Page 271 - SAIT Compendium 2016 Volume1

s 46A INCOME TAX ACT 58 OF 1962 s 47
(2) The amount to be determined for purposes of subsection (1) is the sum of—
(a) the cost of the equity share to the connected person
contemplated in subsection (1) that rst held that share less the sum of all deductions that have been allowed in respect of the share to any connected person that held that share during that period;
(b) any amount contemplated in paragraph (n) of the de nition of ‘gross income’ in section 1 that is required to be included in the income of any connected person that held that share during that period that arises as a result of the disposal of the share by any such person; and
(c) any capital gain of any connected person that held that share during that period that arises as a result of the disposal of the share by any such person.
[S. 46A inserted by s. 30 (1) of Act 3 of 2008.]
47 Transactions relating to liquidation, winding- up and deregistration
(1) For the purposes of this section ‘liquidation distribution’ means any transaction—
company as contemplated in subparagraph (i) (bb), more than 50 per cent of the equity shares in the holding company are directly or indirectly held by a resident (whether alone or together with any other resident that forms part of the same group of companies as that resident).
[Para. (b) deleted by s. 53 (1) (b) of Act 60 of 2008, added by s. 72 (1) (e) of Act 24 of 2011 and substituted by
s. 79 (1) (a) of Act 22 of 2012 – date of commencement: 1 January 2013; the substituted paragraph applies in respect of transactions entered into on or after that date.]
[Sub-s. (1) substituted by s. 55 (1) (a) of Act 45 of 2003.] (2) Where a liquidating company disposes of—
(a) a capital asset in terms of a liquidation distribution to its holding company which acquires it as a capital asset—
(i) that liquidating company must be deemed to have disposed of that asset for an amount equal to the base cost of that asset on the date of the disposal thereof; and
(ii) that liquidating company and that holding company must, for purposes of determining any capital gain or capital loss in respect of a disposal of that asset by that holding company, be deemed to be one and the same person with respect to—
(aa) the date of acquisition of that asset by that liquidating company and the amount and date of incurral by that liquidating company of any expenditure in respect of that asset allowable in terms of paragraph 20 of the Eighth Schedule; and
(bb) any valuation of that asset effected by that liquidating company as contemplated in paragraph 29 (4) of the Eighth Schedule; or
(b) an asset held by it as trading stock in terms of a liquidation distribution to its holding company which acquires it as trading stock—
(i) that liquidating company must be deemed to have disposed of that asset for an amount equal to the amount taken into account by that liquidating company in respect of that asset in terms of section 11 (a) or 22 (1) or (2); and
(ii)that liquidating company and that holding company must, for purposes of determining any taxable income derived by that holding company from a trade carried on by it, be deemed to be one and the same person with respect to the date of acquisition of that asset by that liquidating company and the amount and date of incurral by that liquidating company of any cost or expenditure incurred in respect of that asset as contemplated in section 11 (a) or 22 (1) or (2):
Provided that in the case of a liquidation distribution contemplated in paragraph (b) of the de nition of ‘liquidation distribution’, this subsection does not apply to any asset disposed of in terms of that liquidation distribution to a holding company which is a resident and which forms part of the same group of companies (as de ned in section 1)astheliquidatingcompanyifthatassetconstitutes—
(a) a capital asset acquired by the holding company as a capital asset and the base cost of that asset exceeds the market value of that asset at the time of that disposal; or
(b) trading stock acquired by the holding company as trading stock and the amount taken into account in respect of that asset in terms of section 11 (a) or 22 (1) or (2) exceeds the market value of that asset at the time of that disposal.
(a)
in terms of which any company (hereinafter referred to as the ‘liquidating 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) to its shareholders in anticipation of or in the course of the liquidation, winding up or deregistration of that company 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, but only to the extent to which those assets are so disposed of to another company (hereinafter referred to as the ‘holding company’) which is a resident and which on the date of that disposal forms part of the same group of companies as the liquidating company; or
[Para. (a) substituted by s. 37 (1) of Act 32 of 2004, amended by s. 43 (1) (a) of Act 31 of 2005, by s. 37 (1) (a) of Act 8 of 2007, by s. 58 (1) (a) of Act 35 of 2007, by s. 53 (1) (a) of Act 60 of 2008 and by s. 50 (1) of Act 17 of 2009, substituted by s. 72 (1) (a) of Act 24 of 2011, amended by s. 72 (1) (b) and (d) of Act 24 of 2011 and substituted by s. 79 (1) (a) of Act 22 of 2012 (date of commencement:
1 January 2013; the substituted paragraph applies in respect of transactions entered into on or after that date) and by s. 59 of Act 43 of 2014 – date of commencement: 20 January 2015.]
(b) in terms of which a liquidating company which is a controlled foreign company in relation to any 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) to its shareholders in anticipation of or in the course of the liquidation, winding up or deregistration of that company—
(i) to the extent that those assets are so disposed of to a holding company which—
(aa) is a resident and which forms part of the
same group of companies (as de ned in section 1) as the liquidating company immediately before that distribution; or
(bb) is a controlled foreign company in relation to any resident;
(ii) if, immediately before that transaction, each of the shares held by the holding company in the liquidating company is held as a capital asset; and
(iii) if, immediately after that transaction, where that holding company is a controlled foreign
SAIT CompendIum oF TAx LegISLATIon VoLume 1
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INCOME TAX ACT – SECTIONS