Page 379 - SAIT Compendium 2016 Volume1

Eighth Schedule INCOME TAX ACT 58 OF 1962 Eighth Schedule
(b) an asset of a person that is not a resident, which asset—
(i) becomes an asset of that person’s permanent establishment in the Republic otherwise than by way of acquisition;
or
(ii) ceases to be an asset of that person’s permanent establishment in the Republic otherwise than by way of a
disposal contemplated in paragraph 11;
[Para. (b) amended by s. 50 (1) (c) of Act 3 of 2008.]
(c) assets that are held by a person otherwise than as trading stock, when they commence to be held by that person as
trading stock;
(d) an asset which ceases to be held by a person as a personal-use asset otherwise than by way of a disposal contemplated
in paragraph 11;
(e) an asset which is held by a person otherwise than as a personal-use asset, when that asset commences to be held by
(f)
that person as a personal-use asset; or
an asset transferred by an insurer contemplated in section 29A from one fund contemplated in section 29A (4) to any other such fund.
(3) Where assets that are held by a person as trading stock cease to be held by that person as trading stock, otherwise than by way of a disposal contemplated in paragraph 11, that person will be treated as having disposed of those assets for a consideration equal to the amount included in that person’s income in terms of section 22 (8) and to have immediately reacquired those assets for a cost equal to that amount, which cost must be treated as an amount of expenditure actually incurred and paid for the purposes of paragraph 20 (1) (a).
[Sub-para. (3) substituted by s. 72 (1) (b) of Act 60 of 2001.]
(4) In the event of a person ceasing to be a controlled foreign company as a result of becoming a resident that person
must, subject to paragraph 24, be treated for the purposes of this Schedule as having—
(a) disposed of each of that person’s assets, other than—
(i) assets in the Republic listed in paragraph 2 (1) (b) (i) and (ii); and
(ii) assets held by that person if any amount received or accrued from the disposal of those assets would have been
taken into account for purposes of determining the net income as contemplated in section 9D of that person; and
(b) immediately reacquired each of those assets at an expenditure equal to the market value of those assets immediately before the disposal, which expenditure must be treated as an amount of expenditure actually incurred and paid for
the purposes of paragraph 20 (1) (a).
[Sub-para. (4) substituted by s. 72 (1) (b) of Act 60 of 2001, by s. 67 (1) (c) of Act 31 of 2005, by s. 50 (1) (d) of Act 3 of
2008 and by s. 75 (1) of Act 60 of 2008.]
(5) . . .
[Sub-para. (5) amended by s. 72 (1) (c) of Act 60 of 2001, substituted by s. 68 (1) of Act 74 of 2002, amended by
s. 93 (1) (c) of Act 45 of 2003, by s. 67 (1) (e) and (f) of Act 31 of 2005, by s. 71 (1) of Act 35 of 2007, by
s. 50 (1) (e), (f) and (g) of Act 3 of 2008 and by s. 94 of Act 7 of 2010 and deleted by s. 107 (1) (c) of Act 22 of 2012 – date of commencement: 1 January 2013; this deletion applies iro years of assessment commencing on or after that date.]
12A Reduction of debt
[Heading substituted by s. 127 (1) (a) of Act 31 of 2013 – substitution deemed to have come into operation on 1 January 2013 and applies in respect of years of assessment commencing on or after that date.]
(1) For the purposes of this paragraph—
[Words preceding de nition of ‘allowance asset’ substituted by s. 82 (1) (a) of Act 43 of 2014 – date of commencement deemed to have been 1 January 2013; the substitution applies iro years of assessment commencing on or after that date.]
‘allowance asset’ means a capital asset in respect of which a deduction or allowance is allowable in terms of this Act for purposes other than the determination of any capital gain or capital loss;
‘capital asset’ means an asset that is not trading stock;
‘debt’ does not include a tax debt as de ned in section 1 of the Tax Administration Act;
‘reduction amount’, in relation to a debt owed by a person, means any amount by which that debt is reduced less any
amount applied by that person as consideration for that reduction.
(2) Subject to subparagraph (6), this paragraph applies where a debt that is owed by a person is reduced by any amount
and—
(a)
the amount of that debt was used, directly or indirectly, to fund any expenditure—
(i) other than expenditure in respect of which a deduction or allowance was granted in terms of this Act; or
(ii) incurred in respect of an allowance asset; and
[Subitem (ii) substituted by s. 127 (1) (b) of Act 31 of 2013 – substitution deemed to have come into operation on 1 January 2013 and applies iro years of assessment commencing on or after that date.]
the amount of that reduction exceeds any amount applied by that person as consideration for that reduction. (3) Where—
(a) a debt owed by a person is reduced as contemplated in subparagraph (2); and
(b) the amount of that debt was used as contemplated in item (a) of that subparagraph to fund expenditure incurred in
respect of an asset that is held by that person at the time of the reduction of the debt,
[Item (b) substituted by s. 127 (1) (c) of Act 31 of 2013 – substitution deemed to have come into operation on 1 January 2013 and applies iro years of assessment commencing on or after that date.]
the amount of expenditure so incurred in respect of that asset must, for the purposes of paragraph 20, be reduced by the reduction amount in respect of that debt.
(4) Where—
(a) a debt owed by a person is reduced as contemplated in subparagraph (2); and
SAIT CompendIum oF TAx LegISLATIon VoLume 1 371
(b)
INCOME TAX ACT – SCHEDULES