Page 217 - SAIT Compendium 2016 Volume1

s 25BB INCOME TAX ACT 58 OF 1962 s 25D
(c) Any amount of interest paid in respect of a linked unit in a REIT or a controlled company must be deemed— (i) to be a dividend paid by that REIT or that controlled company for the purposes of the dividends tax
contemplated in Part VIII of this Chapter; and
(ii) not to be an amount of interest paid by that REIT or that controlled company for the purposes of the withholding tax on interest contemplated in Part IVB
of this Chapter.
(7) If during any year of assessment a company that is
a REIT ceases to be a REIT and that company does not qualify as a controlled company or a company that is a controlled company ceases to be a controlled company and that company does not qualify as a REIT—
(a) that year of assessment of that REIT or controlled company is deemed to end on the day that the company ceases to be either a REIT or a controlled company; and
(b) the following year of assessment of that company is deemed to commence on the day immediately after that company ceased to be either a REIT or a controlled company.
(8) If a REIT or a controlled company cancels the debenture part of a linked unit and capitalises the issue price of the debenture to stated capital for the purposes of nancial reporting in accordance with IFRS—
(a) the cancellation of the debenture must be disregarded in determining the taxable income of the holder of the debenture and of the REIT or controlled company;
(b) expenditure incurred by the holder of a share in the REIT or controlled company in respect of he shares is deemed to be equal to the amount of the expenditure incurred in respect of the acquisition of that linked unit; and
[Para. (b) substituted by s. 45 (1) (f) of Act 43 of 2014 – date of commencement deemed to have been 1 April 2013 – the substitution applies iro years of assessment commencing on or after that date.]
(c) the issue price of the cancelled debenture must be added to the contributed tax capital of the class of shares that forms part of the linked unit.
[S. 25BB inserted by s. 59 (1) of Act 22 of 2012 and substituted by s. 74 (1) of Act 31 of 2013 – substitution deemed to have come into operation on 1 April 2013 and applies in respect of years of assessment commencing on or after that date.]
25C Income of insolvent estates
For the purposes of this Act, and subject to any such adjustments as may be necessary the estate of a person prior to sequestration and that person’s insolvent estate shall be deemed to be one and the same person for purposes of determining—
(a) the amount of any allowance, deduction or set off to which that insolvent estate may be entitled;
(b) any amount which is recovered or recouped by or otherwise required to be included in the income of that insolvent estate; and
(c) any taxable capital gain or assessed capital loss of that insolvent estate.
[S. 25C inserted by s. 21 of Act 28 of 1997 and substituted by s. 13 of Act 5 of 2001 and by s. 43 of Act 45 of 2003.]
25D Determination of taxable income in foreign currency
(1) Subject to subsections (2), (3) and (4), any amount received by or accrued to, or expenditure or loss incurred by, a person during any year of assessment in any currency other than the currency of the Republic must be translated
to the currency of the Republic by applying the spot rate on the date on which that amount was so received or accrued or expenditure or loss was so incurred.
[Sub-s. (1) substituted by s. 50 (1) (a) of Act 7 of 2010.] (2) Any amounts received by or accrued to, or expenditure incurred by, a person in any currency other than the currency of the Republic which are attributable to a permanent establishment of that person outside the Republic must be determined in the functional currency of that permanent establishment (other than the currency of any country in the common monetary area) and be translated to the currency of the Republic by applying the average exchange rate for the relevant year of assessment.
[Sub-s. (2) substituted by s. 50 (1) (a) of Act 7 of 2010.] (2A) Subsection (2) shall not apply to the extent that—
(a) the other currency contemplated in that subsection is not the functional currency of that permanent establishment; and
[Para. (a) substituted by s. 50 (1) (b) of Act 7 of 2010.] (b) the functional currency is the currency of a country which has an of cial rate of in ation of 100 per cent
or more throughout the relevant year of assessment.
[Para. (b) substituted by s. 50 (1) (b) of Act 7 of 2010.] [Sub-s. (2A) inserted by s. 41 (1) of Act 35 of 2007.]
(3) Notwithstanding subsection (1), a natural person or a trust (other than a trust which carries on any trade) may elect that all amounts received by or accrued to, or expenditure or losses incurred by that person or trust in any currency other than the currency of the Republic, be translated to the currency of the Republic by applying the average exchange rate for the relevant year of assessment.
(4) Where, during any year of assessment—
(a) any amount—
(i) is received by or accrued to; or (ii) of expenditure is incurred by,
a headquarter company in any currency other than the
functional currency of the headquarter company; and
(b) the functional currency of that headquarter company is a currency other than the currency of the Republic,
that amount must be determined in the functional currency of the headquarter company and must be translated to the currency of the Republic by applying the average
exchange rate for that year of assessment.
[Sub-s. (4) added by s. 50 (1) (c) of Act 7 of 2010.] (5) Where, during any year of assessment—
(a) any amount—
(i) is received by or accrues to; or
(ii) of expenditure is incurred by,
a domestic treasury management company in any currency other than the functional currency of the domestic treasury management company; and
(b) the functional currency of that domestic treasury management company is a currency other than the currency of the Republic,
that amount must be determined in the functional currency of the domestic treasury management company and must be translated to the currency of the Republic by applying the average exchange rate for that year of assessment. [Sub-s. (5) added by s. 75 (1) (a) of Act 31 of 2013 – the added subsection deemed to have come into operation
on 27 February 2013 and applies in respect of years of assessment commencing on or after that date.]
(6) Where, during any year of assessment— (a) any amount—
(i) is received by or accrues to; or
(ii) of expenditure is incurred by,
SAIT CompendIum oF TAx LegISLATIon VoLume 1
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INCOME TAX ACT – SECTIONS