Page 586 - SAIT Compendium 2016 Volume2

IN 67 (2) Income Tax acT: InTeRPReTaTIon noTes IN 67 (2) • B is a connected person in relation to ABC Trust, because B is a connected person in relation to a bene ciary of that
trust (c) [paragraph (b)(ii)].
3.5 Connected person in relation to a company
In determining whether a person is a connected person in relation to a company, regard must be had to each of the tests in paragraph (d)(i), (iv), (v), (vA) and (vi).
3.5.1 Paragraph (d) Connected person means –
(d) in relation to a company—
(i) any other company that would be part of the same group of companies as that company if the expression ‘at
least 70 per cent of the equity shares in’ in paragraphs (a) and (b) of the de nition of ‘group of companies’ in
this section were replaced by the expression ‘more than 50 per cent of the equity shares or voting rights in’;
(ii) ..... .
(iii) ..... .
(iv) any person, other than a company as de ned in section 1 of the Companies Act that individually or jointly
with any connected person in relation to that person, holds, directly or indirectly, at least 20 per cent of— (aa) the equity shares in the company; or
(bb) the voting rights in the company;
(v) any other company if at least 20 per cent of the equity shares or voting
rights in the company are held by that other company, and no holder of shares* holds the majority voting
rights in the company;
(vA) any other company if such other company is managed or controlled by—
(aa) any person who or which is a connected person in relation to such company; or
(bb) any person who or which is a connected person in relation to a person contemplated in item (aa); and
(vi) where such company is a close corporation—
(aa) any member;
(bb) any relative of such member or any trust (other than a portfolio of a collective investment scheme in
securities or a portfolio of a collective investment scheme in property)† which is a connected person in
relation to such member; and
(cc) any other close corporation or company which is a connected person in relation to—
(i) any member contemplated in item (aa); or
(ii) the relative or trust contemplated in item (bb); and
A ‘company’ is de ned in section 1(1) as follows:
‘[C]ompany’ includes—
(a) any association, corporation or company (other than a close corporation) incorporated or deemed to be incorporated by or under any law in force or previously in force in the Republic or in any part thereof, or any body corporate formed or established or deemed to be formed or established by or under any such law; or
(b) any association, corporation or company incorporated under the law of any country other than the Republic or any body corporate formed or established under such law; or
(c) any co-operative; or
(d) any association (not being an association referred to in paragraph (a) or (f)) formed in the Republic to serve a
speci ed purpose, bene cial to the public or a section of the public; or
(e) any—
(i) ......‡
(ii) portfolio comprised in any investment scheme carried on outside the Republic that is comparable to a portfolio of a collective investment scheme in participation bonds or a portfolio of a collective investment scheme in securities in pursuance of any arrangement in terms of which members of the public (as de ned in section 1 of the Collective Investment Schemes Control Act) are invited or permitted to contribute to and hold participatory interests in that portfolio through shares, units or any other form of participatory interest; or
(iii) portfolio of a collective investment scheme in property that quali es as a REIT;§ or
(f) a close corporation,
but does not include a foreign partnership;
* Paragraph (d)(v) was amended by section 4(1)(k) of the Taxation Laws Amendment Act No. 31 of 2013 to substitute the word ‘shareholder’ with the words ‘holder of shares’.
† The de nition of a ‘connected person’ was amended with effect from the commencement of years of assessment commencing on or after 1 January 2010, to exclude a portfolio of a collective investment scheme in securities and a portfolio of a collective investment scheme in property from a trust.
578 saIT comPendIum oF Tax LegIsLaTIon VoLume 2