Page 561 - SAIT Compendium 2016 Volume2

IN 64 (3) Income Tax acT: InTeRPReTaTIon noTes IN 64 (3)
Interpretation Note: No. 64 (Issue 3)
Income Tax Exemption: Bodies Corporate, Share Block Companies and Associations of Persons Managing the Collective Interests Common to all Members
DATE: ACT: SECTION: SUBJECT:
Preamble
17 August 2015
INCOME TAX ACT 58 OF 1962 SECTION 10 (1) (e)
INCOME TAX EXEMPTION: BODIES CORPORATE, SHARE BLOCK COMPANIES AND ASSOCIATIONS OF PERSONS MANAGING THE COLLECTIVE INTERESTS COMMON TO ALL MEMBERS
CONTENTS
1. Purpose
2. Background
3. The law
4. Application of the law
4.1 Qualifying entities
4.1.1 Bodies corporate
4.1.2 Share block companies
4.1.3 Association of persons
4.2 Non-qualifying entity
4.2.1 Time-share exchange entities
4.3 Levy
4.3.1 Receipts and accruals qualifying as levy income
(a) General levies
(b) Special levies
(c) Building penalty levies
(d) Stabilisation fund levies
4.3.2 Receipts and accruals not qualifying as levy income
(a) Fines
(b) Late payments
4.4 Basic exemption and effective date 5. Application for exemption
5.1 Bodies corporate and share block companies
5.2 Association of persons
6. Prohibited transactions, operations or schemes
7. Determination of taxable income
7.1 Receipts and accruals
7.1.1 Levy income
7.1.2 Receipts and accruals from sources other than levy income
7.2 Expenditure
8. Rate of tax
9. Provisional tax
10. Donations tax
11. Capital gains tax (CGT)
12. Dividends tax
13. Conclusion
Preamble
In this Note unless the context indicates otherwise –
• ‘basic exemption’ means the exemption of income from all other sources other than levy income, up to a maximum
of R50 000;
• ‘body corporate’ means a body corporate established under the Sectional Titles Act;
• ‘Companies Act’ means the Companies Act 71 of 2008;
• ‘founding document’ means the written instrument under which an association of persons is established and governed
such as a constitution or memorandum of incorporation;
• ‘levy’ or ‘levy income’ is the amount received or accrued from the members for the purposes of funding expenditure
relating to their collective interests;
• ‘member’ means a member of a body corporate, a shareholder of a share block company or a member of an association
of persons;
• ‘qualifying entity’ means a body corporate, share block company or an association of persons referred to in section
10(1)(e)(i) provided that such entities are not party to the type of transaction, operation or scheme discussed in 6;
• ‘schedule’ means a schedule to the Act;
• ‘section’ means a section of the Act;
• ‘Sectional Titles Act’ means the Sectional Titles Act 95 of 1986;
• ‘share block company’ means a share block company as de ned in the Share Blocks Control Act;
• ‘Share Blocks Control Act’ means the Share Blocks Control Act 59 of 1980;
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