Page 261 - SAIT Compendium 2016 Volume1

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cern, to that resultant company as part
of that amalgamation transaction; and (ii) was not incurred by that amalgamated company for the purpose of procuring, enabling, facilitating or funding the acquisition by that resultant company of any asset in terms of that
amalgamation transaction.
[Para. (b) substituted by s. 76 (1) (d) of Act 22 of 2012 — date of commencement deemed to have been 1 January 2012; this substituted paragraph applies in respect of transactions entered into on or after that date.]
[Sub-s. (4) substituted by s. 52 (1) (c) of Act 45 of 2003, amended by s. 40 (1) (a) of Act 31 of 2005 and substituted by s. 69 (1) (c) of Act 24 of 2011 – date of commencement: 1 January 2012. This substituted subsection 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: Provided that where the amalgamated company is a portfolio of a collective investment scheme in property, the price at which the participatory interests were issued shall be added to the contributed tax capital in respect of the class of shares issued by the resultant company.
[Proviso added by s. 93 (1) (c) of Act 31 of 2013 – addition deemed to have come into operation on 24 October 2013.]
[Sub-s. (4A) inserted by s. 50 (1) (a) of Act 60 of 2008 and substituted by s. 49 (1) (c) of Act 17 of 2009 and by s. 93 (1) (b) of Act 31 of 2013 – substitution deemed to have come into operation on 1 January 2013 and applies in respect of transactions entered into on or after that date.]
(5) Where the resultant company acquires any asset from the amalgamated company in terms of an amalgamation transaction that was subject to subsection (2) or (3) and that resultant company disposes of that asset within a period of 18 months after so acquiring that asset and— (a) that asset constitutes a capital asset in the hands of
that resultant company—
(i) so much of any capital gain determined in respect
of the disposal of that asset as does not exceed the amount that would have been determined had that asset been disposed of at the beginning of that period of 18 months for proceeds equal to the market value of that asset as at that date, may not be taken into account in determining any net capital gain or assessed capital loss of that resultant company but is subject to paragraph 10 of the Eighth Schedule for purpose of determining an amount of taxable capital gain derived from that gain, which taxable capital gain may not be set off against any assessed loss or balance of assessed loss of that resultant company; or
(ii) so much of any capital loss determined in respect of the disposal of that asset as does not exceed the amount that would have been determined had that asset been disposed of at the beginning of that period of 18 months for proceeds equal to the market value of that asset as at that date, must be disregarded in determining the
INCOME TAX ACT 58 OF 1962
in terms of section 24 or 24C was allowable to that amalgamated company in respect of that contract for the year preceding that in which that contract is transferred or would have been allowable to that amalgamated company for the year of that transfer had that contract not been so transferred—
(i) no allowance allowed to that amalgamated company under those sections must be included in that amalgamated company’s income for the year of that transfer; and
(ii) that amalgamated company and that resultant company must be deemed to be one and the same person for purposes of determining the amount of any allowance—
(aa) to which that resultant company may be entitled under those sections; or
(bb) that is to be included in the income of that resultant company under those sections.
[Para. (b) substituted by s. 63 (1) (a) of Taxation Laws Amendment Act, 2015 – date of commencement: 1 January 2016; the substitution applies iro years of assessment ending on or after that date.]
Prelex
Wording of para. (b) in force until 1 January 2016 (b) a contract to a resultant company as part of a
disposal of a business as a going concern in terms of an amalgamation transaction and that contract imposes an obligation on that amalgamated company in respect of which an allowance in terms of section 24C was allowable to that amalgamated company for the year preceding that in which that contract is transferred or would have been allowable to that amalgamated company for the year of that transfer had that contract not been so transferred—
(i) no allowance allowed to that amalgamated company in respect of that obligation must be included in that amalgamated company’s income for the year of that transfer; and
(ii) that amalgamated company and that resultant company must be deemed to be one and the same person for purposes of determining the amount of any allowance—
(aa) to which that resultant company may be entitled in respect of that obligation; or
(bb) that is to be included in the income of that resultant company in respect of that obligation.
(4) The provisions of subsections (2) and (3) will not apply to a disposal of an asset by an amalgamated company to a resultant company as part of an amalgamation transaction to the extent that such asset is so disposed of in exchange for consideration other than—
(a) an equity share or shares in that resultant company; or
(b) the assumption by that resultant company of a debt of
that amalgamated company, that—
(i) was incurred by that amalgamated company—
(aa) more than 18 months before that disposal; or
(bb) within a period of 18 months before that disposal, to the extent that the debt—
(A) constitutes the re nancing of any
debt incurred as contemplated in
subparagraph (aa); or
(B) is attributable to and arose in the
ordinary course of a business undertaking disposed of, as a going con-
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INCOME TAX ACT – SECTIONS