Page 387 - SAIT Compendium 2016 Volume1

Eighth Schedule INCOME TAX ACT 58 OF 1962 Eighth Schedule
(i) whose interests increased in value as a result of a value shifting arrangement contemplated in subparagraph (a) is increased by that proportion of the proceeds on disposal contemplated in paragraph 35 (2) in respect of the value shifting arrangement which resulted in the increase in market value of that person’s interest; or
(ii) who acquires a direct or indirect interest in the company, trust or partnership, is that proportion of the proceeds of disposal contemplated in paragraph 35 (2) in respect of the value shifting arrangement which resulted in the acquisition of that interest.*
24 Base cost of asset of a person who becomes a resident on or after valuation date
(1) The base cost of an asset, other than an asset situated in the Republic listed in paragraph 2 (1) (b) (i) and (ii) or an asset held by a person if any amount received or accrued from the disposal of the asset would be taken into account for purposes of determining the net income as contemplated in section 9D of that person, acquired by a person before the date on which that person became a resident is the sum of the value of that asset determined in terms of subparagraphs (2) or (3) and the expenditure allowable in terms of paragraph 20 incurred on or after that date in respect of that asset.
[Sub-para. (1) substituted by s. 76 (1) (b) of Act 60 of 2001, by s. 72 (1) (a) of Act 74 of 2002 and by s. 78 (1) (a) of Act 60 of 2008.]
(2) Where an asset contemplated in paragraph 12 (2) or (4) has been disposed of by a person on or after the date on which that person commenced to be a resident and the proceeds from that disposal and the expenditure allowable in terms of paragraph 20 incurred prior to that date (determined without regard to paragraph 12 (2) or (4)) in respect of that asset are each lower than the market value of that asset as contemplated in paragraph 12 (2) or (4), that person must be treated as having acquired that asset at a cost equal to the higher of—
(a) the expenditure allowable in terms of paragraph 20 incurred in respect of that asset prior to that date; or
(b) those proceeds less the expenditure allowable in terms of paragraph 20 incurred on or after that date in respect of
that asset.
[Item (b) substituted by s. 72 (1) (c) of Act 74 of 2002.]
[Sub-para. (2) amended by s. 72 (1) (b) of Act 74 of 2002, by s. 69 (a) of Act 31 of 2005, by s. 53 (1) (a) of Act 3 of 2008
and by s. 78 (1) (b) of Act 60 of 2008.]
(3) Where an asset contemplated in paragraph 12 (2) or (4) has been disposed of by a person on or after the date on
which that person commenced to be a resident and the proceeds from the disposal of that asset and the market value of that asset as contemplated in paragraph 12 (2) or (4) are each lower than the expenditure allowable in terms of paragraph 20 incurred prior to that date (determined without regard to paragraph 12 (2) or (4)) in respect of that asset, that person must be treated as having acquired that asset at a cost equal to the higher of—
(a) that market value; or
(b) those proceeds less the expenditure allowable in terms of paragraph 20 incurred on or after that date in respect of
that asset.
[Item (b) substituted by s. 72 (1) (e) of Act 74 of 2002.]
[Sub-para. (3) amended by s. 72 (1) (d) of Act 74 of 2002, by s. 69 (b) of Act 31 of 2005, by s. 53 (1) (b) of Act 3 of 2008
and by s. 78 (1) (c) of Act 60 of 2008.]
(4) The provisions of this paragraph do not apply in respect of any asset of a person who became a resident before
1 October 2001.
[Sub-para. (4) added by s. 76 (1) (c) of Act 60 of 2001 and substituted by s. 46 of Act 20 of 2006.] [Para. 24 amended by s. 76 (1) (a) of Act 60 of 2001.]
25 Determination of base cost of pre-valuation date assets
(1) The base cost of a pre-valuation date asset (other than an identical asset in respect of which paragraph 32 (3A) has been applied), is the sum of the valuation date value of that asset, as determined in terms of paragraph 26, 27 or 28 and the expenditure allowable in terms of paragraph 20 incurred on or after the valuation date in respect of that asset.
(2) If a person has determined the base cost as contemplated in subparagraph (1) of a pre-valuation date asset which was disposed of during any prior year of assessment and in the current year of assessment—
(a) any amount of proceeds is received or accrued in respect of that disposal which has not been taken into account in
any prior year in determining the capital gain or capital loss in respect of that disposal;
(b) any amount of proceeds which was taken into account in determining the capital gain or capital loss in respect of that disposal has become irrecoverable, or has become repayable or that person is no longer entitled to those proceeds as a result of the cancellation, termination or variation of any agreement or due to the prescription or
waiver of a claim or a release from an obligation or any other event during the current year;
(c) any amount of expenditure is incurred which forms part of the base cost of that asset which has not been taken into
account in any prior year in determining the capital gain or loss in respect of that disposal; or
(d) any amount of base cost of that asset that has been taken into account in any prior year in determining the capital
gain or capital loss in respect of that disposal, has been recovered or recouped,
that person must redetermine the base cost of that asset in terms of subparagraph (1) and the capital gain or capital loss from the disposal of that asset, having regard to the full amount of the proceeds and base cost so redetermined.
[Sub-para. (2) added by s. 60 (1) (b) of Act 32 of 2004.]
* Item (ii) has been substituted by s. 112 (1) of Act 22 of 2012; the substitution was to have come into operation on 1 January 2014 and was to apply in respect of disposals made on or after that date. The said s. 112 (1) was, however, retrospectively repealed wef 1 February 2013 by s. 207 of Act 31 of 2013.
SAIT CompendIum oF TAx LegISLATIon VoLume 1 379
INCOME TAX ACT – SCHEDULES