Page 220 - SAIT Compendium 2016 Volume1

s 27 INCOME TAX ACT 58 OF 1962 s 27
granted to that co-operative under section 11 (g), whether in the current or any previous year of assessment.
[Sub-s. (4) added by s. 17 (1) of Act 113 of 1977 and substituted by s. 7 (1) of Act 4 of 2008.]
(5) Where any agricultural co-operative (hereinafter referred to as the new co-operative) has before 1April 1977 been constituted by an amalgamation under section 94 of the Co-operative Societies Act, 1939, of two or more other agricultural co-operatives and by reason of such amalgamation the ownership of any building used as a storage building by one of such other co-operatives (hereinafter referred to as the other co-operative) has passed from the other co-operative to the new co-operative—
(a) an allowance may in the appropriate circumstances be granted under subsection (2) (b) to the new co-operative in respect of such building or any improvements (other than repairs) thereto if such allowance would have been granted to the other co- operative if the amalgamation had not been effected;
[Para. (a) substituted by s. 23 (b) of Act 113 of 1993.]
(b) .. .
[Para. (b) deleted by s. 28 (f) of Act 129 of 1991.]
(c) where an allowance or deduction may be granted or allowed as contemplated in paragraph (a) or (b), the provisions of subsections (2) (b), (3) and (4) shall be applied as though the other co-operative and the new co- operative had at all relevant times been one co-operative.
[Para. (c) substituted by s. 28 (g) of Act 129 of 1991.] [Sub-s. (5) added by s. 17 (1) of Act 113 of 1977 and
amended by s. 19 (1) (c) of Act 104 of 1980.]
(5A) Where any agricultural co-operative has on or after 1 April 1977 and before the date of commencement of the Co-operatives Act, 1981, been constituted by an amalgamation under section 94 of the Co-operatives Societies Act, 1939, of two or more other agricultural co-operatives, the said co-operative and such other co- operatives shall, for the purposes of assessments under this Act, be deemed to be and to have been one and the
same agricultural co-operative.
[Sub-s. (5A) inserted by s. 19 (1) (d) of Act 104 of 1980 and substituted by s. 21 (1) (e) of Act 96 of 1981.]
(5B) Where any co-operative has on or after the date of commencement of the Co-operatives Act, 1981, come into being in pursuance of a conversion or amalgamation in terms of Chapter VIII of the Act, such co-operative and any company, co-operative or co-operatives out of which it so came into being shall, for the purposes of assessments under this Act for the year of assessment during which such co-operative came into being and subsequent years of assessment but subject to such conditions as the Commissioner may impose, be deemed to be and to have been one and the same co-operative.
[Sub-s. (5B) inserted by s. 21 (1) (f) of Act 96 of 1981.]
(6) . . .
[Sub-s. (6) added by s. 17 (1) of Act 113 of 1977, amended by s. 11 (c) of Act 101 of 1978, by s. 19 (1) (e) of Act 104 of 1980 and by s. 21 (1) (g) of Act 96 of 1981 and deleted by s. 28 (h) of Act 129 of 1991.]
(7) . . .
[Sub-s. (7) added by s. 17 (1) of Act 113 of 1977, amended by s. 11 (d) of Act 101 of 1978, by s. 19 (1) (f) of Act 104 of 1980 and by s. 21 (1) (h) of Act 96 of 1981 and deleted by s. 28 (h) of Act 129 of 1991.]
(8) (a) The full amount of any bonus distributed by any agricultural co-operative shall, to the extent that such amount quali es for deduction from the income of such co-operative under subsection (2) (a) or, if it is distributed out of the stabilization fund referred to in subsection (2)
(h), be included in the gross income of the person who has become entitled thereto and shall be deemed to have accrued to such person on the date of the distribution of the bonus by such co-operative.
(b) For the purposes of this section the amount of any bonus distributed by way of capitalization shares or bonus debentures or securities shall be deemed to be the nominal value of such shares, debentures or securities, as the case may be.
[Sub-s. (8) added by s. 17 (1) of Act 113 of 1977.]
(9) In this section—
‘agricultural co-operative’ means any co-operative agricultural society or company or any farmers’ special co-operative company, as de ned in the Co-operative Societies Act, 1939;
‘bonus’ means any amount distributed by any co- operative society or company referred to in this section out of its pro ts or surplus for any year of assessment or, in the case of the vereniging referred to in paragraph (h) of subsection (2), out of the stabilization fund referred to in that paragraph, whether such amount is distributed in cash or by way of a credit or an award of capitalization shares or bonus debentures or securities, if such amount—
(a) is divided among the persons entitled thereto in such manner that the amount accruing to each such person is determined in accordance with the value of the business transactions between such society or company and such person; and
(b) is distributed during the speci ed period in relation to such year of assessment or is distributed out of the stabilization fund referred to in subsection (2) (h);
‘improvements’, in relation to any storage building, means any extension, addition or improvements (other than repairs) to a storage building which is or are effected for the purpose of increasing the capacity of the building for storing or packing pastoral, agricultural or other farm products or for carrying on therein any primary process in respect of any such products;
‘primary process’, in relation to any product produced in the course of pastoral, agricultural or other farming operations, means the rst process to which such product is subjected by an agricultural co-operative in order to render such product marketable or to convert such product into a marketable commodity, and includes any further process carried on by such co-operative which is so connected with the said rst process that such rst process and such further process or processes may be regarded as one process and to be necessary to convert such product into a marketable commodity;
[De nition of ‘primary process’ substituted by s. 23 (c) of Act 113 of 1993.]
‘storage building’, in relation to any agricultural co- operative, means—
(a) a building which is at any relevant time or during any
relevant period wholly or mainly used by such co- operative for storing or packing pastoral, agricultural or other products produced by such co-operative’s members or for carrying on therein any primary process in respect of such products; or
(b) a structure of a permanent nature which is at any relevant time or during any relevant period wholly or mainly used by such co-operative in connection with the fattening of livestock on behalf of the members of such co-operative:
Provided that for the purposes of this de nition the members of a central co-operative agricultural company or central farmers’ special co-operative company or federal co-operative agricultural company or federal farmers’ special co-operative company, as de ned in the Co-
212 SAIT CompendIum oF TAx LegISLATIon VoLume 1