Page 191 - SAIT Compendium 2016 Volume1

s 24O INCOME TAX ACT 58 OF 1962 s 24A
that excess is deemed to be an amount received or accrued from a small business funding entity during the following year of assessment for the purposes of paragraph (a).
[S. 23O inserted by s. 39 (1) of Act 43 of 2014 – date of commencement: 1 March 2015; this section applies iro amounts received on or after that date.]
24 Credit agreements and debtors allowance
(1) Subject to the provisions of section 24J, if any taxpayer has entered into any agreement with any other person in respect of any property the effect of which is that, in the case of movable property, the ownership shall pass or, in the case of immovable property, transfer shall be passed from the taxpayer to that other person, upon or after the receipt by the taxpayer of the whole or a certain portion of the amount payable to the taxpayer under the agreement, the whole of that amount shall for the purposes of this Act be deemed to have accrued to the taxpayer on the day on which the agreement was entered into.
[Sub-s. (1) substituted by s. 17 (1) of Act 28 of 1997.]
(2) In the case of such an agreement in terms of which at least 25 per cent of the said amount payable only becomes due and payable on or after the expiry of a period of not less than 12 months after the date of the said agreement, the Commissioner, taking into consideration any allowance he has made under section 11 (j), may make such further allowance as under the special circumstances of the trade of the taxpayer seems to him reasonable, in respect of all amounts which are deemed to have accrued under such agreements but which have not been received at the close of the taxpayer’s accounting period: Provided that any allowance so made shall be included as income in the taxpayer’s returns for the following year of assessment and shall form part of his income.
[NB: Sub-s. (2) has been substituted by s. 41 (1) of Taxation Laws Amendment Act, 2015, a provision that is to come into operation on a date to be determined by the Minister of Finance in the Gazette. See Pendlex below.]
(3) . . .
[Sub-s. (3) amended by s. 6 (1) of Act 108 of 1986 and deleted by s. 31 of Act 31 of 2005.]
(4) . . .
[Sub-s. (4) deleted by s. 31 of Act 31 of 2005.]
(5) and (6) . . .
[Sub-ss. (5) and (6) added by s. 23 of Act 101 of 1990 and deleted by s. 31 of Act 31 of 2005.]
[S. 24 amended by s. 22 of Act 89 of 1969, by s. 21 of Act 94 of 1983 and by s. 14 of Act 96 of 1985 and substituted by s. 16 (1) of Act 65 of 1986.]
24A Transactions whereby xed property is or company shares are exchanged for shares
(1) If, under any transaction entered into before 1 October 2001 for the disposal by any person (hereinafter referred to as the trader) of any trading stock consisting of xed property or any shares in any company, the consideration received by or accrued to the trader for such trading stock in effect consists of or includes—
(a) shares in a public company; or
(b) company shares quoted by a recognized stock
exchange at the time of such transaction or within six
months thereafter; or
(c) shares in any other company, if such shares are,
under a scheme for the consolidation or merger of the interests of two or more persons, issued or transferred to the trader,
the value of the shares which constitute or are included in such consideration shall, if the trader and the Commissioner agree thereto, be excluded from the trader’s income for the year of assessment during which such consideration is received by or accrues to him.
[Sub-s. (1) amended by s. 35 of Act 60 of 2001.]
(2) For the purposes of this Act—
(a) the shares which constitute or are included in the
said consideration and any capitalization shares issued in respect of such shares (which shares and capitalization shares are hereinafter referred to as new trading stock) shall be deemed to be trading stock of the trader; and
[Para. (a) amended by s. 24 of Act 85 of 1974.]
(b) the cost price to the trader of the shares which constitute or are included in the said consideration shall be deemed to be the cost to him of the trading stock referred to in subsection (1) or, if such last- mentioned trading stock was held by him and had not been disposed of by him at the beginning of the year of assessment, the amount taken into account under section 22 (2) as the value thereof, less an amount which bears to the said cost or the amount so taken into account, as the case may be, the same ratio as the value of such portion (if any) of the said consideration as does not consist of the said shares bears to the total value of the said consideration (including the said
shares).
Pendlex iro sub-s. (2) (to come into operation on a date to be determined by the Minister of Finance in the Gazette)
(2) In the case of such an agreement in terms of which at least 25 per cent of the said amount payable only becomes due and payable on or after the expiry of a period of not less than 12 months after the date of the said agreement, taking into consideration any allowance made under section 11 (j), there shall be made such further allowance as under the special circumstances of the trade of the taxpayer, as set out in a public notice issued by the Commissioner, is reasonable, in respect of all amounts which are deemed to have accrued under such agreements but which have not been received at the close of the taxpayer’s accounting period: Provided that any allowance so made shall be included as income in the taxpayer’s returns for the following year of assessment and shall form part of the taxpayer’s income.
(iii) redeeming, re nancing or settling, on or after 1 April 2014, a debt issued, assumed or used directly or indirectly for the purpose of procuring, enabling, facilitating or funding the acquisition by that acquiring company of any asset in terms of a reorganisation transaction entered into on or after 3 June 2011 and on or before 31 March 2014; or
(b) a debt—
(i) issued, assumed or used in terms of an acquisition transaction entered into on or after 1 April 2014;
(ii) redeeming, re nancing or settling a debt contemplated in subparagraph (i); or
(iii) issued, assumed or used, on or after 1 April 2014, directly or indirectly for the purpose of redeeming, re nancing
or settling a debt that was issued, assumed or used in terms of an acquisition transaction entered into on or after 1 January 2013 and on or before 31 March 2014.
SAIT CompendIum oF TAx LegISLATIon VoLume 1 183
INCOME TAX ACT – SECTIONS