Page 213 - SAIT Compendium 2016 Volume2

IN 9 (5)
Note 3:
Note 4:
Income Tax acT: InTeRPReTaTIon noTes IN 9 (5)
Any body corporate established under the Sectional Titles Act 95 of 1986 or share block company established under the Share Block Control Act 59 of 1980 or any other association of persons (other than companies registered or deemed to be registered under the Companies Act 61 of 1973, any co-operative, close corporation and trust, but including a company incorporated under section 21 of the Companies Act, 1973 [section 12E (4) (a) (ii) (cc) read with section 10 (1) (e) (i), (ii) or (iii)].
The speci ed co-operatives must be registered as one of the following:
• A social co-operative, that is, a non-pro t co-operative which engages in the provision of social services
to its members, such as care for the elderly, children and the sick (for example, child nursery facilities).
• A consumer co-operative, that is, a co-operative that procures and distributes goods or commodities to its
members and non-members and provides services to its members (for example, consumer buy-aids).
• A co-operative burial society, that is, a co-operative that provides funeral bene ts, including funeral
insurance and other services to its members and their dependants.
A co-operative will not qualify as an SBC if the shareholders hold more than 5% interest in any of the abovementioned three categories of co-operatives during any year of assessment ending on or after 1 January 2008.
Note 5: Note 6:
Worker
Agricultural
Financial services (to a certain extent) Marketing and supply
Service.
Note 7: Note 8:
Membership of the following co-operatives will continue to exclude an SBC from qualifying: Housing
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A friendly society is an entity established for the mutual assistance of its members, and must be registered as such under the Friendly Societies Act 25 of 1956.
The speci ed co-operative banks are discussed below:
i. Primary savings co-operative bank
This means a co-operative registered as a primary co-operative under the Co-operatives Act, 2005 and as a primary savings co-operative bank under the Co-operative Banks Act, 2007. A primary co-operative is a co- operative formed by a minimum of ve natural persons whose objective is to provide employment or services to its members and to facilitate community development.
Primary savings co-operative banks provide banking services and in addition, perform the following limited functions:
(a) Solicit and accept deposits from its members.
(b) Open savings accounts for its members, in the name of each member, into which that member may deposit
or withdraw money and from which that member may instruct the co-operative to transfer or pay money. (c) Borrow money from the agency and members, other than deposits referred to in (a) above, up to a
percentage of the assets held by it, as prescribed by the Minister of Finance.
(d) Open a savings or cheque account in the name of that co-operative bank with any banking institution.
(e) Make, draw, accept, endorse or negotiate negotiable instruments that are paid to the order of or made out
and endorsed by that co-operative bank.
(f) Provide trust or custody services to members.
(g) Conduct any additional banking services as may be prescribed by the Minister of Finance.
(h) Invest money deposited with it in investments prescribed by the Minister of Finance.
ii. Primary savings and loans co-operative bank
This means a co-operative registered as a primary co-operative under the Co-operatives Act, 2005 and as a primary savings and loans co-operative bank under the Co-operative Banks Act, 2007 that may provide banking services and perform functions permissible under that Act.
A primary savings and loans co-operative bank is limited to provide the following functions:
(a) Any of the banking services provided, participated in or undertook by a primary savings co-operative bank. (b) Grant secured and unsecured loans to members to a maximum aggregate value prescribed by the Minister
of Finance.
(c) Conduct any additional banking services and invest money deposited with it in any investments prescribed
by the Minister of Finance, in addition to those provided, participated in or undertook by a primary savings
co-operative bank.
A venture capital company is a vehicle established to pool together the investments of small investors. The venture capital company then acts as a nancier to small businesses by using the funds of the small investors to invest in small business companies. The venture capital company must be approved as such by the Commissioner under section 12J (5).
For the purposes of section 12E, a company, close corporation or co-operative will be considered to either be a dormant or shelf company, if the company has not during any year of assessment carried on any trade and has not during any year of assessment owned assets with a total market value of which exceeds R5 000.
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