Page 392 - SAIT Compendium 2016 Volume1

Eighth Schedule INCOME TAX ACT 58 OF 1962 Eighth Schedule
(i) any portfolio of a collective investment scheme in securities, or any portfolio of a collective investment scheme in property, carried on in the Republic, the price at which a participatory interest can be sold to the management company of the scheme on that date; or
[Subitem (i) substituted by s. 49 (c) of Act 20 of 2006 and by s. 97 of Act 7 of 2010.]
(ii) any arrangement or scheme contemplated in paragraph (e) (ii) of the de nition of ‘company’, the price at which a participatory interest can be sold to the management company of the scheme on that date or where there is not a management company the price which could have been obtained upon a sale of the asset between a willing
buyer and a willing seller dealing at arm’s length in an open market on that date;
[Subitem (ii) substituted by s. 49 (c) of Act 20 of 2006.] [Item (c) substituted by s. 78 (1) (a) of Act 74 of 2002.]
(d) a duciary, usufructuary or other similar interest in any asset, an amount determined by capitalising at 12 per cent
the annual value of the right of enjoyment of the asset subject to that duciary, usufructuary or other like interest, as determined in terms of subparagraph (2), over the expectation of life of the person to whom that interest was granted, or if that right of enjoyment is to be held for a lesser period than the life of that person, over that lesser period;
[Item (d) substituted by s. 83 (1) (b) of Act 60 of 2001 and by s. 78 (1) (b) of Act 74 of 2002.]
(e) any asset which is subject to a duciary, usufructuary or other similar interest in favour of any person, the amount by which the market value of the full ownership of that asset exceeds the value of that duciary, usufructuary or other
like interest determined in accordance with item (d);
[Item (e) substituted by s. 78 (1) (b) of Act 74 of 2002.]
(f) any asset which constitutes immovable property on which a bona de farming undertaking is being carried on, subject to subparagraph (4), either—
(i) the value of that property determined as contemplated in paragraph (b) of the de nition of ‘fair market value’ in section 1 of the Estate Duty Act; or
[Subitem (i) substituted by s. 86 (a) of Act 43 of 2014 – date of commencement: 20 January 2015.] (ii) the price contemplated in item (g);
[Item (f) amended by s. 49 (d) of Act 20 of 2006.]
(g) any other asset, the price which could have been obtained upon a sale of the asset between a willing buyer and a
willing seller dealing at arm’s length in an open market.
[Sub-para. (1) amended by s. 49 (a) of Act 20 of 2006.]
(2) For purposes of subparagraph (1) (d)—
(a) the annual value of the right of enjoyment of any asset which is subject to any duciary, usufructuary or other like interest, means an amount equal to 12 per cent of the market value of the full ownership of the asset: Provided that where the asset which is subject to that interest cannot reasonably be expected to produce an annual yield equal to 12 per cent on that value of the asset, the Commissioner must decide, on application by the taxpayer, such sum as reasonably represents the annual yield, and the sum so xed must for the purposes of subparagraph (1) (d) be treated as being the annual value of the right of enjoyment of that asset; and
[Item (a) substituted by s. 110 of Taxation Laws Amendment Act, 2015 – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
(b) the expectation of life of a person to whom an interest was granted—
(i) in the case of a natural person, must be determined in accordance with the provisions applicable in determining
the expectation of life of a person for estate duty purposes, as contemplated in the regulations issued in terms of section 29 of the Estate Duty Act; and
[Subitem (i) substituted by s. 86 (b) of Act 43 of 2014 – date of commencement: 20 January 2015.] (ii) in the case of a person other than a natural person, is a period of fty years.
[Sub-para. (2) substituted by s. 78 (1) (c) of Act 74 of 2002.]
(3) The market value of any shares of a person in a company not listed on a recognised exchange must be determined at
a value equal to the price which could have been obtained upon a sale of the share between a willing buyer and a willing seller dealing at arm’s length in an open market subject to the following—
Prelex
Wording of item (a) before substitution by s. 110 of Taxation Laws Amendment Act, 2015 wef the date of promulgation of Taxation Laws Amendment Act, 2015
(a) the annual value of the right of enjoyment of any asset which is subject to any duciary, usufructuary or other like
interest, means an amount equal to 12 per cent of the market value of the full ownership of the asset: Provided that where the Commissioner is satis ed that the asset which is subject to that interest could not reasonably be expected to produce an annual yield equal to 12 per cent on that value of the asset, the Commissioner may x such sum as representing the annual yield as may seem reasonable, and the sum so xed must for the purposes of subparagraph (1) (d) be treated as being the annual value of the right of enjoyment of that asset; and
(a) (b)
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no regard shall be had to any provision—
(i) restricting the transferability of the shares therein, and it shall be assumed that those shares were freely
transferable; or
(ii) whereby or whereunder the value of the shares is to be determined;
if upon the winding-up of the company that person would have been entitled to share in the assets of the company to an extent that is not in proportion to that person’s holding of shares, the value of the shares held by that holder of shares must not be less than the amount to which that holder of shares would have been so entitled if the company had been in the course of winding-up and the said amount had been determined as at valuation date.
[Item (b) substituted by s. 131 (b) of Act 31 of 2013 – date of commencement: 12 December 2013.]
SAIT CompendIum oF TAx LegISLATIon VoLume 1