Page 300 - SAIT Compendium 2016 Volume1

s 80A INCOME TAX ACT 58 OF 1962 s 80E
(i) it was entered into or carried out by means or in a manner which would not normally be employed for bona de business purposes, other than obtaining a tax bene t; or
(ii) it lacks commercial substance, in whole or in part, taking into account the provisions of section 80C;
(b) in a context other than business, it was entered into or carried out by means or in a manner which would not normally be employed for a bona de purpose, other than obtaining a tax bene t; or
(c) in any context—
(i) it has created rights or obligations that would not
normally be created between persons dealing at
arm’s length; or
(ii) it would result directly or indirectly in the misuse
or abuse of the provisions of this Act (including
the provisions of this Part).
[S. 80A inserted by s. 34 (1) of Act 20 of 2006.]
80B Tax consequences of impermissible tax avoidance
(1) The Commissioner may determine the tax consequences under this Act of any impermissible avoidance arrangement for any party by—
(a) disregarding, combining, or re-characterising any
steps in or parts of the impermissible avoidance
arrangement;
(b) disregarding any accommodating or tax-indifferent
party or treating any accommodating or tax- indifferent party and any other party as one and the same person;
(c) deeming persons who are connected persons in relation to each other to be one and the same person for purposes of determining the tax treatment of any amount;
(d) reallocating any gross income, receipt or accrual of a capital nature, expenditure or rebate amongst the parties;
(e) re-characterising any gross income, receipt or accrual
(b)
signi cantly from, the legal form of its individual steps; or
[Para. (a) substituted by s. 40 (1) of Act 8 of 2007.] the inclusion or presence of—
(i) round trip nancing as described in section 80D; or
(ii) an accommodating or tax indifferent party as described in section 80E; or
(iii) elements that have the effect of offsetting or cancelling each other.
[S. 80C inserted by s. 34 (1) of Act 20 of 2006.]
(f)
of a capital nature or expenditure; or
treating the impermissible avoidance arrangement as if it had not been entered into or carried out, or in such other manner as in the circumstances of the case the Commissioner deems appropriate for the prevention or diminution of the relevant tax bene t.
(2) This section applies to any round tripped amounts without regard to—
(a) whether or not the round tripped amounts can be
traced to funds transferred to or received by any party
in connection with the avoidance arrangement;
(b) the timing or sequence in which round tripped
amounts are transferred or received; or
(c) the means by or manner in which round tripped
amounts are transferred or received.
(3) For the purposes of this section, the term ‘funds’
includes any cash, cash equivalents or any right or obligation to receive or pay the same.
[S. 80D inserted by s. 34 (1) of Act 20 of 2006.]
80E Accommodating or tax-indifferent parties
(1) A party to an avoidance arrangement is an accommodating or tax-indifferent party if—
(a) any amount derived by the party in connection with
the avoidance arrangement is either— (i) not subject to normal tax; or
(ii) signi cantly offset either by any expenditure or loss incurred by the party in connection with that avoidance arrangement or any assessed loss of that party; and
(b) either—
(i) as a direct or indirect result of the participation
of that party an amount that would have— (aa)been included in the gross income (including the recoupment of any amount) or receipts or accruals of a capital nature of another party would be included in the gross income or receipts or accruals of a capital
nature of that party; or
(bb) constituted a non-deductible expenditure or
loss in the hands of another party would be treated as a deductible expenditure by that other party; or
(cc) constituted revenue in the hands of another party would be treated as capital by that other party; or
(dd) given rise to taxable income to another party would either not be included in gross income or be exempt from normal tax; or
(ii) the participation of that party directly or indirectly involves a prepayment by any other party.
(2) Subject to the time limits imposed by sections 99, 100 and 104 (5) (b) of the Tax Administration Act, the Commissioner must make compensating adjustments that he or she is satis ed are necessary and appropriate to ensure the consistent treatment of all parties to the impermissible avoidance arrangement.
[Sub-s. (2) substituted by s. 271 of Act 28 of 2011 – date of commencement: 1 October 2012.]
[S. 80B inserted by s. 34 (1) of Act 20 of 2006.]
80C Lack of commercial substance
(1) For purposes of this Part, an avoidance arrangement lacks commercial substance if it would result in a signi cant tax bene t for a party (but for the provisions of this Part) but does not have a signi cant effect upon either the business risks or net cash ows of that party apart from any effect attributable to the tax bene t that would be obtained but for the provisions of this Part.
(2) For purposes of this Part, characteristics of an avoidance arrangement that are indicative of a lack of commercial substance include but are not limited to—
(a) the legal substance or effect of the avoidance
arrangement as a whole is inconsistent with, or differs
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80D Round trip nancing
(1) Round trip nancing includes any avoidance arrangement in which—
(a) funds are transferred between or among the parties
(b)
(round tripped amounts); and
the transfer of the funds would—
(i) result, directly or indirectly, in a tax bene t but for the provisions of this Part; and
(ii) signi cantly reduce, offset or eliminate any business risk incurred by any party in connection with the avoidance arrangement.