Page 224 - SAIT Compendium 2016 Volume1

s 29A INCOME TAX ACT 58 OF 1962 s 29A
‘owner’, in relation to a policy, means the person who is entitled to enforce any bene t provided for in the policy: Provided that where a policy has been—
(a) ceded or pledged solely for the purpose of providing
security for the performance of any obligation, the owner shall be the person who retains the bene cial interest in such policy; or
(b) reinsured by one insurer with another insurer, the reinsurance policy shall be deemed to be owned by the owner of the insurance policy so insured;
‘policy’ means a long-term policy as de ned in section 1 of the Long-term Insurance Act;
‘policyholder fund’ means any fund contemplated in subsection (4) (a), (b) or (c);
‘risk policy’ means—
(a) any policy issued by the insurer during any year of
assessment of that insurer commencing on or after 1 January 2016 under which the bene ts payable cannot exceed the amount of premiums receivable, except where all or substantially the whole of the policy bene ts are payable due to death, disablement, illness or unemployment and excludes a contract of insurance in terms of which annuities are being paid; or
(b) any policy in respect of which an election has been made as contemplated in subsection (13B);
[De nition of ‘risk policy’ inserted by s. 47 (1) (b) of Act 43 of 2014 (date of commencement: 1 January 2016) and substituted by s. 53 (1) (b) of Taxation Laws Amendment Act, 2015 – date of commencement: also on 1 January 2016; the substituted de nition applies iro years of assessment commencing on or after that date.]
‘risk policy fund’ means the fund contemplated in subsection 4 (e);
[De nition of ‘risk policy fund’ inserted by s. 47 (1) (b) of Act 43 of 2014 – date of commencement: 1 January 2016; the de nition applies iro years of assessment commencing on or after that date.]
‘value of liabilities’ means, in respect of—
(a) a policyholder fund, an amount equal to the value of the liabilities of the insurer in respect of the business conducted by it in the fund concerned calculated on the basis as shall be determined by the chief actuary of the Financial Services Board, appointed in terms of section 13 of the Financial Services Board Act, in
consultation with the Commissioner; and
(b) the risk policy fund, the adjusted IFRS value plus expenditure allocated to the risk policy fund that has not been paid in relation to that fund by the last day
of the year of assessment;
[De nition of ‘value of liabilities’ substituted by s. 47 (1) (c) of Act 43 of 2014 – date of commencement: 1 January 2016; the substituted de nition applies iro years of assessment commencing on or after that date.]
[NB: The de nition of ‘value of liabilities’ has been substituted by s. 53 (1) (c) of Taxation Laws Amendment Act, 2015, a provision that is to come into operation on the date on which the Insurance Act, 2016, comes into operation and is to apply iro years of assessment ending on or after that date. See Pendlex below.]
(2) The taxable income derived by any insurer in respect of any year of assessment commencing on or after 1 January 2000, shall be determined in accordance with the provisions of this Act, but subject to the provisions of this section and section 29B.
[Sub-s. (2) substituted by s. 62 (1) (a) of Act 22 of 2012 – date of commencement deemed to have been 29 February 2012.]
(3) Every insurer shall establish ve separate funds as contemplated in subsection (4), and shall thereafter maintain such funds in accordance with the provisions of this section and section 29B.
[Sub-s. (3) amended by s. 23 (a) of Act 20 of 2006 and substituted by s. 62 (1) (a) of Act 22 of 2012 (date of commencement deemed to have been 29 February 2012) and by s. 47 (1) (d) of Act 43 of 2014 (‘four separate funds’ replaced by ‘ ve separate funds’ – date of commencement: 1 January 2016; the substituted subsection applies iro years of assessment commencing on or after that date.]
(4) The funds referred to in subsection (3) shall be—
Pendlex (to come into operation on the date on which the Insurance Act, 2016, comes into operation)
‘value of liabilities’ means, in respect of a policyholder fund and a risk policy fund the adjusted IFRS value plus so much of the expenditure allocated to that fund that has not been paid by the last day of the year of assessment and has not been taken into account in determining the adjusted IFRS value;
(a)
a fund, to be known as the untaxed policyholder fund, in which shall be placed assets having a market value equal to the value of liabilities determined in relation to—
(i) (aa) business other than business relating to a risk policy carried on by the insurer with; and
(bb) any policy other than a risk policy, of which the owner is,
any pension fund, pension preservation fund, provident fund, provident preservation fund, retirement annuity fund or bene t fund;
[Sub-para. (i) substituted by s. 21 of Act 3 of 2008 and by s. 47 (1) (e) of Act 43 of 2014 – date of commencement: 1 January 2016; the substituted paragraph applies iro years of assessment commencing on or after that date.]
(ii) any policy, other than a risk policy, of which the owner is a person where any amount constituting gross income of whatever nature would be exempt from tax in terms of section 10 were it to be received by or accrue to that person: Provided that an insurer shall not deal with a policy in terms of the provisions of this subparagraph unless it has satis ed itself beyond all reasonable doubt that the owner of such policy is such a person or body;
[Sub-para. (ii) amended by s. 16 of Act 16 of 2004 and by s. 47 (1) (f) of Act 43 of 2014 (‘, other than a risk policy,’ inserted in words preceding the proviso) – date of commencement: 1 January 2016; the substituted wording applies iro years of assessment commencing on or after that date.]
Prelex
Wording of sub-para. (i) in force until 1 January 2016
(i) business carried on by the insurer with, and any policy of which the owner is, any pension fund, pension preservation fund, provident fund, provident preservation fund, retirement annuity fund or bene t fund;
Prelex
Wording of de nition of ‘value of liabilities’ in force until 1 January 2016
‘value of liabilities’, means an amount equal to the value of the liabilities of the insurer in respect of the business conducted by it in the fund concerned calculated on the basis as shall be determined by the Chief Actuary of the Financial Services Board in consultation with the Commissioner.
216 SAIT CompendIum oF TAx LegISLATIon VoLume 1