Page 421 - SAIT Compendium 2016 Volume2

IN 43 (5) Income Tax acT: InTeRPReTaTIon noTes IN 43 (5)
INTERPRETATION NOTE: NO. 43 (Issue 5)
Circumstances in which Certain Amounts Received or Accrued from the Disposal of Shares are deemed to be of a Capital Nature
DATE: ACT: SECTION: SUBJECT:
CONTENTS
Preamble
1. Purpose
2. Background
3. Effective date
4. De nitions [section 9C(1)]
4.1 The law
4.2 De nition – connected person 4.3 De nition – qualifying share
4.3.1 Equity share requirement
4.3.2 Disposal requirement
4.3.3 Three-year ownership requirement
4.3.4 Partnerships
4.3.5 Trusts and their bene ciaries
4.3.6 Non-residents
4.3.7 Exclusions – overview
4.3.8 Exclusion – shares in a share block company
4.3.9 Exclusion – shares in non-resident companies that are not listed in South Africa 4.3.10 Exclusion – hybrid equity instruments
5. Amounts deemed to be of a capital nature [section 9C(2)] 5.1 The law
5.2 Application of the law
5.2.1 Amount received or accrued on disposal of qualifying shares deemed to be of a capital nature 5.2.2 Mandatory application and impact on gains and losses
5.2.3 Shares disposed of within three years
6. Venture capital company (VCC) shares [section 9C(2A)] 6.1 The law
6.2 Application of the law
7. Anti-avoidance measures applying to Immovable property and bare dominium schemes [section 9C(3)]
7.1 The law
7.2 Application of the law
7.2.1 Companies holding immovable property
7.2.2 Bare dominium scheme
8. Securities-lending arrangements [section 9C(4)]
8.1 The law
8.2 Application of the law
9. Recoupment of expenditure or losses [section 9C(5)]
9.1 The law
9.2 Application of the law
10. Share-dealers
11. ‘First-in- rst-out’ method [section 9C(6)] 11.1 The law
11.2 Application of the law
12. Suspension of section 22(8) on shares ceasing to be held as trading stock [section 9C(7)]
12.1 The law
12.2 Application of the law
13. Consolidation and subdivision of shares and conversions under sections 40A and 40B [section 9C(8)]
13.1 The law
13.2 Application of the law
14. Insolvency
15. Death
15.1 Deceased person 15.2 Deceased estate 15.3 Heirs or legatees
16. Asset-for-share and unbundling transactions
17. Exclusion of shares acquired under employee share incentive plans
17.1 Section 8B
saIT comPendIum oF Tax LegIsLaTIon VoLume 2 413
17 February 2014
INCOME TAX ACT 58 OF 1962
Section 9C
Circumstances in which Certain Amounts Received or Accrued from the Disposal of Shares are deemed to be of a Capital Nature