Page 220 - SAIT Compendium 2016 Volume2

IN 9 (5) Income Tax acT: InTeRPReTaTIon noTes IN 9 (5) 7. Objection and appeal
Any decision made by the Commissioner under the provisions of section 12E is subject to objection and appeal.
8. Conclusion
A company which has complied with all the requirements of an SBC in one year of assessment does not necessarily indicate compliance for any subsequent year of assessment. The facts of each case will, therefore, have to be considered for every year of assessment in order to determine whether the company complies with all the requirements for the speci c year of assessment under review.
Legal and Policy Division
SOUTH AFRICAN REVENUE SERVICE
Date of rst issue: 13 December 2002 Date of second issue: 29 March 2004 Date of third issue: 13 January 2006 Date of fourth issue: 16 February 2007
ANNEXURE A Section 12E
(4) For the purposes of this section—
(a) ‘small business corporation’ means any close corporation, co-operative or company registered as a private
company in terms of the Companies Act, 1973 (Act 61 of 1973), all the shareholders of which are at all times during the year of assessment natural persons, where—
(i) the gross income for the year of assessment does not exceed R14 million: Provided that where the close corporation or company during the relevant year of assessment carries on any trade, for purposes of which any asset contemplated in this section is used, for a period which is less than 12 months, the amount shall be reduced to an amount which bears to that amount, the same ratio as the number of months (in the determination of which a part of a month shall be reckoned as a full month), during which that company or close corporation carried on that trade bears to 12 months;
(ii) none of the shareholders or members at any time during the year of assessment of the company, close corporation or co-operative holds any shares or has any interest in the equity of any other company as de ned in section 1, other than—
(aa) a company contemplated in paragraph (a) of the de nition of ‘listed company’;
(bb) any portfolio in a collective investment scheme contemplated in paragraph (e) of the de nition of ‘company’;
(cc) a company contemplated in section 10 (1) (e) (i), (ii) or (iii);
(dd) less than 5 per cent of the interest in a social or a consumer co- operative or a co-operative burial society
as de ned in section 1 of the Co-operatives Act, 2005 Act 14 of 2005), or any other similar co-operative if all of the income derived from the trade of that co-operative during any year of assessment is solely derived from its members;*
(ee) any friendly society as de ned in section 1 of the Friendly Societies Act, 1956 (Act 25 of 1956); or
(ff) less than 5 per cent of the interest in a primary savings co-operative bank or a primary savings and loans co-operative bank as de ned in the Co-operative Banks Act, 2007, that may provide, participate in or
undertake only the following—
(A) in the case of a primary savings co-operative bank, banking services contemplated in section 14(1)
(a) to (d) of that Act; and
(B) in the case of a primary savings and loans co-operative bank, banking services contemplated in
section 14 (2) (a) or (b) of that Act;
(gg) a venture capital company as de ned in section 12J;
(hh) any company, close corporation or co-operative if the company, close corporation or co-operative—
(A) has not during the year of assessment carried on any trade; and
(B) has not during any year of assessment owned assets, the total market value of which exceeds
R5000†;
(iii) not more than 20 per cent of the total of all receipts and accruals (other than those of a capital nature) and
all the capital gains of the company, close corporation or co-operative consists collectively of investment income and income from the rendering of a personal service; and
* Five per cent limitation effected by s 25(b) of the Revenue Laws Amendment Act 35 of 2007 and effective as from the commencement of years of assessment ending on or after 1 January 2008. Initially, there was no limitation for social co-operatives for years of assessment ending on or after 7 February 2007.
† Amendments as per the Taxation Law Amendment Act 17 of 2009, and effective from the commencement of years of assessment ending on or after 1 January 2010.
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