Page 589 - SAIT Compendium 2016 Volume2

IN 67 (2) Income Tax acT: InTeRPReTaTIon noTes IN 67 (2)
3.5.3 A person that holds at least 20% of the equity shares or voting rights in the company [paragraph (d)(iv)]
A 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% of the equity shares or voting rights in a company, is a connected person in relation to the company. A ‘person’ is de ned in section 2 of the Interpretation Act No. 33 of 1957 as follows:
The above meaning of a ‘person’ is further modi ed in the de nition contained in section 1(1) as follows:
A ‘portfolio of a collective investment scheme’ is de ned in section 1(1) as follows:
Paragraph (d)(iv) therefore applies to a natural person, an insolvent estate, a deceased estate, a trust, a portfolio of a collective investment scheme and a ‘company’ not falling within the de nition of that term in the Companies Act. A ‘company’ is de ned in section 1 of the Companies Act as follows:
Categories of companies as de ned in section 1(1) which fall outside the de nition of a ‘company’ in the Companies Act and which consequently fall within paragraph (d)(iv) include –
• portfolios of a collective investment scheme in property;
• companies registered outside South Africa;
• voluntary associations that derive their corporate status under the common law from their constitutions; and
• companies incorporated under other statutes.
Examples of companies incorporated under other statutes which fall within paragraph (d)(iv) include the following:
• Close corporations established under the Close Corporations Act No. 69 of 1984. A close corporation may not be
formed on or after 1 May 2011 but a pre-existing close corporation may continue and is not obliged to convert to a
company under the Companies Act.
• A body corporate established under section 36 of the Sectional Titles Act No. 95 of 1986 is not a company as de ned
in the Companies Act.
Companies falling within the de nition of a ‘company’ in the Companies Act and which are therefore excluded from paragraph (d)(iv) include the following:
• A state-owned company, a private company, a personal liability company, a public company and a non-pro t company.
• A domesticated company, which is a company whose registration has been transferred to South Africa. Under section
13(5) of the Companies Act it is treated as if it had been originally incorporated under the Companies Act.
• A close corporation which converted to a company on or after 1 May 2011.
• A share block company, which is a company as de ned in the Companies Act even though it must comply with the
Share Blocks Control Act No. 59 of 1980.
* Paragraph (d) of the de nition was amended to include a portfolio of a collective investment scheme in property with effect from years of assessment commencing on or after 1 April 2013.
† A “portfolio of a declared collective investment scheme” as de ned in section 1(1) includes a “portfolio of a hedge fund collective investment scheme” which term is also de ned in section 1(1).
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‘[P]erson’ includes—
(a) any divisional council, municipal council, village management board, or like authority; (b) any company incorporated or registered as such under any law;
(c) any body of persons corporate or unincorporate;
‘[P]erson’ includes—
(a) an insolvent estate;
(b) the estate of a deceased person;
(c) any trust; and
(d) any portfolio of a collective investment scheme,* but does not include a foreign partnership,
‘[P]ortfolio of a collective investment scheme’ means any—
(a) portfolio of a collective investment scheme in participation bonds; (b) portfolio of a collective investment scheme in property;
(c) portfolio of a collective investment scheme in securities; or
(d) portfolio of a declared collective investment scheme;†
‘[C]ompany’ means a juristic person incorporated in terms of this Act, a domesticated company, or a juristic person that, immediately before the effective date—
(a) was registered in terms of the—
(i) Companies Act, 1973 (Act No. 61 of 1973), other than as an external company as de ned in that Act; or (ii) Close Corporations Act, 1984 (Act No. 69 of 1984), if it has subsequently been converted in terms of Schedule 2;
(b) was in existence and recognised as an ‘existing company’ in terms of the Companies Act, 1973 (Act No. 61 of 1973); or
(c) was deregistered in terms of the Companies Act, 1973 (Act No. 61 of 1973), and has subsequently been re- registered in terms of this Act;