Page 253 - SAIT Compendium 2016 Volume1

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(B) at least 25 per cent of the equity shares of that listed company or portfolio if no person other than that other company holds an equal or greater amount of equity shares in the listed company or portfolio; or
(ii) an asset to a portfolio of a hedge fund collective investment scheme; or
[Proviso to para. (a) (ii) de nition of ‘asset-for-share transaction’ substituted by s. 62 (1) (a) of Taxation Laws Amendment Act, 2015 – date of commencement deemed to have been 1 April 2015.]
42 Asset-for-share transactions
[Heading substituted by s. 26 (1) (a) of Act 3 of 2008.]
(1) For the purposes of this section—
‘asset-for-share transaction’ means any transaction—
INCOME TAX ACT 58 OF 1962
(b)
be, and which otherwise would have had to be brought to account at the time of that disposal or distribution; and the company acquiring that replacement asset and the person referred to in paragraph (a) must be treated as one and the same person for the purposes of section 8 (4) (eB), (eC) or (eD) and paragraphs 65 and 66 of the Eighth Schedule.
[Sub-s. (9) added by s. 48 (1) of Act 60 of 2008.]
(a) (i)
in terms of which a person disposes of an asset (other than an asset which constitutes a restraint of trade or personal goodwill), the market value of which is equal to or exceeds—
(aa) in the case of an asset held as a capital asset, the base cost of that asset on the date of that disposal; or
(bb) in the case of an asset held as trading stock, the amount taken into account in respect of that asset in terms of section 11 (a) or 22 (1) or (2),
to a company which is a resident, in exchange for the issue of an equity share in that company and that person—
[Words in para. (a) (i) of the de nition of ‘asset-for-share transaction’ following item (bb) substituted by s. 74 (1) (a) of Act 22 of 2012 – date of commencement: 1 January 2013; this substitution applies in respect of transactions entered into on or after that date.]
(A) at the close of the day on which that asset is disposed of, holds a qualifying interest in that company; or
(B) is a natural person who will be engaged on a full-time basis in the business of that company, or a controlled group company in relation to that company, of rendering a service; and
(ii) as a result of which that company acquires that asset from that person—
(aa) as trading stock, where that person holds it
as trading stock;
(bb) as a capital asset, where that person holds it
as a capital asset; or
(cc) as trading stock, where that person holds it
as a capital asset and that company and that person do not form part of the same group of companies:
Provided that this subparagraph does not apply in respect of any transaction which meets the requirements of subparagraph (i) in terms of which a person disposes of—
(i) an equity share in a listed company or in a portfolio of a collective investment scheme in securities or in a portfolio of a hedge fund collective investment scheme to any other company and after that disposal, together with any other transaction that is concluded—
(aa) on the same terms as that transaction; and
(bb) within a period of 90 days after that disposal,
that other company holds—
(A) at least 35 per cent of the equity shares
(b) in terms of which a person that is a company disposes of an asset that constitutes an equity share held by that person in a foreign company as a capital asset, the market value of which is equal to or exceeds the base cost of that equity share on the date of that disposal, to another foreign company in exchange for the issue of an equity share in that other foreign company and—
(i) immediately before the asset is disposed of in terms of that transaction—
(aa) that person and the other foreign company
form part of the same group of companies
(as de ned in section 1); and
(bb) the other foreign company is a controlled
foreign company in relation to any company that is a resident and that forms part of that group of companies; and
(ii) at the close of the day on which the asset is disposed of in terms of that transaction—
(aa) more than 50 per cent of the equity shares
in the foreign company are directly or indirectly held by a resident (whether alone or together with any company forming part of the same group of companies as that resident); or
(bb) at least 70 per cent of the equity shares in that other foreign company are directly or indirectly held by a resident (whether alone or together with any other company forming part of the same group of companies as that resident);
[Para. (b) of the de nition of ‘asset-for-share transaction’ substituted by s. 74 (1) (b) of Act 22 of 2012 – date of commencement: 1 January 2013; this substitution applies in respect of transactions entered into on or after that date.]
[De nition of ‘asset for share transaction’ amended by s. 50 (1) (a) of Act 45 of 2003, by s. 38 (1) (a) and (b) of Act
of that listed company or portfolio; or
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Prelex
Wording of proviso to para. (a) (ii) of de nition of ‘asset-for-share transaction’ in force until its retrospective substitution wef 1 April 2015
Provided that this subparagraph does not apply in respect of any transaction which meets the requirements of subparagraph (i) in terms of which a person disposes of an equity share in a listed company or in a portfolio of a collective investment scheme in securities to any other company and after that disposal, together with any other transaction that is concluded—
(aa) on the same terms as that transaction; and
(bb) within a period of 90 days after that disposal,
that other company holds—
(A) at least 35 per cent of the equity shares of that listed
company or portfolio; or
(B) at least 25 per cent of the equity shares of that listed
company or portfolio if no person other than that other company holds an equal or greater amount of equity shares in the listed company or portfolio; or
INCOME TAX ACT – SECTIONS