Page 244 - SAIT Compendium 2016 Volume1

s 37A INCOME TAX ACT 58 OF 1962 s 37A
37A Closure rehabilitation company or trust
(1) For purposes of determining the taxable income derived by a person from carrying on any trade, any cash paid during any year of assessment commencing on or after 2 November 2006 by that person to a company or trust shall be deducted from that person’s income if—
(a) the sole object of that company or trust is to apply its property solely for rehabilitation upon premature closure, decommissioning and nal closure, and post closure coverage of any latent and residual environmental impacts on the area covered in terms of any permit, right, reservation or permission contemplated in paragraph (d) (i) (aa) to restore one or more areas to their natural or predetermined state, or to a land use which conforms to the generally accepted principle of sustainable development;
(b) that company or trust holds assets solely for purposes contemplated in paragraph (a);
[Para. (b) substituted by s. 28 (1) (b) of Act 8 of 2007.]
(ii) those nancial instruments are issued by a person that is a connected person in relation to a person contemplated in subsection (1) (d);
[Sub-para. (ii) substituted by s. 28 (1) (e) of Act 8 of 2007.] (c) nancial instruments issued by any sphere of
government in the Republic; or
(d) any other investments which were held by that
company or trust before 18 November 2003.
(3) To the extent that the Cabinet member responsible for mineral resources is satis ed that all of the areas in terms of any permit, right, reservation or permission contemplated in subsection (1) (d) (i) (aa) that have been rehabilitated as contemplated in subsection (1) (a), the company or trust in respect of those areas must be wound-up or liquidated and its assets remaining after the
satisfaction of its liabilities must be transferred to—
[Words preceding para. (a) substituted by s. 84 (c) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(a) another company or trust as contemplated in this section as approved by the Commissioner; or
[Para. (a) substituted by s. 28 (1) (f) of Act 8 of 2007.] (b) if no such company or trust has been established, to an account or trust prescribed by the Cabinet member responsible for mineral resources as approved of by the Commissioner if the Commissioner is satis ed that such company or trust satis es the objects of
subsection (1) (a).
[Para. (b) substituted by s. 84 (d) of Act 31 of 2013 – date
of commencement: 12 December 2013.]
(4) If the Cabinet member responsible for mineral resources is satis ed that a company or trust as
contemplated in subsection (1) (a)—
[Words preceding para. (a) substituted by s. 84 (e) of Act
31 of 2013 – date of commencement: 12 December 2013.]
(a) will be able to satisfy all of the liabilities of that
company or trust; and
(b) such company or trust has suf cient assets to
rehabilitate and restore, as contemplated in subsection (1) (a), all areas to which any permit, right, reservation or permission contemplated in subsection (1) (d) (i) (aa) relates, as the case may be,
that company or trust may transfer assets not required for purposes of paragraphs (a) and (b) to another company or trust established in terms of this section as approved by the Commissioner.
[Sub-s. (4) substituted by s. 28 (1) (g) of Act 8 of 2007.] (5) (a) The constitution of a company or the instrument establishing a trust contemplated in this section must incorporate the provisions of this section and any
amendments thereto.
[Para. (a), previously Sub-s. (5), renumbered by s. 28 (1) (h) of Act 8 of 2007.]
(b) Where the constitution of a company or the instrument establishing a trust contemplated in this section does not comply with this section, it shall be deemed to comply for a period not exceeding two years, if the person responsible in a duciary capacity for the funds and the assets of that company or trust, furnishes the Commissioner with a written undertaking that that company or trust will be administered in compliance with this section.
[Para. (b) inserted by s. 28 (1) (i) of Act 8 of 2007.]
(6) If a company or trust contemplated in this section contravenes any provision of subsection (2) during any year of assessment by holding property other than property
contemplated in that subsection—
(a) an amount of taxable income is deemed to accrue
(c)
that company or trust makes distributions solely for purposes contemplated in paragraph (a), or subsection (3) or (4); and
[Para. (c) substituted by s. 28 (1) (c) of Act 8 of 2007.] (d) that person—
(i)(aa)holds a permit or right in respect of prospecting, exploration, mining or production, an old order right or OP26 right as de ned in item 1 of Schedule II or any reservation or permission for or right to the use of the surface of land as contemplated in item 9 of Schedule II to the Mineral and Petroleum Resources Development Act; or
[Item (aa) substituted by s. 28 (1) (d) of Act 8 of 2007 and by s. 84 (a) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(bb)is engaged in prospecting, exploration, mining or production in terms of any permit, right, reservation or permission as contemplated in item (aa); or
(ii) after approval by the Commissioner, paid any cash to that company or trust and that payment was not part of any transaction, operation or scheme designed solely or mainly for purposes of shifting the deduction contemplated in this subsection from another person to that person.
[Sub-s. (1) amended by s. 28 (1) (a) of Act 8 of 2007.] (2) The company or trust contemplated in subsection (1)
may only hold—
(a) nancial instruments issued by any—
(i) collective investment scheme as regulated in terms of the Collective Investment Schemes Control Act;
[Sub-para. (i) substituted by s. 84 (b) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(ii) long-term insurer as regulated in terms of the Long-term Insurance Act;
[Sub-para. (ii) substituted by s. 84 (b) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(iii) bank as regulated in terms of the Banks Act; or
[Sub-para. (iii) substituted by s. 84 (b) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(iv) mutual bank as regulated in terms of the Mutual Banks Act, 1993 (Act 124 of 1993);
(b) nancial instruments of a listed company unless— (i) those nancial instruments are issued by a
person contemplated in subsection (1) (d); or [Sub-para. (i) substituted by s. 28 (1) (e) of Act 8 of 2007.]
equal to the market value of that other property on 236 SAIT CompendIum oF TAx LegISLATIon VoLume 1