Page 179 - SAIT Compendium 2016 Volume1

s 22A INCOME TAX ACT 58 OF 1962 s 23
(b) a consideration accrued from the transferee company to the transferor company the money value of which was less than the market value of such asset on the date on which the transferee company acquired such asset,
such asset shall for the purposes of this Act be deemed to be trading stock of the transferee company, and, where paragraph (a) is applicable—
(i) the transferee company shall be deemed to have acquired such asset at a price equal to the cost price thereof to the transferor company; and
(ii) notwithstanding the provisions of section 22 (2), no deduction shall, in the determination of the taxable income of the transferor company for the year of assessment of that company during which the transferee company acquired such asset, be made in respect of the value of such asset as trading stock.
[Sub-s. (1) amended by s. 31 of Act 60 of 2001.]
(2) Any amount which is received by or accrues to the transferee company from the disposal of the said asset (or of any interest therein) shall be included in that company’s income, whether such amount is derived in carrying on any trade or otherwise or is derived from a source within or outside the Republic.
[S. 22A inserted by s. 19 (1) of Act 88 of 1971.]
22B Dividends treated as income on disposal of certain shares
(1) For the purposes of this section, ‘exempt dividend’ means any dividend or foreign dividend to the extent that the dividend or foreign dividend is—
(a) not subject to tax under Part VIII of Chapter II; and (b) exempt from normal tax in terms of section 10 (1) (k)
(i) or section 10B (2) (a) or (b).
(2) Where a taxpayer that is a company disposes of
shares in any other company, the amount of any exempt dividend received by or accrued to the taxpayer in respect of any share held by the taxpayer in that other company must be included in the income of the taxpayer—
(a) to the extent that the exempt dividend is received by or accrues to the taxpayer within a period of 18 months prior to or as part of the disposal;
(b) if the taxpayer immediately before the disposal— (i) held the shares disposed of as trading stock; and
(ii) held more than 50 per cent of the equity shares in the other company; and
(c) if the other company (or any company in which that other company directly or indirectly holds more than 50 per cent of the equity shares) has, within a period of 18 months prior to that disposal, by reason of or in consequence of that disposal, incurred any debt—
[Words preceding sub-para. (i) substituted by s. 41 (1) (b) of Act 22 of 2012 – date of commencement: 1 January 2013.]
(i) owing to the person acquiring the shares or any connected person in relation to that person; or
(ii) that is guaranteed or otherwise secured by the person acquiring the shares or any connected person in relation to that person.
(3) For the purposes of subsection (2), the amount that must be included in the income of the taxpayer is limited to the amount of the debt contemplated in paragraph (c) of that subsection.
[Sub-s. (3) substituted by s. 41 (1) (b) of Act 22 of 2012 – date of commencement: 1 January 2013.]
[S. 22B inserted by s. 34 (1) of Act 17 of 2009, amended by s. 40 (1) of Act 7 of 2010 and substituted by s. 46 (1) of Act 24 of 2011 – date of commencement: 1 April 2012.]
23 Deductions not allowed in determination of taxable income
No deductions shall in any case be made in respect of the following matters, namely—
(a) the cost incurred in the maintenance of any taxpayer,
his family or establishment;
(b) domestic or private expenses, including the rent of
or cost of repairs of or expenses in connection with any premises not occupied for the purposes of trade or of any dwelling-house or domestic premises except in respect of such part as may be occupied for the purposes of trade: Provided that—
(a) such part shall not be deemed to have been occupied for the purposes of trade, unless such part is speci cally equipped for purposes of the taxpayer’s trade and regularly and exclusively used for such purposes; and
(b) no deduction shall in any event be granted where the taxpayer’s trade constitutes any employment or of ce unless—
(i) his income from such employment or of ce is derived mainly from commission or other variable payments which are based on the taxpayer’s work performance and his duties are mainly performed otherwise than in an of ce which is provided to him by his employer; or
[Item (i) substituted by s. 15 (a) of Act 21 of 1994.]
(ii) his duties are mainly performed in such part;
[Item (ii) substituted by s. 15 (a) of Act 21 of 1994.] [Para. (b) amended by s. 23 of Act 129 of 1991 and by s.
(c) (d)
18 (1) (a) of Act 113 of 1993.]
any loss or expense, the deduction of which would otherwise be allowable, to the extent to which it is recoverable under any contract of insurance, guarantee, security or indemnity;
any tax imposed under this Act or any interest or penalty imposed under any other Act administered by the Commissioner;
[Para. (d) substituted by s. 20 (a) of Act 121 of 1984, by s. 20 (a) of Act 141 of 1992, by s. 28 (1) (a) of Act 30 of 2000, by s. 13 of Act 16 of 2004 and by s. 271 of Act 28 of 2011 – date of commencement: 1 October 2012.]
(e) income carried to any reserve fund or capitalized in any way;
(f) any expenses incurred in respect of any amounts received or accrued which do not constitute income as de ned in section one;
(g) any moneys claimed as a deduction from income derived from trade, to the extent to which such moneys were not laid out or expended for the purposes of trade;
[Para. (g) substituted by s. 20 (b) of Act 141 of 1992.] (h) interest which might have been made on any capital
employed in trade;
(i) any expenditure, loss or allowance to the extent to
which it is claimed as a deduction from any retirement fund lump sum bene t or retirement fund lump sum withdrawal bene t;
[Para. (i) deleted by s. 18 of Act 65 of 1973, inserted by s. 20 (b) of Act 121 of 1984, amended by s. 18 (1) (b) of Act 113 of 1993 and by s. 15 (b) of Act 21 of 1994, deleted by s. 21 (1) (a) of Act 30 of 2002, inserted by s. 20 of Act 8 of 2007 and substituted by s. 37 (1) (a) of Act 60 of 2008.]
(j) . . .
[Para. (j) added by s. 20 (c) of Act 141 of 1992 and deleted
by s. 17 (a) of Act 20 of 2006.] (k) any expense incurred by—
SAIT CompendIum oF TAx LegISLATIon VoLume 1
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INCOME TAX ACT – SECTIONS