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s 42
INCOME TAX ACT 58 OF 1962 s 42
(ii)
with any other asset-for-share transaction that is concluded—
(aa)on the same terms as that asset-for-share
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
an asset to a portfolio of a hedge fund collective
investment scheme.
(iii) in the case of the disposal of an asset that constitutes trading stock, the amount taken into account in respect of that asset in terms of section 11 (a) or 22 (1) or (2),
that must be attributed to the part of the asset deemed to have been disposed of other than in terms of an asset- for-share transaction, must bear the same ratio to the respective amounts referred to in subparagraphs (i) to (iii) as the market value of the consideration not consisting of equity shares issued by that company bears to the market value of the total consideration in respect of that asset. [Sub-s. (4) amended by s. 50 (1) (e) and (g) of Act 45 of 2003 and by s. 53 (1) (o) and (p) of Act 35 of 2007.]
(5) Where a person—
(a) acquired any equity share in a company in terms of an
asset-for-share transaction; and
[Para. (a) substituted by s. 53 (1) (q) of Act 35 of 2007.] (b) disposes of any such equity share (other than by way of an intra-group transaction contemplated in section 45, an unbundling transaction contemplated in section 46 or a liquidation distribution contemplated in section 47, an involuntary disposal as contemplated in paragraph 65 of the Eighth Schedule or the death of that person) within a period of 18 months after the date of acquisition contemplated in paragraph (a) and immediately prior to that disposal more than 50 per cent of the market value of all the assets disposed of by that person to that company in terms of any transaction in respect of which the provisions of this Part apply, is attributable to
allowance assets or trading stock or both,
that person must, to the extent that any amount received by or accrued to that person in respect of the disposal of that share is less than or equal to the market value of that share at the beginning of such period of 18 months, include that amount in that person’s income.
[Words following para. (b) in sub-s. (5) substituted by s. 62 (1) (e) of Taxation Laws Amendment Act, 2015 – date of commencement deemed to have been 1 April 2015.]
[Sub-s. (5) amended by s. 29 of Act 20 of 2006.]
(6) Where a person—
(a) disposed of an asset to a company in terms of an
asset-for-share transaction contemplated in paragraph (a) of the de nition of ‘asset-for-share transaction’ and, within a period of 18 months after the date of that disposal, that person ceases—
(i) to hold a qualifying interest in that company, as contemplated in paragraphs (c) and (d) of the de nition of ‘qualifying interest’ (whether or not as a result of the disposal of shares in that company); or
[Sub-para. (i) substituted by s. 54 (1) (a) of Act 43 of 2014 – date of commencement deemed to have been
1 January 2013; the substituted subparagraph applies iro transactions entered into on or after that date.]
(ii) to be engaged on a full-time basis in the business of the company, or controlled group company in relation to that company, of rendering the service contemplated in paragraph (a) (i) (B) of the de nition of ‘asset-for-share transaction’,
that person is for purposes of subsection (5), section 22 or the Eighth Schedule deemed to have—
[Proviso to sub-s. (3A) added by s. 68 (1) (e) of Act 24 of 2011 (date of commencement: 1 April 2012) and substituted by s. 62 (1) (d) of Taxation Laws Amendment Act, 2015 – date of commencement deemed to have been 1 April 2015.]
Prelex
Wording of proviso to sub-s. (3A) in force until its retrospective substitution wef 1 April 2015
Provided that this subsection does not apply in respect of any asset-for-share transaction 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 asset-for-share transaction that is concluded—
(i) on the same terms as that asset-for-share transaction; and
(ii) within a period of 90 days after that disposal,
that other company holds—
(aa) at least 35 per cent of the equity shares of that listed
company or portfolio; or
(bb) 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.
Prelex
Words following para. (b) in sub-s. (5) in force until their retrospective substitution wef 1 April 2015
that person must be deemed to have disposed of that share as trading stock to the extent that any amount received by or accrued to that person in respect of the disposal of that share is less than or equal to the market value of that share at the beginning of such period of 18 months.
[Sub-s. (3A) inserted by s. 49 (1) (g) of Act 60 of 2008.]
(4) Where—
(a) a person disposes of an asset to a company in terms of
an asset-for-share transaction; and
[Para. (a) substituted by s. 50 (1) (e) of Act 45 of 2003, by s. 53 (1) (n) of Act 35 of 2007 and by s. 49 (1) (h) of Act 60 of 2008.]
(b) that person becomes entitled, in exchange for that asset, to any consideration in addition to any equity shares issued by the company to that person, other than any debt assumed by that company as contemplated in subsection (8),
[Para. (b) substituted by s. 50 (1) (e) of Act 45 of 2003.] the disposal of that asset to that company contemplated
in paragraph (a) must, to the extent that any equity shares are issued by the company to that person, be deemed to be a disposal in terms of an asset-for-share transaction for purposes of this section, and to the extent that such person becomes entitled to any other consideration, as contemplated in paragraph (b), be deemed to be a disposal of part of that asset other than in terms of an asset-for-share transaction, in which case the amount to be determined in respect of—
(i) in the case of a disposal of a capital asset, the base cost of that asset at the time of that disposal;
(ii) in the case of a disposal of an allowance asset, the amount of the allowances allowed to that person in respect of that asset; or
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