Page 192 - SAIT Compendium 2016 Volume1

s 24A INCOME TAX ACT 58 OF 1962 s 24BA
(3) Any amount (including the value of any bene t or advantage) which is received by or accrues to the trader from the disposal of new trading stock (or a portion thereof) shall be included in the trader’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: Provided that the provisions of this subsection shall not be construed so as to prevent the provisions of subsection (1) being applied in respect of such amount.
[Sub-s. (3) amended by s. 15 (1) of Act 85 of 1987.]
(4) If on or after the date of promulgation of the Income Tax Act, 1971, the trader disposes of or ceases to be the owner of new trading stock for any reason other than his death or insolvency or, in the case of a company, the winding-up or liquidation thereof and no consideration accrues to him in respect of such new trading stock or a consideration accrues to him in respect of such new trading stock which in whole or part is not measurable in terms of money (the part of the consideration which is so measurable being less in value than the market value of such new trading stock at the date on which it was disposed of or on which the trader ceased to be the owner thereof), he shall for the purposes of this Act be deemed to have disposed of such new trading stock for a consideration equal to the market value thereof at the date on which it was disposed of or on which the trader ceased to be the owner thereof or the market value thereof on the date of the transaction referred to in subsection (1), whichever value is the lower, reduced by the amount (if any) included in the trader’s income under subsection (3) in respect of the disposal, and such value, as so reduced, shall be included in his income: Provided that the foregoing provisions of this subsection shall not apply where the trader disposes of or ceases to be the owner of new trading stock by reason of the carrying out of any scheme referred to in section 22A and the trader is a transferor company as contemplated in that section.
(5) Where the trader has until his death or the prior sequestration of his estate or, in the case of a company, the commencement of the winding-up or liquidation thereof, continued to hold new trading stock, the trader shall for the purposes of this Act be deemed to have disposed of such new trading stock on the day preceding the date of his death or the sequestration of his estate (whichever rst occurs) or, in the case of a company the date on which the winding- up or liquidation thereof commenced, for a consideration equal to the market value on the said day of such new trading stock or the market value thereof on the date of the transaction referred to in subsection (1), whichever value is the lower, and such value shall be included in his income for the period of assessment within which the said day falls.
(6) For the purposes of this section—
(a) ‘ xed property’ means property as de ned in section
1 of the Transfer Duty Act, 1949 (Act 40 of 1949);
and
(b) a company which has not yet been recognized under
the provisions of this Act as a public company, may at the request of the taxpayer, be deemed to be a public company, if the Commissioner is satis ed that such company will be so recognized.
[S. 24A inserted by s. 23 of Act 89 of 1969 and substituted by s. 20 (1) of Act 88 of 1971.]
24B . . .
[S. 24B inserted by s. 9 (1) of Act 101 of 1978, substituted
by s. 13 (1) of Act 104 of 1979, repealed by s. 32 of Act 30 of 2000, inserted by s. 22 (1) of Act 32 of 2004, amended by s. 37 (1) (a), (b) and (c) of Act 17 of 2009, by s. 39 (1) (a), (b) and (c) of Act 60 of 2008, by s. 39 of Act 35 of 2007 and by s. 51 (1) (a), (b) and (c) of Act 22 of 2012 and repealed by s.
65 (1) of Act 31 of 2013 – repeal deemed to have come into operation on 1 April 2013 and applies in respect of shares acquired, issued or disposed of on or after that date.]
24BA Transactions where assets are acquired as consideration for shares issued
(1) For the purposes of this section, ‘asset’ means an asset as de ned in paragraph 1 of the Eighth Schedule or a number of such assets.
(2) Subject to subsection (4), this section applies where—
(a) in terms of any transaction, a company, for consideration, acquires an asset from a person in exchange for the issue by that company to that person of shares in that company; and
(b) the consideration contemplated in paragraph (a) is (before taking into account any other transaction, operation, scheme, agreement or understanding that directly or indirectly affects that consideration) different from the consideration that would have applied had that asset been acquired in exchange for the issue of those shares in terms of a transaction between independent persons dealing at arm’s length.
(3) Notwithstanding paragraph 11 (2) (b) of the Eighth Schedule, where a company acquires an asset from a person in exchange for the issue by that company to that person of shares in that company as contemplated in subsection (2) and the market value of—
[Words in sub-s. (3) preceding para. (a) substituted by s. 66 (1) (a) of Act 31 of 2013 – date of commencement: 1 January 2014; the substitution applies in respect of assets acquired or disposed of on or after that date.]
(a) that asset immediately before that disposal exceeds the market value of the shares immediately after that issue, the amount of the excess must—
(i) be deemed to be a capital gain in respect of a disposal by that company of the shares; and
(ii) where those shares are acquired by that person as—
(aa) a capital asset, be applied to reduce any amount of expenditure incurred by that person in acquiring those shares that is allowable in terms of paragraph 20 of the Eighth Schedule; or
(bb)trading stock, be applied to reduce any amount that must be taken into account by the person in respect of the shares in terms of section 11 (a) or 22 (1) or (2); or
(b) the shares immediately after that issue exceeds the market value of that asset immediately before the disposal, the amount of the excess must, for the purposes of Part VIII, be deemed to be a dividend as de ned in section 64D that—
(i) consists of a distribution of an asset in specie; and
(ii) is paid by the company on the date of that issue. (4) This section must not apply where a company acquires an asset from a person as contemplated in
subsection (2) (a) if—
(a)
(b)
(i) that company and that person form part of the same group of companies immediately after that company acquires that asset; or
(ii) that person holds all the shares in that company immediately after that company acquires that asset; or
paragraph 38 of the Eighth Schedule applies.
[Sub-s. (4) substituted by s. 66 (1) (b) of Act 31 of 2013 – substitution deemed to have come into operation on 1 January 2013 and applies in respect of transactions entered into on or after that date.]
184 SAIT CompendIum oF TAx LegISLATIon VoLume 1