Page 405 - SAIT Compendium 2016 Volume1

Eighth Schedule INCOME TAX ACT 58 OF 1962 Eighth Schedule
(f)
if the amount received or accrued constitutes an amount contemplated in section 10 (1) (gG) or (gH).
[Item (f) added by s. 114 (1) (c) of Act 24 of 2011 – date of commencement: 10 January 2012. This item applies iro
disposals made on or after that date.]
(2) For the purposes of subparagraph (1), ‘policy’ means a policy as de ned in section 29A with an insurer. [Sub-para. (2) added by s. 31 (c) of Act 19 of 2001.]
[Para. 55 amended by s. 31 (a) of Act 19 of 2001.]
56 Disposal by creditor of debt owed by connected person
(1) Where a creditor disposes of a debt owed by a debtor, who is a connected person in relation to that creditor, that creditor must disregard any capital loss determined in consequence of that disposal.
[Sub-para. (1) substituted by s. 119 (1) (a) of Act 22 of 2012 – date of commencement: 1 January 2013.]
(2) Despite paragraph 39, subparagraph (1) does not apply in respect of any capital loss determined in consequence of the disposal by a creditor of a debt owed by a debtor, to the extent that the amount of that debt so disposed of
represents—
(a)
[Words in sub-para. (2) preceding item (a) substituted by s. 119 (1) (b) of Act 22 of 2012 – date of commencement: 1 January 2013.]
an amount which is applied to reduce—
(i) the expenditure in respect of an asset of the debtor in terms of paragraph 12A; or
[Subitem (i) substituted by s. 138 (1) (a) 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.]
(ii) any assessed capital loss of the debtor in terms of paragraph 12A;
[Subitem (ii) substituted by s. 138 (1) (a) 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.]
[Item (a) substituted by s. 119 (1) (c) 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.]
(b) an amount which the creditor proves must be or was included in the gross income of any acquirer of that debt; [Item (b) substituted by s. 119 (1) (d) of Act 22 of 2012 – date of commencement: 1 January 2013.]
(c) an amount that must be or was included in the gross income or income of the debtor or taken into account in the determination of the balance of assessed loss of the debtor in terms of section 20 (1) (a); or
[Item (c) substituted by s. 138 (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.]
(d)
a capital gain which the creditor proves must be or was included in the determination of the aggregate capital gain or aggregate capital loss of any acquirer of the debt.
[Item (d) added by s. 65 (b) of Act 32 of 2004 and substituted by s. 119 (1) (e) of Act 22 of 2012 – date of commencement: 1 January 2013.]
[Sub-para. (2) substituted by s. 88 (1) of Act 74 of 2002 and amended by s. 119 (1) (b) of Act 22 of 2012 – date of commencement: 1 January 2013.]
[Para. 56 substituted by s. 99 (1) of Act 60 of 2001.]
57 Disposal of small business assets
(1) For purposes of this paragraph—
‘active business asset’ means—
(a) an asset which constitutes immovable property, to the extent that it is used for business purposes; or (b) an asset (other than immovable property) used or held wholly and exclusively for business purposes, but excludes—
(i) a nancial instrument; and
(ii) an asset held in the course of carrying on a business mainly to derive any income in the form of an annuity, rental
income, a foreign exchange gain or royalty or any income of a similar nature;
[De nition of ‘active business asset’ inserted by s. 89 (1) of Act 74 of 2002.]
‘small business’ means a business of which the market value of all its assets, as at the date of the disposal of the asset or interest contemplated in subparagraph (2), does not exceed R10 million.
[De nition of ‘small business’ substituted by s. 11 (1) (a) of Act 13 of 2012 – date of commencement deemed to have been 1 March 2012; the substituted de nition applies iro years of assessment commencing on or after that date.]
(2) Subject to subparagraphs (3), (4) and (5), a natural person must, when determining an aggregate capital gain or aggregate capital loss, disregard a capital gain determined in respect of the disposal of—
(a) an active business asset of a small business owned by that natural person as a sole proprietor; or
(b) an interest in each of the active business assets of a business, which quali es as a small business, owned by a partnership,
upon that natural person’s withdrawal from that partnership to the extent of his or her interest in that partnership; or (c) an entire direct interest in a company (which consists of at least 10 per cent of the equity of that company), to the extent
that the interest relates to active business assets of the business, which quali es as a small business, of that company, if that person at the time of that disposal held for his or her own bene t that active business asset, interest in the partnership, or interest in the company (as the case may be) for a continuous period of at least ve years prior to that disposal and was substantially involved in the operations of the business of that small business during that period, and—
(i) has attained the age of 55 years; or
(ii) the disposal is in consequence of ill-health, other in rmity, superannuation or death.
SAIT CompendIum oF TAx LegISLATIon VoLume 1 397
INCOME TAX ACT – SCHEDULES