Page 237 - SAIT Compendium 2016 Volume1

s 31 INCOME TAX ACT 58 OF 1962 s 31
(a) debt; or
[Para. (a) substituted by s. 64 (1) (a) of Act 22 of 2012 –
date of commencement: 1 January 2013.] (b) security or guarantee.
(2) Where—
(a) any transaction, operation, scheme, agreement or
understanding constitutes an affected transaction; and (b) any term or condition of that transaction, operation,
scheme, agreement or understanding—
(i) is a term or condition contemplated in paragraph
(b) of the de nition of ‘affected transaction’; and (ii) results or will result in any tax bene t being derived by a person that is a party to that transaction, operation, scheme, agreement or
understanding,
the taxable income or tax payable by any person contemplated in paragraph (b) (ii) that derives a tax bene t contemplated in that paragraph must be calculated as if that transaction, operation, scheme, agreement or understanding had been entered into on the terms and conditions that would have existed had those persons been independent persons dealing at arm’s length.
(3) To the extent that there is a difference between—
(a) any amount that is, after taking subsection (2) into account, applied in the calculation of the taxable income of any resident that is a party to an affected
transaction; and
(b) any amount that would, but for subsection (2), have
been applied in the calculation of the taxable income
of the resident contemplated in paragraph (a),
the amount of that difference must, if that person is a resident and the other person to the affected transaction is a person as contemplated in paragraph (a) (i) (bb) or (a) (iii) (bb) of the de nition of ‘affected transaction’—
(i) if that resident is a company, be deemed to be a dividend consisting of a distribution of an asset in specie declared and paid by that resident to that other person; or
(ii) if that resident is a person other than a company, be deemed, for purposes of Part V, to be a donation made by that resident to that other person,
[Para. (ii) substituted by s. 56 of Taxation Laws Amendment Act, 2015 (‘to be donation’ replaced by ‘to be a donation’) – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
on the last day of the period of six months following the end of the year of assessment in respect of which that adjustment is made: Provided that where the amount of that difference was prior to 1 January 2015 deemed to be a loan that constitutes an affected transaction, so much of that loan as has not been repaid before 1 January 2015 must—
(a) if that resident is a company, be deemed to be a dividend consisting of a distribution of an asset in specie that was declared and paid by that resident to that other person; or
(b) if that resident is a person other than a company, be deemed, for purposes of Part V, to be a donation made by that resident to that other person,
on 1 January 2015.
[Words in sub-s. (3) following para. (b) substituted by s. 50 (1) (a) of Act 43 of 2014 – date of commencement: 1 January 2015.]
(4) For the purposes of subsection (2), where any transaction, operation, scheme, agreement or understanding has been directly or indirectly entered into or effected as contemplated in that subsection in respect of—
(b) intellectual property as contemplated in the de nition of ‘intellectual property’ in section 23I(1) or knowledge,
‘connected person’ means a connected person as de ned in section 1: Provided that the expression ‘and no holder of shares holds the majority voting rights in the company’ in paragraph (d) (v) of that de nition must be disregarded.
[Proviso to de nition of ‘connected person’ substituted by s. 82 (1) (b) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(5) Where any transaction, operation, scheme, agreement or understanding has been entered into between a headquarter company and—
(a) any other person that is not a resident and that
transaction, operation, scheme, agreement or understanding is in respect of the granting of nancial assistance by that other person to that headquarter company, this section does not apply to so much of that nancial assistance that is directly applied as nancial assistance to any foreign company in which the headquarter company directly or indirectly (whether alone or together with any other company forming part of the same group of companies as that headquarter company) holds at least 10 per cent of the equity shares and voting rights;
(b) any foreign company in which the headquarter company directly or indirectly (whether alone or together with any other company forming part of the same group of companies as that headquarter company) holds at least 10 per cent of the equity shares and voting rights and that transaction, operation, scheme, agreement or understanding comprises the granting of nancial assistance by that headquarter company to that foreign company, this section does not apply to that nancial assistance;
(c) any other person that is not a resident and that transaction, operation, scheme, agreement or understanding is in respect of the granting of the use, right of use or permission to use any intellectual property as de ned in section 23I (1) by that other person to that headquarter company, this section does not apply to the extent that the headquarter company—
(i) grants that use, right of use or permission to use that intellectual property to any foreign company in which the headquarter company directly or indirectly (whether alone or together with any other company forming part of the same group of companies as that headquarter company) holds at least 10 per cent of the equity shares and voting rights; and
(ii) does not make use of that intellectual property otherwise than as contemplated in subparagraph (i); or
[Para. (c) added by s. 64 (1) (d) of Act 22 of 2012 – date of commencement: 1 January 2013; this paragraph applies in respect of years of assessment commencing on or after that date.]
(d) any foreign company in which the headquarter company directly or indirectly (whether alone or together with any other company forming part of the same group of companies as that headquarter company) holds at least 10 per cent of the equity shares and voting rights and that transaction, operation, scheme, agreement or understanding comprises the granting of the use, right of use or permission to use any intellectual property as de ned in section 23I (1) by that headquarter company to that foreign company, this section does not apply to that granting to that foreign company.
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(a) the granting of any nancial assistance; or
SAIT CompendIum oF TAx LegISLATIon VoLume 1
INCOME TAX ACT – SECTIONS