Page 112 - SAIT Compendium 2016 Volume1

s 10 INCOME TAX ACT 58 OF 1962 s 10A
(zK) any amount received by or accrued to or in favour of a small, medium or micro-sized enterprise from a small business funding entity;
[Para. (zK) added by s. 14 (1) (l) of Act 43 of 2014 – date of commencement: 1 March 2015; the paragraph applies iro amounts received or accrued on or after that date.]
[Sub-s. (1) amended by s. 16 (1) (a) of Act 31 of 2005.]
(2) Notwithstanding the exemptions provided for in paragraphs (h) and (k) of subsection (1)—
(a) . . .
[Para. (a) deleted by s. 2 (1) of Act 4 of 2008.]
(b) the said exemptions shall not apply in respect of any
portion of an annuity.
(3) The exemptions from tax provided by any paragraph
of subsection (1) shall not extend to—
(a) any payments out of the receipts, accruals, amounts
or pro ts mentioned in such paragraph; or
(b) any tax leviable under this Act in respect of any taxable capital gain determined in accordance with
the Eighth Schedule.
[Sub-s. (3) substituted by s. 26 (1) (o) of Act 45 of 2003.]
(4) . . .
[Sub-s. (4) substituted by s. 13 (1) (p) of Act 89 of 1969, amended by s. 9 (1) (c) and (d) of Act 52 of 1970, deleted by s. 9 (f) of Act 88 of 1971, added by s. 10 (1) (s) of Act 101 of 1990 and deleted by s. 8 (1) (p) of Act 36 of 1996.]
10A Exemption of capital element of purchased annuities
(1) For the purposes of this section—
‘annuity amount’ means an amount payable by way of annuity under an annuity contract and any amount payable in consequence of the commutation or termination of any such annuity contract;
[De nition of ‘annuity amount’ substituted by s. 8 (a) of Act 113 of 1993.]
‘annuity contract’ means an agreement concluded between an insurer in the course of his insurance business and a purchaser, in terms of which—
(a) the insurer agrees to pay to the purchaser or the
purchaser’s spouse or surviving spouse an annuity or annuities (whether to one such person or to each of them) until the death of the annuitant or the expiry of a speci ed term;
(b) the purchaser agrees to pay to the insurer a lump sum cash consideration for such annuity or annuities; and
(c) no amounts are or will be payable by the insurer to the
purchaser or any other person other than amounts payable by way of such annuity or annuities or, where an annuity is payable for a minimum term and such annuity is in the event of the death of the annuitant before the end of such term to continue to be payable to some third person for the balance of that term, amounts which may be so payable to such third person by way of such annuity,
but does not include any agreement for the payment by any insurer of any annuity which is under the rules of a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund payable to a member of such fund or to any other person; [De nition of ‘annuity contract’ substituted by s. 11 (1) (a) of Act 85 of 1974 and amended by s. 11 (1) (a) of Act 21 of 1995, by s. 19 (1) (a) of Act 53 of 1999 and by s. 17 of Act 60 of 2008.]
‘commencement’, in relation to an annuity contract, means the date on which the annuity contract is concluded;
[De nition of ‘commencement’ substituted by s. 11 (1) (b) of any Act 85 of 1974.]
‘expected return’, in relation to an annuity under an annuity contract, means an amount determined in a manner
contemplated in this section as representing the sum of all the annuity amounts which may, as at the commencement of the annuity contract, be expected to become payable by way of the annuity from the said commencement; [De nition of ‘expected return’ substituted by s. 11 (1) (c) of Act 85 of 1974.]
‘purchaser’, in relation to an annuity contract means— (a) any natural person and includes such person’s
deceased or insolvent estate; or
(b) a curator bonis of, or a trust created solely for the
bene t of, any natural person where the High Court has declared such person to be of unsound mind and incapable of managing his own affairs and such Court has ordered the appointment of such curator or creation of such trust, as the case may be;
[De nition of ‘purchaser’ inserted by s. 19 (1) (b) of Act 53 of 1999.]
‘statutory actuary’ means an actuary appointed in accordance with section 20 (1) or 21 (1) (b) of the Long- term Insurance Act;
[De nition of ‘statutory actuary’ inserted by s. 19 (1) (b) of Act 53 of 1999 and substituted by s. 24 of Act 31 of 2013 – date of commencement: 12 December 2013.]
‘valuator’ . . .
[De nition of ‘valuator’ substituted by s. 11 (1) (a) of Act 28
of 1997 and deleted by s. 19 (1) (c) of Act 53 of 1999.]
(2) There shall be exempt from normal tax so much of any annuity amount payable to a purchaser or his spouse or surviving spouse (as contemplated in paragraph (a) of the de nition of ‘annuity contract’ in subsection (1)), or to the deceased or insolvent estate of such spouse or surviving spouse as is determined in accordance with subsection (3) to represent the capital element of such amount.
[Sub-s. (2) substituted by s. 11 (1) (b) of Act 21 of 1995, by
s. 11 (1) (b) of Act 28 of 1997 and by s. 19 (1) (d) of Act 53 of 1999.]
(3) The capital element of an annuity amount shall be—
(i) ‘Z’ represents the amount to be determined; 104 SAIT CompendIum oF TAx LegISLATIon VoLume 1
(a)
a sum determined in accordance with the formula
Y 5 _A_ 3 C, B
in which formula—
(i) ‘Y’ represents the sum to be determined;
(ii) ‘A’ represents the amount of the total cash consideration given by the purchaser under the annuity contract in question as contemplated in paragraph (b) of the de nition of ‘annuity contract’ in subsection (1);
(iii) ‘B’ represents the total expected returns of all the annuities provided for in the annuity contract in question; and
(iv) ‘C’ represents the aforesaid annuity amount; or where, by reason of any unpredictable contingency (other than the death or survival of any person), any amount payable by way of any annuity under the annuity contract in question is uncertain at the date on which the rst payment by way of an annuity becomes due under that contract, such sum as may on the basis of a fair and reasonable calculation be taken to be the capital element of the aforesaid annuity amount: Provided that the said sum shall be determined in such manner that the capital element of all the annuity amounts becoming due during any year of assessment in respect of all the annuities under the said contract does not in total exceed an amount determined in accordance with the formula
Z 5 _1_ 3 A, in which formula— N
(b)