Page 385 - SAIT Compendium 2016 Volume1

Eighth Schedule INCOME TAX ACT 58 OF 1962 Eighth Schedule
exempt from tax in terms of section 10B (2) (a) or (c) had that second-mentioned controlled foreign
company been a resident;
[Subsubitem (bb) substituted by s. 110 (1) of Act 24 of 2011 (date of commencement: 1 April 2012; this substitution
applies iro disposals made on or after that date) and by s. 108 (1) (b) of Taxation Laws Amendment Act, 2015 (‘less’ replaced by ‘reduced by’ and ‘(b)’ replaced by ‘(c)’) – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
[Subitem (iii) substituted by s. 75 (1) (c) of Act 60 of 2001, by s. 71 (1) (d) of Act 74 of 2002, by s. 95 (1) (b) of Act 45 of 2003, by s. 68 (1) (d) of Act 31 of 2005, by s. 73 (b) of Act 35 of 2007 and by s. 52 of Act 3 of 2008.]
(iv) a value shifting arrangement, an amount determined in accordance with paragraph 23;
(v) an asset which was acquired by a resident by way of inheritance from the deceased estate of a person who at
the time of his or her death was not resident—
(aa) the market value of that asset immediately before the death of that deceased person; and
(bb) any expenditure contemplated in this paragraph incurred by the executor of that deceased estate in respect
of that asset in the process of liquidation or distribution of that deceased estate:
Provided that this subitem does not apply in respect of any asset so acquired which constituted an asset of that deceased person as contemplated in paragraph 2 (1) (b);
[Subitem (v) inserted by s. 45 (1) (a) of Act 20 of 2006.]
(vi) an asset which was acquired on or after the valuation date by a person from a person who at the time of that
acquisition was not a resident by means of a donation or for a consideration not measurable in money or where the person acquiring the asset is a connected person in relation to the person that is not a resident, for a consideration which does not re ect an arm’s length price, the market value of that asset on the date of its acquisition:
[Subitem (vi) substituted by s. 84 (1) of Act 43 of 2014 – date of commencement: 20 January 2015; the substitution applies iro acquisitions during any year of assessment ending on or after that date.]
Provided that where subitem (i), (ii) (bb) or (dd) applies, that person must for purposes of this paragraph disregard any expenditure actually incurred by that person in respect of that asset prior to the date on which—
(a) the market value or value placed on the asset under the Seventh Schedule, as the case may be, is determined; or (b) the asset was disposed of, where the amount received or accrued from the disposal is taken into account in
determining the gain or loss in terms of section 8C,
[Item (h) amended by s. 26 (1) (d) of Act 19 of 2001, by s. 68 (1) (e) of Act 31 of 2005 and by s. 45 (1) (b) of Act 20 of 2006.] which must for the purposes of this Part be treated as expenditure incurred in respect of that asset.
[Sub-para. (1) amended by s. 75 (1) (a) of Act 60 of 2001.]
(2) The expenditure incurred by a person in respect of an asset does not include any of the following amounts—
(a) borrowing costs, including any interest as contemplated in section 24J or raising fees;
(b) expenditure on repairs, maintenance, protection, insurance, rates and taxes, or similar expenditure; and
(c) the valuation date value of any option or right to acquire any marketable security contemplated in section 8A (1),
[Item (c) added by s. 26 (1) (h) of Act 19 of 2001.] other than borrowing costs and expenditure contemplated in subparagraph (1) (g).
[Sub-para. (2) amended by s. 26 (1) (e) of Act 19 of 2001.]
(3) The expenditure contemplated in subparagraph (1) (a) to (g), incurred by a person in respect of an asset must be reduced by any amount which—
(a)
(b)
(i) is or was allowable or is deemed to have been allowed as a deduction in determining the taxable income of that person; and
(ii) is not included in the taxable income of that person in terms of section 9C (5), before the inclusion of any taxable capital gain; or
[Item (a) substituted by s. 77 (1) (d) of Act 60 of 2008 and by s. 95 of Act 7 of 2010.]
has for any reason been reduced or recovered or become recoverable from or has been paid by any other person (whether prior to or after the incurral of the expense to which it relates), to the extent that such amount is not—
(i) taken into account as a recoupment in terms of section 8 (4) (a) or paragraph (j) of the de nition of ‘gross income’;
(ii) reduced in terms of section 12P; or
(iii) applied to reduce an amount taken into account in respect of trading stock as contemplated in section 19; or
[Item (b) substituted by s. 75 (1) (e) of Act 60 of 2001, by s. 68 (1) (f) of Act 31 of 2005, by s. 45 (1) (c) of Act 20 of 2006, by s. 60 (1) (a) of Act 8 of 2007 and by s. 111 (1) (a) of Act 22 of 2012 – date of commencement: 1 January 2013; the substituted item applies iro years of assessment commencing on or after that date.]
(c) is exempt from tax in terms of section 10 (1) (yA) and is granted or paid for purposes of the acquisition of that asset. [Item (c) deleted by s. 58 (1) (e) of Act 32 of 2004, added by s. 45 (1) (d) of Act 20 of 2006 and substituted by s. 111 (1) (a) of Act 22 of 2012 – date of commencement: 1 January 2013; the substituted item applies iro years of assessment commencing on or after that date.]
[Sub-para. (3) amended by s. 26 (1) (i) of Act 19 of 2001, by s. 75 (1) (d) of Act 60 of 2001 and by s. 111 (1) (b) of Act 22 of 2012 – date of commencement: 1 January 2013; the amendment (deletion of proviso to sub-para. (3)) applies iro years of assessment commencing on or after that date.]
(4) A person who—
(a) disposed of an asset to another person in terms of an agreement; and
(b) reacquired that asset from that other person by reason of the cancellation or termination of that agreement and the
restoration of both persons to the position they were in prior to entering into that agreement, must be treated as having acquired that asset for an amount equal to—
(i) the base cost of that asset prior to that disposal; and
SAIT CompendIum oF TAx LegISLATIon VoLume 1 377
INCOME TAX ACT – SCHEDULES