Page 630 - SAIT Compendium 2016 Volume2

IN 72 Income Tax acT: InTeRPReTaTIon noTes IN 72 Paragraph 1 of the Seventh Schedule
‘associated institution’, in relation to any single employer, means—
(a) where the employer is a company, any other company which is associated with the employer company by reason
of the fact that both companies are managed or controlled directly or indirectly by substantially the same persons;
or
(b) where the employer is not a company, any company which is managed or controlled directly or indirectly by the
employer or by any partnership of which the employer is a member; or
(c) any fund established solely or mainly for providing bene ts for employees or former employees of the employer
or for employees or former employees of the employer and any company which is in terms of paragraph (a) or (b) an associated institution in relation to the employer, but excluding any fund established by a trade union or industrial council and any fund established for postgraduate research otherwise than out of moneys provided by the employer or by any associated institution in relation to the employer;
‘consideration’, as respects any reference in this Schedule to any consideration given by an employee, does not include any consideration in the form of services rendered or to be rendered by the employee;
Paragraph 2 (b) of the Seventh Schedule
Paragraph 4 of the Seventh Schedule
Paragraph 7 of the Seventh Schedule
2. For the purposes of this Schedule and of paragraph (i) of the de nition of ‘gross income’ in section 1 of this Act, a taxable bene t shall be deemed to have been granted by an employer to his employee in respect of the employee’s employment with the employer, if as a bene t or advantage of or by virtue of such employment or as a reward for services rendered or to be rendered by the employee to the employer—
(a) ....
(b) the employee has been granted the right to use any asset (other than any residential accommodation or household
goods supplied with such accommodation) for his or her private or domestic purposes either free of charge or for a consideration payable by the employee which is less than the value of such use, as determined under paragraph 6 in the case of an asset other than a motor vehicle or under paragraph 7 in the case of a motor vehicle; or
4. Where any associated institution in relation to any employer has given any employee of that employer, by reason of the fact that the employee is in the employment of the employer, or as a bene t or advantage of such employment or as a reward for services rendered or to be rendered by the employee to the employer any bene t or advantage which, if such bene t or advantage had been given to the employee directly by the employer in the circumstances contemplated in paragraph 2, would have constituted a taxable bene t, such bene t or advantage shall for the purposes of this Schedule be deemed to be a taxable bene t granted by the employer to the employee and the cash equivalent of the value of such taxable bene t shall be determined accordingly.
(1) For the purposes of this paragraph, ‘determined value’, in relation to a motor vehicle, means—
(a) where such motor vehicle (not being a vehicle in respect of which paragraph (b) (ii) of this de nition applies) was acquired by the employer under a bona de agreement of sale or exchange concluded by parties acting at arm’s length, the original cost thereof to the employer (excluding any nance charge or interest payable by the
employer in respect of the employer’s acquisition thereof); or
(b) where such motor vehicle—
(i) is held by the employer under a lease (other than an ‘operating lease’ as de ned in section 23A (1)); or
(ii) was held by the employer under a lease (other than an ‘operating lease’ as de ned in section 23A (1)) and
the ownership thereof was acquired by the employer on the termination of the lease,
the retail market value thereof at the time the employer rst obtained the right of use of the vehicle or, where at such time such lease was a lease contemplated in paragraph (b) of the de nition of ‘instalment credit agreement’ in section 1 of the Value-added Tax Act, 1991 (Act No. 89 of 1991), the cash value thereof as contemplated in the de nition of ‘cash value’ in the said section; or
(c) in any other case, the market value of such motor vehicle at the time when the employer rst obtained the vehicle or the right of use thereof:
Provided that—
(a) where an employee has been granted the right of use of such motor vehicle as contemplated in subparagraph (2)
(other than a motor vehicle acquired under an operating lease as de ned in section 23A (1)) and such vehicle, or the right of use thereof, was acquired by the employer not less than 12 months before the date on which the employee was granted such right of use, there shall be deducted from the amount determined under the foregoing provisions of this subparagraph a depreciation allowance calculated according to the reducing balance method at the rate of 15 per cent for each completed period of 12 months from the date on which the employer rst obtained such vehicle or the right of use thereof to the date on which the said employee was rst granted the right of use thereof; and
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