Page 267 - SAIT Compendium 2016 Volume1

s 45 INCOME TAX ACT 58 OF 1962 s 45
an amount equal to the lesser of—
(AA) the greatest capital gain that would have been
determined in respect of any disposal of the equity share in terms of an intra-group transaction within the period of six years preceding the date on which the transferee company ceased to form part of the group of companies as contemplated in item (aa), had subsection (2) not applied in respect of that disposal; or
(BB) the capital gain that would be determined if the asset was disposed of on the date on which the transferee company ceases to form part of the group of companies as contemplated in item (aa) for an amount equal to the market value of the equity share on that date,
must be deemed to be a capital gain of the transferee company for the year of assessment in which the transferee company ceased to form part of the group of companies as contemplated in item (aa) and applied to increase the base cost of the equity share.
[Para. (bA) inserted by s. 77 (1) (n) of Act 22 of 2012 – date of commencement: 1 January 2013; this paragraph applies in respect of transactions entered into on or after that date.]
(c) Where the transferor company or transferee company contemplated in paragraph (b) is liquidated, wound up or deregistered at a time when a company which is a resident (hereinafter referred to as the ‘holding company’) holds at least 70 per cent of the equity shares of that company which is liquidated, wound up or deregistered, the holding company and the company which is liquidated, wound up or deregistered must be deemed to be one and the same company for purposes of paragraph (b).
[Para. (c) added by s. 41 (1) (b) of Act 31 of 2005 and substituted by s. 41 (1) (c) of Act 31 of 2005.]
(d) Where the transferor company or transferee company contemplated in paragraph (bA) is liquidated, wound up or deregistered at a time when a company (hereinafter referred to as the ‘holding company’), which is a resident or a controlled foreign company in relation to any resident, holds at least 70 per cent of the equity shares of that company which is liquidated, wound up or deregistered, the holding company and the company which is liquidated, wound up or deregistered must be deemed to be one and the same company for purposes of paragraph (bA).
[Para. (d) added by s. 77 (1) (o) of Act 22 of 2012 – date of commencement: 1 January 2013; this paragraph applies in respect of transactions entered into on or after that date.]
[Sub-s. (4) amended by s. 53 (1) (b) of Act 45 of 2003 and substituted by s. 35 (1) (a) of Act 32 of 2004.]
(4A) Subsection (4) (b) does not apply in respect of any asset disposed of—
(a) prior to 21 February 2008, where that transferee
company and that transferor company contemplated in that subsection cease to form part of a group of companies by reason of the coming into operation of section 52 (1) (c) of the Revenue Laws Amendment Act, 2007 (Act 35 of 2007); or
(b) on or after 1 January 2011, where that transferee company and that transferor company contemplated in that subsection cease to form part of a group of companies by reason of the coming into operation of section 6 (1) (g) of the Taxation Laws Amendment Act, 2010.
[Sub-s. (4A) inserted by s. 28 (1) (b) of Act 3 of 2008 and substituted by s. 51 (1) (e) of Act 60 of 2008 and by s. 64 (1) (c) of Act 7 of 2010.]
(4B) A transferee company and a transferor company contemplated in subsection (4) (b) must for purposes of subsection (4) be deemed to have ceased to form part of any group of companies in relation to each other if a disposal contemplated in subsection (4) forms part of any transaction, operation or scheme in terms of which—
[Words in sub-s. (4B) preceding para. (a) substituted by s. 77 (1) (p) 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) any consideration received or accrued in respect of that disposal; or
(b) more than 10 per cent of any amount derived directly or indirectly from such consideration,
has, within two years of that disposal, been disposed of—
i(i) (ii)
by that transferor company; or
by any other company forming part of the same group of companies as the transferor company,
[Para. (b) amended by s. 51 (1) (f) of Act 60 of 2008.]
to any person that does not form part of the same group of companies as the transferor company—
(aa) for no consideration;
(bb) for a consideration which does not re ect an arm’s
length price; or
(cc) by means of a distribution.
[Sub-s. (4B) inserted by s. 28 (1) (c) of Act 3 of 2008.] (5) Where a transferee company disposes of an asset, other than in terms of an involuntary disposal as contemplated in paragraph 65 of the Eighth Schedule or a disposal that would have constituted an involuntary disposal as contemplated in that paragraph had that asset not been a nancial instrument, within a period of 18 months after acquiring that asset in
terms of an intra-group transaction and—
(a) that asset constitutes a capital asset in the hands of
that transferee 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 transferee company but is subject to paragraph 10 of the Eighth Schedule for purposes 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 transferee company; or
[Sub-para. (i) substituted by s. 70 (1) (b) of Act 24 of 2011 – date of commencement: 1 January 2012; this subparagraph applies in respect of years of assessment commencing on or after that date.]
(b)
(ii) so much of any capital loss determined in respect of the disposal of that asset as does not exceed that 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 aggregate capital gain or aggregate capital loss of that transferee company for purposes of the Eighth Schedule: Provided that the amount of any capital loss so disregarded may be deducted from the amount of any capital gain determined in respect of the disposal during that year or any subsequent year of assessment of any other asset acquired by that transferee company from the transferor company in terms of an intra-group transaction; or
that asset constitutes—
(i) trading stock in the hands of that transferee
company, so much of the amount received or accrued in respect of the disposal of that trading stock as does not exceed the market value of that
SAIT CompendIum oF TAx LegISLATIon VoLume 1
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INCOME TAX ACT – SECTIONS