Page 211 - SAIT Compendium 2016 Volume1

s 24M INCOME TAX ACT 58 OF 1962 s 24O
(4) If an asset which was acquired by a person during any year of assessment as contemplated in subsection (2)—
(a) constitutes a depreciable asset; and
(b) any amount is in terms of subsection (2) (b) deemed
to have been actually incurred by that person in any subsequent year of assessment which has not been taken into account in determining the amount of any allowance in respect of that depreciable asset in any previous year and would have been so taken into account had that amount been actually incurred by that person,
so much of the amount as would have been so allowed as an allowance in any previous year must be allowed in that subsequent year of assessment.
[S. 24M inserted by s. 25 (1) of Act 32 of 2004.]
24N Incurral and accrual of amounts in respect of disposal or acquisition of equity shares
(1) Where a person (hereinafter referred to as ‘the seller’) during a year of assessment disposes of equity shares to any other person (hereinafter referred to as ‘the purchaser’) in the circumstances contemplated in subsection (2), any quanti ed or quanti able amount payable by the purchaser to the seller must—
(a) to the extent that it is not due and payable to the seller during that year, be deemed for purposes of this Act— (i) not to have been accrued to the seller in that year;
and
(ii) not to have been incurred by the purchaser
during that year; and
(b) to the extent that it becomes due and payable to
the seller in any subsequent year of assessment, be deemed for purposes of this Act—
(i) to have been accrued to the seller during that subsequent year; and
(ii) to have been incurred by the purchaser during that subsequent year.
(2) Subsection (1) applies in respect of the disposal by a seller to a purchaser of any equity shares in a company where— (a) more than 25 per cent of the amount payable for those
shares becomes due and payable by the purchaser after the end of the year of assessment of the seller and the amount payable is based on the future pro ts of that company;
(b) the value of the equity shares in that company which have in aggregate been disposed of during that year and in respect of which the provisions of this section apply, exceeds 25 per cent of the total value of equity shares in that company;
(c) the purchaser and seller are not connected persons in relation to each other after that disposal;
(d) the purchaser is obliged to return the equity shares to the seller in the event of failure by the purchaser to pay any amount when due; and
(e) the amount is not payable by the purchaser to the seller in terms of a nancial instrument which is payable on demand and which is readily tradeable in the open market.
[S. 24N inserted by s. 26 (1) of Act 32 of 2004.]
24O Incurral of interest in respect of certain debts deemed to be in the production of income
(1) For the purposes of this section—
‘acquisition transaction’ means any transaction in terms of which a company acquires an equity share—
(a) in another company—
(i) that is an operating company; and
(ii) as a result of which, at the end of the day of that
(b)
(aa) that company is a controlling group company in relation to that other company; and
(bb) that company and that other company form part of the same group of companies as de ned in section 41 (1); or
in another company—
(i) that is a controlling group company in relation
to an operating company that forms part of the same group of companies, as de ned in section 41 (1), as that controlling group company; and
(ii) as a result of which, at the end of the day of that transaction,
(aa) that company is a controlling group company in relation to that other controlling group company; and
(bb) that company and that other company form part of the same group of companies as de ned in section 41 (1);
‘operating company’ means a company of which— at least 80 per cent of the receipts and accruals constitute income in the hands of that company; and the income contemplated in paragraph (a) is derived—
(i) from a business carried on continuously by that company; and
(ii) in the course or furtherance of providing goods or rendering of services for consideration by that company.
transaction—
SAIT CompendIum oF TAx LegISLATIon VoLume 1
the following events occurs in relation to a company taken into account in making that determination:
203
(a) (b)
(2) Subject to subsections (3) and (4), where during any year of assessment a debt is issued, assumed or used by a company—
(a) for the purpose of nancing the acquisition by that
company of an equity share in terms of an acquisition
transaction; or
(b) in substitution for a debt issued, assumed or used as
contemplated in paragraph (a),
any interest incurred by that company in respect of that debt must, to the extent to which that equity share constitutes a qualifying interest in an operating company, be deemed to have been—
(i) so incurred in the production of the income of that company; and
(ii) laid out or expended by that company for the purposes of trade.
(3) An equity share in a company constitutes a qualifying interest in an operating company, on the date of acquisition, if that equity share is an equity share in— (a) an operating company; or
(b) any other company, to the extent that the value of that equity share is derived from an equity share or equity shares held by that company in an operating company or operating companies—
(i) in relation to which that company is a controlling group company; and
(ii) that form part, with that company, of a group of companies, as de ned in section 41 (1): Provided that if at least 90 per cent of the value of that equity share is so derived, that equity share must be treated as an equity share in an operating company.
(4) A determination of the extent to which an equity share acquired in terms of an acquisition transaction constitutes a qualifying interest in an operating company— (a) must apply, for purposes of subsection (2), until any of
INCOME TAX ACT – SECTIONS