Page 409 - SAIT Compendium 2016 Volume1

Eighth Schedule INCOME TAX ACT 58 OF 1962 Eighth Schedule
(b) any distribution contemplated in subparagraph (4) by any portfolio contemplated in item (a).
[Para. 64B inserted by s. 105 (1) of Act 45 of 2003, amended by s. 79 (1) (a) and (b) of Act 31 of 2005, by s. 35 (a) and (b)
of Act 9 of 2006, by s. 65 of Act 8 of 2007, by s. 77 (1) (a) and (b) of Act 35 of 2007, by s. 58 (1) (a)–(e) of Act 3 of 2008, by s. 81 of Act 60 of 2008, by s. 108 (1) (a)–(n) of Act 7 of 2010, by s. 116 (1) (a)–(j) of Act 24 of 2011 and by s. 122 (1) (a)–(l) of Act 22 of 2012 and substituted by s. 123 (1) of Act 22 of 2012 – date of commencement: 1 January 2013; this substituted paragraph applies iro disposals made on or after that date.]
64C Disposal of restricted equity instruments
A person must disregard any capital gain or capital loss determined in respect of the disposal of any restricted equity instrument as contemplated in section 8C (4) (a), (5) (a) or (c).
[Para. 64C added by s. 118 (1) of Taxation Laws Amendment Act, 2015 – date of commencement: 1 March 2016; this addition applies iro years of assessment commencing on or after that date.]
PART IX ROLL-OVERS (paras. 65–67D)
65 Involuntary disposal
(1) A person may elect that this paragraph applies in respect of the disposal of an asset (other than a nancial instrument), where—
(a) that asset is disposed of by way of operation of law, theft or destruction;
(b) proceeds accrue to that person by way of compensation in respect of that disposal;
(c) those proceeds are equal to or exceed the base cost of that asset;
(d) (i) an amount at least equal to the receipts and accruals from that disposal has been or will be expended to acquire
one or more asset (hereinafter referred to as the ‘replacement asset or assets’);
(ii) all the replacement assets constitute assets contemplated in section 9 (2) (j) or (k);
[Subitem (ii) substituted by s. 124 (1) (a) of Act 22 of 2012 (date of commencement deemed to have been 22 December 2003; this substitution applied iro disposals made on or after that date), by s. 124 (1) (b) of Act 22 of 2012 (date of commencement deemed to have been 1 January 2012; this substitution applies iro disposals made during years of assessment commencing on or after that date) and by s. 119 (1) (a) of Taxation Laws Amendment Act, 2015 (‘(j) or’ inserted) – date of commencement deemed to have been 1 January 2012 as well; this substitution applies iro disposals made during years of assessment commencing on or after that date.]
(iii) the contracts for the acquisition of the replacement asset or assets have all been or will be concluded within 12 months after the date of the disposal of that asset; and
(iv) the replacement asset or assets will all be brought into use within three years of the disposal of that asset: Provided that the Commissioner may, on application by the taxpayer, decide to extend the period within which the contract must be concluded or asset brought into use by no more than six months if all reasonable steps were taken to conclude those contracts or bring those assets into use; and
[Proviso substituted by s. 119 (1) (b) of Taxation Laws Amendment Act, 2015 (‘, on application by the taxpayer, decide to’ inserted) – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
(e) that asset is not deemed to have been disposed of and to have been reacquired by that person.
(2) Where a person has elected in terms of subparagraph (1) that this paragraph must apply in respect of the disposal of an asset, any capital gain determined in respect of that disposal must, subject to subparagraphs (4), (5) and (6) be
disregarded when determining that person’s aggregate capital gain or aggregate capital loss.
(3) Where a person acquires more than one replacement asset as contemplated in subparagraph (1), that person must, in applying subparagraphs (4) and (5), apportion the capital gain derived from the disposal of that asset to each replacement asset in the same ratio as the receipts and accruals from that disposal respectively expended in acquiring each of those replacement
assets bear to the total amount of those receipts and accruals expended in acquiring all those replacement assets.
(4) Where a replacement asset contemplated in subparagraph (1) constitutes a depreciable asset, the person must treat as a capital gain for a year of assessment, so much of the disregarded capital gain contemplated in subparagraph (3), as bears to the total amount of that disregarded gain apportioned to that replacement asset as contemplated in subparagraph (3) the same ratio as the amount of any deduction or allowance allowed in that year in respect of the replacement asset bears to the total amount of the deduction or allowance (determined with reference to the cost or value of that asset at the
time of acquisition thereof) which is allowable for all years of assessment in respect of that replacement asset.
[Sub-para. (4) substituted by s. 27 (1) (a) of Act 16 of 2004 and by s. 78 of Act 35 of 2007.]
(5) Where a person during any year of assessment disposes of a replacement asset and any portion of the disregarded capital gain which is apportioned to that asset, has not otherwise been treated as a capital gain in terms of this paragraph, that person must treat that portion of disregarded capital gain as a capital gain from the disposal of that replacement asset
in that year of assessment.
[Sub-para. (5) substituted by s. 27 (1) (a) of Act 16 of 2004.]
(6) Where a person fails to conclude a contract or fails to bring any replacement asset into use within the period
prescribed in subparagraph (1) (d) (iii) or (iv), subparagraph (2) shall not apply and that person must—
(a) treat the capital gain contemplated in subparagraph (2) as a capital gain on the date on which the relevant period ends; (b) determine interest at the prescribed rate on that capital gain from the date of that disposal to the date contemplated
in item (a); and
(c) treat that interest as a capital gain on the date contemplated in item (a) when determining that person’s aggregate
capital gain or aggregate capital loss.
[Sub-para. (6) amended by s. 27 (1) (b) of Act 16 of 2004.]
(7) Where a replacement asset or assets constitute personal-use assets, the provisions of this paragraph shall not apply.
[Sub-para. (7) substituted by s. 27 (1) (c) of Act 16 of 2004.]
[Para. 65 amended by s. 103 (1) of Act 60 of 2001 and substituted by s. 106 (1) of Act 45 of 2003.]
SAIT CompendIum oF TAx LegISLATIon VoLume 1 401
INCOME TAX ACT – SCHEDULES