Page 229 - SAIT Compendium 2016 Volume1

s 29A INCOME TAX ACT 58 OF 1962 s 29B
adjusted IFRS value for the year of assessment in respect of risk policies.
(b) Any amount deducted in terms of paragraph (a) during any year of assessment shall be included in the income of the risk policy fund in the following year of assessment.
[Sub-s. (13A) added by s. 47 (1) (u) of Act 43 of 2014 – date of commencement: 1 January 2016; the subsection applies iro years of assessment commencing on or after that date.]
(13B) (a) An insurer may elect that all policies or one or more classes of policies that share substantially similar contractual rights and obligations that would have constituted risk policies under paragraph (a) of the de nition of ‘risk policy’ in subsection (1) had those policies been issued during any year of assessment commencing on or after 1 January 2016 be allocated to the risk policy fund with effect from the rst day of the year of assessment commencing on or after 1 January 2016, which election—
(i) is binding for the duration of the policies in respect of which the election is made; and
(ii) must be in a manner and form as the Commissioner may prescribe.
(b) Assets with a value equal to the value of liabilities, as determined at the end of the previous year of assessment in respect of policies allocated to the risk policy fund in terms of paragraph (a), must be allocated to the risk policy fund with effect from the rst day of the year of assessment commencing on or after 1 January 2016.
(c) The amount of assets as contemplated in paragraph (b) shall not be deducted from the income of the policyholder fund from which it is transferred and shall not be included in the income of the risk policy fund to which it is transferred.
(d) Where as a result of the election as contemplated in paragraph (a) an asset as de ned in paragraph 1 of the Eighth Schedule, other than an asset that is trading stock, is disposed of by the policyholder fund to a risk policy fund—
(i) the policyholder fund that disposes of that asset must be deemed to have disposed of that asset for an amount equal to the base cost of that asset on the date of that disposal; and
(ii) the policyholder fund that disposes of that asset and that the risk policy fund that acquires that asset must, for purposes of determining any capital gain or capital loss by the risk policy fund that acquires that asset in respect of a disposal of that asset, be deemed to be one and the same person with respect to— (aa)the date of acquisition of that asset by the
policyholder fund that disposes of that asset and the amount and date of incurral of any expenditure by the policyholder fund that disposes of that asset in respect of that asset allowable in terms of paragraph 20 of the Eighth Schedule; and
(bb) any valuation of that asset effected by the policyholder fund of that asset as contemplated in paragraph 29 (4) of the Eighth Schedule.
(e) Where as a result of the election as contemplated in paragraph (a) a policyholder fund disposes of an asset that is held as trading stock to a risk policy fund that acquires that asset as trading stock—
(i) that asset must be deemed to have been disposed of in an amount equal to the amount taken into account in terms of section 11 (a) or 22 (1) or (2) in respect of that asset by the policyholder fund; and
(ii) the policyholder fund and the risk policy fund must, for purposes of determining any taxable income derived by the risk policy fund, be deemed to be one and the same person with respect to the date of acquisition of that asset and the amount and date of incurral of any cost or expenditure incurred in respect of that asset as contemplated in section 11 (a) or 22 (1) or (2).
[Sub-s. (13B) added by s. 53 (1) (f) of Taxation Laws Amendment Act, 2015 – date of commencement: 1 January 2016; the subsection applies iro years of assessment commencing on or after that date.]
(14) . . .
[Sub-s. (14) deleted by s. 52 of Act 7 of 2010.]
(15) and (16) . . .
[Sub-ss. (15) and (16) deleted by s. 23 (b) and (c) of Act 20 of 2006.]
[S. 29A inserted by s. 30 of Act 53 of 1999.]
29B Mark-to-market taxation in respect of long- term insurers
(1) For the purposes of this section, unless the context otherwise indicates, any word or expression that has been de ned in section 29A must bear the same meaning as de ned in that section, and—
‘Category III Financial Services Provider’ means a nancial services provider as de ned in section 1 of the Financial Advisory and Intermediary Services Act, 2002 (Act 37 of 2002), that has been issued with a Category III licence in terms of that Act;
‘market value’, in relation to any asset placed in any policyholder fund as contemplated in section 29A (4), means—
(a) where that asset constitutes a nancial instrument that
is listed on—
(i) an exchange as de ned in section 1 of the
Financial Markets Act and licensed under section
9 of that Act; or
[Sub-para. (i) substituted by s. 78 (1) (a) of Act 31 of 2013 – substitution deemed to have come into operation on 3 June 2013.]
(ii) an exchange in a country other than the Republic which has been recognised by the Minister as contemplated in paragraph (c) of the de nition of ‘recognised exchange’ in paragraph 1 of the Eighth Schedule,
the sum which a person having the right to freely dispose of that asset might reasonably expect to obtain from a sale of that asset in the open market; or
(b) where that asset is an asset other than an asset contemplated in paragraph (a), the value of that asset as taken into account in determining the investment value of policies as reported to the owners of the policies in respect of the policyholder fund in which the asset is so placed; and
‘realisation year’, in relation to an insurer, means the rst year of assessment of that insurer that ends on or after 29 February 2012.
(2) An insurer must be deemed to have disposed of each asset held by that insurer on 29 February 2012, at the close of the day, in respect of all its policyholder funds, other than an asset that constitutes—
[Words in sub-s. (2) preceding para. (a) substituted by s. 78 (1) (b) of Act 31 of 2013 – substitution deemed to have come into operation on 29 February 2012.]
(a) an instrument as de ned in section 24J (1);
(b) an interest rate agreement as de ned in section 24K
(1);
SAIT CompendIum oF TAx LegISLATIon VoLume 1
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INCOME TAX ACT – SECTIONS