Page 259 - SAIT Compendium 2016 Volume1

s 43
(b)
(c)
INCOME TAX ACT 58 OF 1962 s 44
acquired that other equity share so acquired on the latest date on which that person acquired any share comprising the equity share so disposed of for a cost equal to the expenditure incurred by that person as contemplated in paragraph (a); and
incurred the cost contemplated in paragraph (b) on the date contemplated in that paragraph, which cost must— (i) if the equity share so acquired is acquired as a capital asset, be treated for the purposes of paragraph 20 of the Eighth Schedule as an expenditure actually incurred by that person in
respect of the equity share so acquired; or
(ii) if the equity share so acquired is acquired as trading stock, be treated for the purposes of section 11 (a) or 22 (1) or (2) as the amount to be taken into account by that person in respect of
the equity share so acquired.
of that consideration and the market value of the equity share acquired by that person in terms of that substitutive share-for-share transaction.
[Sub-s. (4) substituted by s. 92 (1) (l) of Act 31 of 2013 – substitution deemed to have come into operation on
24 October 2013 (‘4 July 2013’ retrospectively replaced by ‘24 October 2013’ by s. 124 (1) of Act 43 of 2014) and applies in respect of transactions entered into on or after that date.]
(4A) For purposes of the de nition of ‘contributed tax capital’, if the resultant company issues shares in exchange for the disposal of an asset in terms of an amalgamation transaction, the amount received by or accrued to the resultant company as consideration for the issue of shares is deemed to be equal to an amount which bears to the contributed tax capital of the amalgamated company at the time of termination contemplated in paragraph (a) (ii) of the de nition of ‘amalgamation transaction’ in subsection (1) the same ratio as the value of the shares held in the amalgamated company at that time by shareholders other than the resultant company bears to the value of all shares held in the amalgamated company at that time.
[Sub-s. (4A) added by s. 92 (1) (m) of Act 31 of 2013 – addition deemed to have come into operation on 24 October 2013 (‘4 July 2013’ retrospectively replaced by ‘24 October 2013’ by s. 124 (1) of Act 43 of 2014) and applies in respect of transactions entered into on or after that date.]
[S. 43 amended by s. 51 (1) of Act 45 of 2003, by s. 34
of Act 32 of 2004, by s. 39 (1) of Act 31 of 2005 and by s. 30 of Act 20 of 2006, repealed by s. 54 (1) of Act 35 of 2007 and inserted by s. 75 (1) of Act 22 of 2012 – date of commencement: 1 January 2013; this section applies in respect of transactions entered into on or after that date.]
43A . . .
[S. 43A inserted by s. 29 of Act 94 of 1983 and repealed
by s. 25 (1) of Act 21 of 1995.]
44 Amalgamation transactions
(1) For the purposes of this section—
‘amalgamation transaction’ means any transaction— (a) (i) in terms of which any company (hereinafter referred to as the ‘amalgamated company’) which is a resident disposes of all of its assets (other than assets it elects to use to settle any debts incurred by it in the ordinary course of its trade and other than assets required to satisfy any reasonably anticipated liabilities to any sphere of government of any country and costs of administration relating to the liquidation or winding-up) to another company (hereinafter referred to as the ‘resultant company’) which is a resident, by means of an
amalgamation, conversion or merger; and
[Sub-para. (i) substituted by s. 57 (a) of Act 43 of 2014 – date of commencement: 20 January 2015.]
[Sub-s. (2) amended by s. 92 (1) (i) of Act 31 of 2013 (deemed to have come into operation on 1 April 2013) and substituted by s. 92 (1) (j) of Act 31 of 2013 – substitution deemed to have come into operation on 24 October 2013 (‘4 July 2013’ retrospectively replaced by ‘24 October 2013’ by s. 124 (1) of Act 43 of 2014) and applies in respect of transactions entered into on or after that date.]
(3) . . .
[Sub-s. (3) deleted by s. 92 (1) (k) of Act 31 of 2013 –
deletion deemed to have come into operation on 24 October 2013 (‘4 July 2013’ retrospectively replaced by ‘24 October 2013’ by s. 124 (1) of Act 43 of 2014) and applies in respect of transactions entered into on or after that date.]
(4) (a) This subsection applies where—
(i) a person disposes of an equity share in a company in
terms of a substitutive share-for-share transaction; and (ii) that person becomes entitled, in exchange for that equity share, to any consideration other than a dividend, foreign dividend or another equity share that is acquired by that person in terms of that
substitutive share-for-share transaction.
(b) Where a person disposes of an equity share in terms of a substitutive share-for-share transaction and becomes entitled to consideration other than another equity share as
contemplated in paragraph (a) (ii)—
(i) subsection (2) must not apply to the part of the equity
share so disposed of that relates to that consideration; and
[Sub-para. (i) substituted by s. 56 of Act 43 of 2014 – date of commencement: 20 January 2015.]
(ii) either—
(aa) where that equity share is so disposed of as a capital
asset, the base cost at the time of that disposal of the part of the equity share contemplated in subparagraph (i) must be deemed to be equal to an amount which bears to the base cost of the equity share so disposed of the same ratio as the market value of that consideration bears to the sum of the market value of that consideration and the market value of the equity share acquired by that person in terms of that substitutive share-for-share transaction; or
(bb) where that interest is so disposed of as trading stock, the amount to be taken into account in terms of section 11 (a) or 22 (1) or (2) in respect of the part of the equity share contemplated in subparagraph (i) must be deemed to be equal to an amount which bears to the total amount taken into account in terms of section 11 (a) or 22 (1) or (2) in respect of the equity share so disposed of the same ratio as the market value of that consideration bears to the sum of the market value
(ii) (b) (i)
as a result of which the existence of that amalgamated company will be terminated;
in terms of which an amalgamated company which is a foreign company disposes of all of its assets (other than assets it elects to use to settle any debts incurred by it in the ordinary course of its trade and other than assets required to satisfy any reasonably anticipated liabilities to any sphere of government of any country and costs of administration relating to the liquidation or winding-up) to a resultant company which is a resident, by means of an amalgamation, conversion or merger;
[Sub-para. (i) substituted by s. 57 (b) of Act 43 of 2014 – date of commencement: 20 January 2015.]
SAIT CompendIum oF TAx LegISLATIon VoLume 1
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INCOME TAX ACT – SECTIONS