Page 359 - SAIT Compendium 2016 Volume1

Seventh Schedule INCOME TAX ACT 58 OF 1962 Seventh Schedule ACQUISITION OF AN ASSET AT LESS THAN ACTUAL VALUE (para. 5)
5. (1) Where an asset has been acquired by an employee as contemplated in paragraph 2 (a), the cash equivalent of the value of the taxable bene t shall be so much of the value of such asset (as determined under subparagraph (2) of this paragraph) as exceeds the value of any consideration given by the employee for such asset.
(2) The value to be placed on such asset shall be the market value thereof at the time the asset is acquired by the employee: Provided that where the asset in question is movable property (other than marketable securities or an asset which the employer had the use of prior to acquiring ownership thereof) and was acquired by the employer in order to dispose of it to the employee or the asset in question (other than marketable securities) was held by the employer as trading stock, the value to be placed thereon shall be the cost thereof to the employer or, where such asset was held as trading stock and the market value thereof was less than such cost, such market value: Provided further that where—
(a) any asset is presented by an employer to an employee as an award for bravery, such value to be placed thereon shall
be reduced by the lesser of the cost to the employer of all such assets so awarded to the employee during the year of assessment and R5 000; or
[Item (a) amended by s. 35 of Act 30 of 2002 and by s. 1 (2) (c) of Act 3 of 2008.]
(b) any asset is given by an employer to an employee for long service, such value to be placed thereon shall be reduced by the lesser of the cost to the employer of all such assets so given to the employee during the year of assessment
and R5 000.
[Item (b) amended by s. 35 of Act 30 of 2002, by s. 2 (2) (b) of Act 8 of 2007 and by s. 1 (2) (c) of Act 3 of 2008.]
[Sub-para. (2) amended by s. 57 (1) (a) of Act 101 of 1990, by s. 31 (a) of Act 21 of 1994 and by s. 46 of Act 21 of 1995.]
(3) No value shall be placed under this paragraph on fuel or lubricants supplied by an employer to his employee for use in a motor vehicle where the value of the private use of such vehicle has been determined under paragraph 7.
[Sub-para. (3) amended by s. 57 (1) (b) of Act 101 of 1990 and substituted by s. 31 (b) of Act 21 of 1994.]
(3A) No value shall be placed under this paragraph on any immovable property acquired by an employee as
contemplated in paragraph 2 (a): Provided that this subparagraph must not apply if—
(a) the remuneration proxy of the employee exceeds R250 000 in relation to the year of assessment during which the
immovable property is so acquired;
(b) the market value of the immovable property on the date of that acquisition exceeds R450 000; or
[Item (b) amended by s. 74 (1) of Act 43 of 2014 – date of commencement deemed to have been 1 March 2014; the amendment applies iro immovable property acquired on or after that date.]
(c) the employee is a connected person in relation to the employer.
[Sub-para. (3A) inserted by s. 119 (1) of Act 31 of 2013 – date of commencement: 1 March 2014; the substituted wording
applies in respect of acquisitions made on or after that date.]
(4) For the purposes of this paragraph, ‘long service’ means an initial unbroken period of service of not less than 15
years or any subsequent unbroken period of service of not less than 10 years.
[Sub-para. (4) added by s. 28 of Act 96 of 1985 and substituted by s. 31 (c) of Act 21 of 1994.]
RIGHT OF USE OF ANY ASSET (OTHER THAN RESIDENTIAL ACCOMMODATION OR ANY MOTOR
VEHICLE) (para. 6)
6. (1) Where an employee has been granted the right to use any asset (other than residential accommodation or any motor vehicle) as contemplated in paragraph 2 (b), the cash equivalent of the value of the taxable bene t shall be so much of the value of the private or domestic use of such asset (as determined under subparagraph (2) of this paragraph for the period of use) as exceeds any consideration given by the employee for the use of such asset during such period or any amount expended by the employee on the maintenance or repair of such asset.
(2) The value to be placed on the private or domestic use of such asset shall be—
(a) where the asset is held by the employer as the lessee under a lease or hiring agreement, the amount of the rental
payable by the employer in respect of the period during which the employee has the use of the asset; or
(b) where the asset is owned by the employer, an amount calculated for the period during which the employee has the use of the asset at the rate of 15 per cent per annum on the lesser of the cost of such asset to the employer or the market value thereof at the date of commencement of the period of use: Provided that where an employee is granted the sole right of the use of the asset for a period extending over the useful life of the asset or over a major portion thereof, the value to be placed on the private or domestic use of the asset shall be the cost thereof to the employer, and in such case the taxable bene t in respect of such use shall be deemed to have accrued to the employee on the
date on which he was rst granted the right of use of such asset.
[Item (b) amended by s. 29 of Act 96 of 1985.]
(3) For employees’ tax purposes an appropriate portion of the said cash equivalent shall be apportioned to each period
during the year of assessment in respect of which any cash remuneration is paid or becomes payable by the employer to the employee.
(4) No value shall be placed under this paragraph on the private or domestic use of an asset by an employee, if—
(a) such use is incidental to the use of the asset for the purposes of the employer’s business or the asset is provided by the employer as an amenity to be enjoyed by the employee at his place of work or for recreational purposes at that
place or a place of recreation provided by the employer for the use of his employees in general; or
(b) the asset consists of any equipment or machine which the employer concerned allows his employees in general to use from time to time for short periods and the value of the private or domestic use of the asset, as determined under subparagraph (2), as does not exceed an amount determined on a basis as set out in a public notice issued by the
Commissioner;
[Item (b) substituted by s. 95 of Taxation Laws Amendment Act, 2015 – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
SAIT CompendIum oF TAx LegISLATIon VoLume 1 351
INCOME TAX ACT – SCHEDULES