Page 35 - SAIT Compendium 2016 Volume1

s 1 INCOME TAX ACT 58 OF 1962 s 1
Commissioner having regard to the circumstances of
the case may approve;
[De nition of ‘ nancial year’ inserted by s. 1 (a) of Act 6 of 1963 and substituted by s. 6 (1) (a) of Act 89 of 1969 and by s. 2 (1) (a) of Act 94 of 1983.]
‘foreign company’ means any company which is not a resident;
[De nition of ‘foreign company’ inserted by s. 6 (1) (h) of Act 7 of 2010.]
‘foreign dividend’ means any amount that is paid or payable by a foreign company in respect of a share in that foreign company where that amount is treated as a dividend or similar payment by that foreign company for the purposes of the laws relating to—
(a) tax on income on companies of the country in which that foreign company has its place of effective management; or
(b) companies of the country in which that foreign company is incorporated, formed or established, where the country in which that foreign company has its place of effective management does not have any applicable laws relating to tax on income,
but does not include any amount so paid or payable that—
(i) constitutes a redemption of a participatory interest in an arrangement or scheme contemplated in paragraph (e) (ii) of the de nition of ‘company’; or
(ii) . . .
[Para. (ii) deleted by s. 2 (1) (f) of Act 22 of 2012 – deletion deemed to have come into operation on 1 March 2012.]
(iii) constitutes a share in that foreign company;
[Para. (iii) added by s. 2 (1) (g) of Act 22 of 2012 – addition deemed to have come into operation on 1 January 2011.]
[De nition of ‘foreign dividend’ inserted by s. 12 (1) (e) of Act 45 of 2003 and substituted by s. 6 (1) (i) of Act 7 of 2010 and by s. 7 (1) (k) of Act 24 of 2011 – date of commencement: 1 January 2011.]
‘foreign equity instrument’ . . .
[De nition of ‘foreign equity instrument’ inserted by
s. 17 (1) (a) of Act 60 of 2001, amended by s. 6 (1) (i) and (j) of Act 74 of 2002 and deleted by s. 4 (1) (q) of Act 31 of 2013 – date of commencement: 12 December 2013.]
‘foreign investment entity’ means any person other than a natural person—
(a) that is not incorporated, established or formed in the
Republic;
(b) the assets of which consist solely of a portfolio of one
or more of the following:
(i)amounts in cash or that constitute cash
equivalents;
(ii) nancial instruments that—
(aa) are issued by a listed company or by the government of the Republic in the national, provincial or local sphere; or
(bb) if not issued by a listed company or by the government of the Republic in the national, provincial or local sphere, are traded by members of the general public and a market for that trade exists;
(iii) nancial instruments, the values of which are determined with reference to nancial instruments contemplated in subparagraph (ii); or
(c) (d)
(iv) rights to receive any asset contemplated in subparagraph (i), (ii) or (iii),
which amounts, nancial instruments and rights are held by that person for investment purposes;
where no more than 10 per cent of the shares, units or other form of participatory interest in that person are directly or indirectly held by persons that are residents; and
where that person has no employees and has no directors or trustees that are engaged in the management of that person on a full-time basis;
*Provisions pertaining to the coming into operation of s. 7 (1) (l) of Act 24 of 2011: Section 7 (5) of Act 24 of 2011:
[De nition of ‘foreign investment entity’ inserted by s. 2 (1) (h) of Act 22 of 2012 – date of commencement: 1 January 2013 – the inserted de nition applies in respect of years of assessment commencing on or after that date.]
‘foreign partnership’, in respect of any year of assessment, means any partnership, association, body of persons or entity formed or established under the laws of any country other than the Republic if—
(a) for the purposes of the laws relating to tax on income of the country in which that partnership, association, body of persons or entity is formed or established—
(i) each member of the partnership, association, body of persons or entity is required to take into account the member’s interest in any amount received by or accrued to that partnership, association, body of persons or entity when that amount is received by or accrued to the partnership, association, body of persons or entity; and
(ii) the partnership, association, body of persons or entity is not liable for or subject to any tax on income, other than a tax levied by a municipality, local authority or a comparable authority, in that country; or
[Sub-para. (ii) substituted by s. 3 (1) (g) of Taxation Laws Amendment Act, 2015 (‘, other than a tax levied by a municipality, local authority or a comparable authority,’ inserted) – date of commencement: 31 December 2015; the substituted subparagraph applies iro years of assessment ending on or after that date.]
(b) where the country in which that partnership, association, body of persons or entity is formed or established does not have any applicable laws relating to tax on income—
(i) any amount—
(aa) that is received by or accrued to; or
(bb) of expenditure that is incurred by,
the partnership, association, body of persons or entity is allocated concurrently with the receipt, accrual or incurral to the members of that partnership, association, body of persons or entity in terms of an agreement between those members; and
(ii) no amount distributed to a member of a partnership, association, body of persons or entity may exceed the allocation contemplated in subparagraph (i) after taking into account any prior distributions made by the partnership, association, body of persons or entity;
[De nition of ‘foreign partnership’ inserted by s. 6 (1) (j) of Act 7 of 2010 and substituted by s. 7 (1) (l) of Act 24
of 2011*.]
SAIT CompendIum oF TAx LegISLATIon VoLume 1 27
INCOME TAX ACT – SECTIONS