Page 176 - SAIT Compendium 2016 Volume1

s 22 INCOME TAX ACT 58 OF 1962
s 22
(bb) a right in a controlled foreign company held directly by another controlled foreign company, include an amount equal to the proportional amount of the net income (without having regard to the percentage adjustments contemplated in paragraph 10 of the Eighth Schedule) of that rst-mentioned controlled foreign company and of any other controlled foreign company in which both the rst- and second-mentioned controlled foreign companies directly or indirectly have an interest, which during any year of assessment would have been included in the income of that second-mentioned controlled foreign company in terms of section 9D had it been a resident, reduced by the amount of any foreign dividend distributed by that rst- mentioned controlled foreign company to the second-mentioned controlled foreign company if that dividend would have been exempt from tax in terms of section 10B (2) (a) or (c) had that second-mentioned controlled foreign company been a resident;
[Sub-para. (iii) added by s. 36 (1) (d) of Act 60 of 2008, amended by s. 45 (1) of Act 24 of 2011 and substituted by s. 37 (1) (b) of Taxation Laws Amendment Act, 2015 – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
[Para. (a) substituted by s. 17 (1) (a) of Act 113 of 1993 and by s. 12 (a) of Act 5 of 2001.]
(b) . . .
[Para. (b) substituted by s. 12 (a) of Act 5 of 2001
and deleted by s. 32 (b) of Act 43 of 2014 – date of commencement: 20 January 2015.]
(c) . . .
[Para. (c) deleted by s. 17 (1) (b) of Act 113 of 1993.]
(d) . . .
[Para. (d) amended by s. 14 (1) (a) of Act 65 of 1986 and
deleted by s. 17 (1) (b) of Act 113 of 1993.] [Sub-s. (3) substituted by s. 19 (1) (a) of Act 121 of 1984.]
(3A) For the purposes of this section the cost price of trading stock referred to in subsection (2A) shall be the sum of the cost to the taxpayer of material used by him in effecting the relevant improvements, and such further costs incurred by him as in accordance with generally accepted accounting practice are to be regarded as having been incurred directly in connection with the relevant contract, and such portion of any other costs incurred by him in connection with the relevant contract and other contracts as in accordance with generally accepted accounting practice are to be regarded as having been incurred in connection with the relevant contract, less a deduction of so much of—
(a) any income received by or accrued to the taxpayer in respect of the relevant contract;
(b) any portion of an amount payable to the taxpayer under the relevant contract (but not exceeding 15 per cent of the total amount payable to him under such contract) the payment of which has been withheld as a retention; and
(c) any of the said costs included under this subsection as exceed that portion of the contract price which relates to the improvements actually effected by him,
as does not exceed the said sum.
[Sub-s. (3A) inserted by s. 20 (a) of Act 94 of 1983, deleted by s. 19 (1) (b) of Act 121 of 1984 and inserted by s. 21 (b) of Act 101 of 1990.]
(3B) . . .
[Sub-s. (3B) inserted by s. 21 (b) of Act 101 of 1990 and deleted by s. 55 (b) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(4) If any trading stock has been acquired by any person for no consideration or for a consideration which is not measurable in terms of money, such person shall for the purposes of subsection (3), unless subsection (3) (a) (iA) applies, be deemed to have acquired such trading stock at a cost equal to the current market price of such trading stock on the date on which it was acquired by such person.
[Sub-s. (4) amended by s. 14 of Act 90 of 1964, by s. 23 of Act 85 of 1974 and by s. 17 (1) (c) of Act 113 of 1993 and substituted by s. 36 (1) (e) of Act 60 of 2008 – date of commencement: 1 April 2012.]
(4A) For the purposes of subsection (4), where—
(a) any security has been lent by a lender to a borrower in terms of a securities lending arrangement, such
distributed by that rst-mentioned controlled foreign company to the second-mentioned controlled foreign company if that dividend would have been exempt from tax in terms of section 10B (2) (c) had that second-mentioned controlled foreign company been a resident;
[Item (bb) substituted by s. 45 (1) of Act 24 of 2011 – date of commencement: 1 April 2012. The substituted item applies in respect of trading stock acquired during years of assessment commencing on or after that date.]
Prelex
Wording of sub-para. (iii) in force until date of promulgation of Taxation Laws Amendment Act, 2015
(iii) in the case of—
(aa) a right in a controlled foreign company held directly by a resident, include an amount equal to the proportional amount of the net income (without having regard to the percentage adjustments contemplated in paragraph 10 of the Eighth Schedule) of that company andof any other controlled foreign company in which that controlled foreign company and that resident directly or indirectly have an interest, which was included in the income of that resident in terms of section 9D during any year of assessment, less the amount of any foreign dividend distributed by that company to that resident during any year of assessment which was exempt from tax in terms of section 10B (2) (c); or
[Item (aa) substituted by s. 45 (1) of Act 24 of 2011 – date of commencement: 1 April 2012. The substituted item applies in respect of trading stock acquired during years of assessment commencing on or after that date.]
(bb)a right in a controlled foreign company held directly by another controlled foreign company, include an amount equal to the proportional amount of the net income (without having regard to the percentage adjustments contemplated in paragraph 10 of the Eighth Schedule) of that rst-mentioned controlled foreign company and of any other controlled foreign company in which both the rst- and second-mentioned controlled foreign companies directly or indirectly have an interest, which during any year of assessment would have been included in the income of that second-mentioned controlled foreign company in terms of section 9D had it been a resident, less the amount of any foreign dividend
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SAIT CompendIum oF TAx LegISLATIon VoLume 1