Page 396 - SAIT Compendium 2016 Volume1

Eighth Schedule INCOME TAX ACT 58 OF 1962 Eighth Schedule
(2) Subparagraph (1) does not apply in respect of the disposal of—
(a) a right contemplated in section 8A;
(b) an asset in the circumstances contemplated in section 10 (1) (nE);
(c) a qualifying equity share contemplated in section 8B by an employer, associated institution or any other person by
arrangement with the employer, as contemplated in paragraph 1 of the Seventh Schedule, to an employee; or
(d) . . .
[Item (d) substituted by s. 72 (1) of Act 31 of 2005 and deleted by s. 98 of Act 7 of 2010.]
(e) any asset in respect of which section 40CA applies.
[Item (e) substituted by s. 134 (1) (c) of Act 31 of 2013 – substitution deemed to have come into operation on 1 April 2013
and applies iro shares acquired or disposed of on or after that date.]
[Sub-para. (2) added by s. 87 (1) (c) of Act 60 of 2001 and substituted by s. 63 (1) (b) of Act 32 of 2004.]
39 Capital losses determined in respect of disposals to certain connected persons
(1) A person must, when determining the aggregate capital gain or aggregate capital loss of that person, disregard any capital loss determined in respect of the disposal of an asset to any person—
(a) who was a connected person in relation to that person immediately before that disposal; or
(b) which is immediately after the disposal—
(i) a member of the same group of companies as that person; or
(ii) a trust with a bene ciary which is a member of the same group of companies as that person.
[Item (b) substituted by s. 26 (b) of Act 16 of 2004.] [Sub-para. (1) substituted by s. 100 of Act 45 of 2003.]
(2) A person’s capital loss which is disregarded in terms of subparagraph (1) may be deducted from that person’s capital gains determined in respect of disposals of assets during that year or subsequent years to the same person to whom the disposal giving rise to that capital loss was made, if at the time of those subsequent disposals, that person is still a connected person in relation to that person.
(3) For the purposes of subparagraph (1), a connected person in relation to—
(a) a natural person does not include a relative of that person other than a parent, child, stepchild, brother, sister,
grandchild or grandparent of that person; or
(b) a fund of an insurer contemplated in section 29A does not include another such fund of that insurer in respect of the
disposal of an asset by such fund to another such fund.
[Item (b) substituted by s. 73 (1) (a) of Act 31 of 2005.]
[Sub-para. (3) substituted by s. 88 (1) of Act 60 of 2001 and amended by s. 63 (1) of Act 8 of 2007.]
(4) Subparagraph (1) does not apply in respect of the disposal by a trust of any right, marketable security or equity instrument contemplated in section 8A or 8C to a bene ciary of that trust, if—
(a) that right, marketable security or equity instrument is disposed of to that bene ciary—
(i) by virtue of that bene ciary’s employment with an employer, directorship of a company or services rendered or to be rendered by that bene ciary as an employee to an employer; or
(ii) as a result of the exercise, cession, release, conversion or exchange by that bene ciary of the right, marketable security or equity instrument contemplated in subitem (i); and
(b) that trust is an associated institution as contemplated in paragraph 1 of the Seventh Schedule in relation to that
employer or company.
[Sub-para. (4) added by s. 73 (1) (b) of Act 31 of 2005.]
39A Disposal of asset for unaccrued amounts of proceeds
(1) Where a person during any year of assessment disposes of an asset and all the proceeds from the disposal of that asset will not accrue to that person during that year, that person must, when determining the aggregate capital gain or aggregate capital loss for that year or any subsequent year of assessment, disregard any capital loss determined in respect of that disposal.
(2) A person’s capital loss which is disregarded during any year of assessment in terms of subparagraph (1) which has not otherwise been allowed as a deduction may be deducted from that person’s capital gains determined in any subsequent year in respect of the disposal of the asset contemplated in subparagraph (1).
(3) If during any year of assessment a person shows that no further proceeds will accrue to that person from the disposal contemplated in subparagraph (1), so much of the capital loss contemplated in that subparagraph as has not been deducted from any subsequent capital gains as contemplated in subparagraph (2), may be taken into account in determining that person’s aggregate capital gain or aggregate capital loss for that year of assessment.
[S. 39A inserted by s. 64 (1) of Act 32 of 2004.]
40 Disposal to and from deceased estate
(1) A person who dies before 1 March 2016 must be treated as having disposed of his or her assets, other than—
[Words preceding item (a) substituted by s. 112 (1) of Taxation Laws Amendment Act, 2015 (‘deceased person’ replaced by ‘person who dies before 1 March 2016’) – date of commencement: 1 March 2016.]
(a) assets transferred to the surviving spouse of that deceased person as contemplated in paragraph 67 (2) (a);
(b) . . .
[Item (b) deleted by s. 79 (1) (a) of Act 60 of 2008.]
(c) a long-term insurance policy of the deceased which if the proceeds of the policy had been received by or accrued to
the deceased, the capital gain or capital loss determined in respect of that disposal would be disregarded in terms of paragraph 55; or
388
SAIT CompendIum oF TAx LegISLATIon VoLume 1