Page 200 - SAIT Compendium 2016 Volume1

INCOME TAX ACT 58 OF 1962 s 24J
[Sub-s. (12) added by s. 36 (1) (m) of Act 60 of 2001 and substituted by s. 27 (1) (n) of Act 74 of 2002.]
[S. 24I inserted by s. 21 of Act 113 of 1993.]
24J Incurral and accrual of interest
(1) For the purposes of this section, unless the context otherwise indicates—
‘accrual amount’, in relation to an accrual period, means an amount determined in accordance with the following formula:
A5B3C
in which formula—
(a) ‘A’ represents the amount to be determined; (b) ‘B’ represents the yield to maturity; and
(c) ‘C’ represents the adjusted initial amount: Provided that—
(i) where the commencement or end of any year of assessment falls within an accrual period, the amount so determined shall be apportioned on a day to day basis over the term of such accrual period in order to determine the relevant portion of such amount relating to that part of such accrual period falling within the year of assessment so commencing or ending, as the case may be;
(ii) where an instrument is transferred on a date other than at the end of an accrual period, the amount so determined shall be apportioned on a day to day basis over the term of such accrual period in order to determine the relevant portion of such amount relating to the relevant transferor or transferee, as the case may be, in relation to such instrument; and
(iii) the amount so determined shall be appropriately adjusted by taking into account amounts received or payments made other than at the end of an accrual period;
‘accrual period’, in relation to an instrument, means—
(a) where in terms of such instrument regular payments at intervals of equal length and not exceeding 12 months per interval are to be made throughout the term of such instrument, the period between such
regular payments; or
(b) any period not exceeding 12 months elected by the
holder or issuer, as the case may be,
which period shall be applied consistently throughout the term of such instrument;
‘adjusted gain on transfer or redemption of an instrument’ means—
(a) in relation to the holder of any income instrument,
where—
(i) an alternative method has not been applied, the
amount by which the sum of the transfer price or redemption payment of such income instrument in relation to such holder and any payments received by such holder in terms of such income instrument during the accrual period in which such income instrument is transferred or redeemed, exceeds the sum of the adjusted initial amount in relation to such income instrument and the accrual amount in relation to such accrual period and any payments made by such holder in terms of such income instrument during such accrual period; or
(ii) an alternative method has been applied, the amount by which the sum of the transfer price or redemption payment of such income instrument in relation to such holder and any payments received by such holder in terms of such income instrument during the period from acquisition
until transfer or redemption of such income instrument by such holder, exceeds the sum of the initial amount and all amounts determined in accordance with such alternative method and any other payments made by such holder in terms of such income instrument during the period from acquisition until transfer or redemption of such income instrument by such holder; or
(b) in relation to the issuer of any instrument, where— (i) an alternative method has not been applied, the amount by which the sum of the adjusted initial amount in relation to such instrument and the accrual amount in relation to the accrual period during which such instrument is transferred or redeemed and any payments received by such issuer in terms of such instrument during the accrual period, exceeds the sum of the transfer price or redemption payment in relation to such instrument in relation to such issuer and any payments made by such issuer in terms of such
instrument during such accrual period; or
(ii) an alternative method has been applied, the amount by which the sum of the initial amount and all amounts determined in accordance with such alternative method and any other payments received by such issuer in terms of such instrument during the period from issue or acquisition until transfer or redemption of such instrument by such issuer, exceeds the sum of the transfer price or redemption payment in relation to such instrument in relation to such issuer and any payments made by such issuer in terms of such instrument during the period from issue or acquisition until transfer or redemption of such
instrument by such issuer;
[De nition of ‘adjusted gain on transfer or redemption of an instrument’ substituted by s. 14 (1) (a) of Act 36 of 1996.]
‘adjusted initial amount’ means—
(a) in relation to the holder of an income instrument with
regard to a particular accrual period, the sum of the initial amount and the accrual amounts in relation to all previous accrual periods and any other payments made by such holder during all such previous accrual periods less any payments received by such holder during all such previous accrual periods, in terms of such income instrument; or
(b) in relation to the issuer of an instrument with regard to a particular accrual period, the sum of the initial amount and the accrual amounts in relation to all previous accrual periods and any other payments received by such issuer during all such previous accrual periods less any payments made by such issuer during all such previous accrual periods, in terms of such instrument: Provided that where that instrument forms part of any transaction, operation or scheme—
(i) any payments made by the issuer to any other person pursuant to that transaction, operation or scheme with a purpose or with the probable effect of making payment directly or indirectly to the holder or a connected person in relation to the holder, must be deducted for purposes of this paragraph; and
(ii) in the case where any party to that transaction, operation or scheme is a connected person in relation to that issuer, any payments made by that connected person to any other person pursuant to that transaction, operation or scheme with a
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SAIT CompendIum oF TAx LegISLATIon VoLume 1
s 24I