Page 205 - SAIT Compendium 2016 Volume1

s 24J INCOME TAX ACT 58 OF 1962 s 24J
the said date and the provisions of this section shall apply to both the issuer and the holder in relation to such instrument as from the date of such extension or material variation.
(7) Where there is more than one—
(a) holder in relation to an income instrument and any
accrual amount in relation to an accrual period with regard to any one of the holders in relation to such income instrument is to be determined, such accrual amount shall be so determined without taking into account any consideration or any amount or amounts paid or payable or received or receivable by any other holder in terms of such income instrument; and
(b) issuer in relation to an instrument and any accrual amount in relation to an accrual period with regard to any one of the issuers in relation to such instrument is to be determined, such accrual amount shall be so determined without taking into account any consideration or any amount or amounts paid or payable or received or receivable by any other issuer in terms of such instrument.
(8) Where in relation to an instrument any person is entitled to any interest in terms of such instrument and also liable to pay any interest in terms of such instrument, such person shall for the purposes of this section—
(a) where the interest which he is entitled to receive in terms of such instrument exceeds the interest which he is liable to pay in terms of such instrument, be deemed not to be an issuer in relation to such instrument; and
(b) where the interest which he is liable to pay in terms of such instrument exceeds the interest which he is entitled to receive in terms of such instrument, be deemed not to be a holder in relation to such instrument.
(9) (a) Any company whose business comprises the dealing in instruments (including the short selling of instruments), interest rate agreements or option contracts may elect that the provisions of subsections (2) to (8), inclusive, section 24K and section 24L shall not apply to all such instruments, interest rate agreements or option contracts in respect of which it so deals in.
[Para. (a) substituted by s. 19 (1) (d) of Act 28 of 1997 and by s. 27 (1) (c) of Act 53 of 1999.]
(b) Any election referred to in paragraph (a) shall— (i) be made in writing;
(ii) be accompanied by a statement setting forth full details of the methodology to be applied by the company to determine the market value as contemplated in paragraph (c) in relation to all instruments, interest rate agreements or option contracts contemplated in paragraph (a);
[Sub-para. (ii) substituted by s. 19 (1) (e) of Act 28 of 1997 and by s. 27 (1) (d) of Act 53 of 1999.]
(iii) not take effect unless the Commissioner has, subject to such conditions as he may deem necessary, approved—
(A) the methodology to be applied by such company
to determine the market value as contemplated in paragraph (c) in respect of such instruments, interest rate agreements or option contracts; and
[Item (A) substituted by s. 19 (1) (f) of Act 28 of 1997 and by s. 27 (1) (e) of Act 53 of 1999.]
(B) the manner in which such market value in relation to such instruments, interest rate agreements or option contracts is to be taken into account in the determination of the taxable income of such company during any year of assessment; and
[Item (B) substituted by s. 19 (1) (f) of Act 28 of 1997 and by s. 27 (1) (e) of Act 53 of 1999.]
(iv) subject to the provisions of paragraphs (e) and (f), be binding upon such company in respect of all such instruments, interest rate agreements and option contracts during the year of assessment in which it took effect and every succeeding year of assessment.
[Sub-para. (iv) substituted by s. 19 (1) (g) of Act 28 of 1997 and by s. 27 (1) (f) of Act 53 of 1999.]
(c) The market value in relation to all instruments, interest rate agreements and option contracts contemplated in paragraph (a) of a company which made an election as contemplated in such paragraph shall be determined in accordance with commercially accepted practice which is applied by such company consistently in respect of all such instruments, interest rate agreements and option contracts for nancial reporting purposes to its shareholders.
[Para. (c) substituted by s. 19 (1) (h) of Act 28 of 1997 and by s. 27 (1) (g) of Act 53 of 1999.]
(d) Any instrument, interest rate agreement or option contract contemplated in paragraph (a) which as a result of an election made in terms of such paragraph is to be dealt with on a market value basis as contemplated in the aforegoing provisions of this subsection shall (subject to the provisions of paragraphs (e) and (f)) be so dealt with until the date of redemption or transfer of such instrument, interest rate agreement or option contract.
[Para. (d) substituted by s. 19 (1) (h) of Act 28 of 1997 and by s. 27 (1) (g) of Act 53 of 1999.]
(e) Where the Commissioner is satis ed that the approval granted by him in terms of paragraph (b) (iii) was obtained by fraud or in consequence of any misrepresentation or failure to disclose any material fact by the company which made the election in terms of paragraph (a), he shall, if he is satis ed that in the light of the full facts the approval should not have been granted, withdraw such approval as from the date such approval was granted by him.
(f) Where any company during any year of assessment no longer complies with the provisions of this subsection— (i) the approval granted by the Commissioner in terms of paragraph (b) (iii) shall be deemed to have been withdrawn by the Commissioner as from such year of
assessment; and
(ii) an appropriate adjustment shall be made to the
taxable income of such company during such year of assessment in relation to all instruments, interest rate agreements or option contracts contemplated in paragraph (a) of the company held and not disposed of or not redeemed by it, as the case may be, as at the end of such year of assessment, having regard to all interest or amounts which would have been deemed to have been incurred by or accrued to such company had the provisions of this subsection not been applicable during all years of assessment before such year of assessment and all amounts which have been included in or deducted from the income of such company during such years of assessment: Provided that the provisions of this paragraph shall not have the effect that an amount be included in or deducted from the income of such company more than once.
[Sub-para. (ii) substituted by s. 19 (1) (i) of Act 28 of 1997 and amended by s. 27 (1) (h) of Act 53 of 1999.]
(g) This subsection shall not apply—
(i) in respect of a company that is a covered person as
de ned in section 24JB, during any year of assessment
ending on or after 1 January 2014; and
[Sub-para. (i) substituted by s. 41 (1) (b) of Act 43 of 2014 – date of commencement deemed to have been 1 January 2014; the substitution applies iro years of assessment commencing on or after that date.]
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INCOME TAX ACT – SECTIONS