Page 250 - SAIT Compendium 2016 Volume1

s 4OC INCOME TAX ACT 58 OF 1962 s 41
[S. 40C inserted by s. 47 (1) of Act 60 of 2008 and substituted by s. 70 (1) of Act 22 of 2012 (date of commencement: 1 January 2013; the substituted section applies in respect of distributions and issues made on or after that date), by s. 87 of Act 31 of 2013 (date of commencement: 12 December 2013) and by
s. 59 of Taxation Laws Amendment Act, 2015 – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
by the licensee in respect of the existing licence the same ratio as the value of that new licence bears to the aggregate value of the new licences,
which cost must be treated as expenditure actually incurred by the licensee in respect of the new licence or licences for the purposes of sections 11 and 22 (1) and (2).
(3) For the purposes of subsection (2) the new licence or licences must be deemed to have been acquired by the licensee on the day immediately after the conversion.
[S. 40D inserted by s. 46 (1) of Act 17 of 2009.]
40E Ceasing to be controlled foreign company
Where a controlled foreign company ceases to be a controlled foreign company during any foreign tax year of that controlled foreign company prior to 5 June 2015 solely by reason of the coming into operation of the Taxation Laws Amendment Act, 2015, section 9H (3) (b) must not apply.
[S. 40E inserted by s. 60 (1) of Taxation Laws Amendment Act, 2015 – date of commencement deemed to have been 31 December 2015; the inserted section applies iro years of assessment commencing on or after that date.]
Part III
Special rules relating to asset-for-share transactions, substitutive share-for-share transactions, amalgamation transactions, intra-group transactions, unbundling transactions and liquidation distributions (ss. 41–47) [Heading to Part III substituted by s. 51 of Act 35
of 2007 and by s. 72 (1) of Act 22 of 2012 – date of commencement: 1 January 2013; the substituted heading applies in respect of transactions entered into on or after that date.]
[Part III repealed by s. 25 (1) of Act 21 of 1995, inserted by s. 44 (1) of Act 60 of 2001 and substituted by s. 34 (1) of Act 74 of 2002.]
41 General
(1) For the purposes of this Part, unless the context otherwise indicates, any word or expression that has been de ned in section 1, shall bear the same meaning so de ned, and—
‘allowance asset’ means—
(a) a capital asset in respect of which a deduction or
allowance is allowable in terms of this Act for purposes other than the determination of any capital gain or capital loss; or
(b) any debt contemplated in section 11 (i) or (j); [De nition of ‘allowance asset’ substituted by s. 49 (1) (a)
of Act 45 of 2003 and by s. 61 (1) (a) of Act 7 of 2010.]
‘asset’ means an asset as de ned in paragraph 1 of the Eighth Schedule;
‘associated group of companies’ . . .
[De nition of ‘associated group of companies’ inserted
by s. 37 (1) (a) of Act 31 of 2005 and deleted by s. 54 (a) of Act 43 of 2014 – date of commencement: 20 January 2015.]
‘base cost’ means the base cost as de ned in paragraph 1 of the Eighth Schedule: Provided that where the base cost of an asset as at a speci c date is to be determined as contemplated in paragraph 26 or 27 of the Eighth Schedule, the amount thereof must, for purposes of section 42 or 44, be determined as if that asset had been disposed of on that date for an amount received or accrued equal to the market value of that asset as at that date;
[De nition of ‘base cost’ amended by s. 32 (a) of Act 8 of 2007 and by s. 52 (1) (a) of Act 35 of 2007.]
‘capital asset’ means an asset as de ned in paragraph 1 of the Eighth Schedule, which does not constitute trading stock; ‘company’ does not include a headquarter company and, for the purposes of sections 42 and 44, includes any
Prelex
Wording of s. 40C in force until date of promulgation of Taxation Laws Amendment Act, 2015
40C Distribution of shares and issue of shares or options for no consideration
Where a company—
(a) distributes a share in that company; or
(b) issues a share in that company or an option or other
right to the issue of a share in that company,
to a person for no consideration, the expenditure actually incurred by the person to acquire the share, option or right must be deemed to be nil.
40CA Acquisitions of assets in exchange for shares or debt issued
If a company acquires any asset, as de ned in paragraph 1 of the Eighth Schedule, from any person in exchange for—
[Words preceding para. (a) substituted by s. 89 (1) of Act 31 of 2013 – substitution deemed to have come into operation on 1 April 2013 and applies in respect of acquisitions made on or after that date.]
(a) shares issued by that company, that company must be deemed to have actually incurred an amount of expenditure in respect of the acquisition of that asset which is equal to the market value of the shares immediately after the acquisition; or
(b) any amount of debt issued by that company, that company must be deemed to have actually incurred an amount of expenditure in respect of the acquisition of that asset which is equal to that amount of debt.
[S. 40CA inserted by s. 71 (1) of Act 22 of 2012 (date of commencement: 1 January 2013; the section applies in respect of acquisitions made on or after that date) and substituted by s. 88 of Act 31 of 2013 – date of commencement: 12 December 2013.]
40D Communications licence conversions
(1) Where existing licences referred to in Chapter 15 of the Electronic Communications Act, 2005 (Act 36 of 2005), are converted to new licences in terms of section 93 of that Act, a licensee of an existing licence or licences must not recover, recoup or include in the licensee’s income for the year of assessment in which that conversion takes place any allowance allowed to the licensee in respect of the existing licence or licences.
(2) The licensee of a new licence contemplated in subsection (1) is deemed to have acquired the new licence—
(a) in the case where an existing licence is converted to a
new licence, at a cost equal to the amount taken into
account by the licensee in respect of the existing licence;
(b) in the case where two or more existing licences are converted to a new licence, at a cost equal to the aggregate of the amounts taken into account by the licensee in respect of each of the existing licences; and
(c) in the case where an existing licence is converted to two or more new licences, at a cost equal to an amount that bears to the amount taken into account
242 SAIT CompendIum oF TAx LegISLATIon VoLume 1