates anomalies. It is proposed that this subparagraph be amended to clarify that the provisions of this section refer to the same group of companies as de ned in section 1 of the Act.
CLAUSE 65
Income Tax: Amendment to section 46
Amendment updates the reference by referring to subsection (1) of section 25BB and refers to REIT or a controlled
company as de ned in section 25BB(1).
CLAUSE 66
Income Tax: Amendment to section 47
Amendments to subsection (3)(b) - The debtor’s allowances granted in terms of section 24 relate to trade debts. For
purposes of the re-organisation rules, such debts are considered allowance assets in respect of which allowances may be enjoyed by the transferee and have, as a result, always quali ed for roll-over treatment. This amendment is purely meant to clarify this position.
CLAUSE 67
Income Tax: Amendment to section 48C
Amendment alters the percentage amount to be included in taxable income for micro business from 20 to 10 per cent.
CLAUSE 68
Income Tax: Amendment to section 49D
Sub-clause (a): Amendments to paragraph (a): Amendment inserts the words ‘withholding tax’ before royalties as a
matter of style and consistency.
Sub-clause (b): Amendments to paragraph (b): Amendment changes the words ‘for the purposes of this Act’ to the
words ‘in terms of Chapter 3 of the Tax Administration Act’ as a matter of style and consistency.
CLAUSE 69
Income Tax: Amendment to section 49E
Amendments in subsection (2)(b) align the wording in the paragraph to apply to both subparagraphs (i) and (ii).
CLAUSE 70
Income Tax: Amendment to section 50A
SAIT CompendIum oF TAx LegISLATIon VoLume 2 1143