Page 415 - SAIT Compendium 2016 Volume1

Eighth Schedule INCOME TAX ACT 58 OF 1962 Eighth Schedule
75 Distributions in specie by company
(1) Where a company makes a distribution of an asset in specie to a person holding a share in that company—
(a) that company must be treated as having disposed of that asset to that person on the date of distribution for an amount received or accrued equal to the market value of that asset on that date; and
[Item (a) substituted by s. 147 of Act 31 of 2013 – date of commencement: 12 December 2013.]
(b) that person must be treated as having acquired that asset on the date of distribution and for expenditure equal to the market value of that asset on that date, which expenditure must be treated as an amount of expenditure actually
incurred for the purposes of paragraph 20 (1) (a).
[Sub-para. (1) substituted by s. 114 (1) (a) of Act 45 of 2003, by s. 29 of Act 16 of 2004, by s. 118 (1) of Act 24 of 2011
(date of commencement: 1 April 2012) and by s. 131 (1) of Act 22 of 2012 – date of commencement deemed to have been 1 April 2012; the substituted subparagraph applies iro distributions made on or after that date.]
(2) . . .
[Sub-para. (2) deleted by s. 114 (1) (b) of Act 45 of 2003.]
76 Returns of capital and foreign returns of capital by way of distributions of cash or assets in specie
[Heading of para. 76 substituted by s. 119 (1) (a) of Act 24 of 2011 – (date of commencement deemed to have been
1 January 2011) and by s. 132 (1) (a) of Act 22 of 2012 – date of commencement deemed to have been 1 January 2011.]
(1) Subject to subparagraph (2), where a return of capital or foreign return of capital by way of a distribution of cash or an asset in specie (other than a distribution of a share in terms of an unbundling transaction contemplated in section 46 (1)) is received by or accrues to a holder of a share in respect of that share, that holder must where the date of distribution of that cash or asset occurs—
(a) before valuation date, reduce the expenditure contemplated in paragraph 20 actually incurred before valuation date
in respect of that share by the amount of that cash or the market value of that asset;
(b) on or after valuation date but before 1 October 2007 and that share is disposed of by the holder of that share on or
before 31 March 2012, treat the amount of that cash or the market value of that asset as proceeds when that share is
disposed of;
(c) on or after 1 October 2007 but before 1 April 2012, treat the amount of that cash or the market value of that asset as
proceeds when that share is partly disposed of in terms of paragraph 76A.
[Sub-para. (1) substituted by s. 107 (1) (a) of Act 60 of 2001, by s. 96 (1) (a) of Act 74 of 2002 and by s. 115 (1) of Act 45 of 2003, amended by s. 81 (1) of Act 31 of 2005, by s. 84 (1) (a) of Act 35 of 2007 and by s. 60 (1) (c) of Act 3 of 2008, substituted by s. 119 (1) (b) of Act 24 of 2011, amended by s. 132 (1) (b) and (c) of Act 22 of 2012 and substituted by s. 148 (a) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(2) Where a holder of shares uses the weighted average method in respect of shares that are identical assets as contemplated in paragraph 32 (3A) (a) and a return of capital or foreign return of capital by way of a distribution of cash or an asset in specie (other than a distribution of a share in terms of an unbundling transaction contemplated in section 46 (1)) is received by or accrues to that holder of shares in respect of those shares on or after valuation date but before 1 October 2007, the weighted average base cost of those shares must be determined by—
[Words preceding item (a) substituted by s. 148 (b) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(a) deducting the amount of that cash or the market value of that asset from the base cost of those shares held when that
return of capital or foreign return of capital was received or accrued; and
(b) dividing the result by the number of those shares held when that return of capital or foreign return of capital was
received or accrued.
[Sub-para. (2) substituted by s. 132 (1) (d) of Act 22 of 2012 – date of commencement deemed to have been 1 January 2011.]
(3) . . .
[Sub-para. (3) substituted by s. 96 (1) (b) of Act 74 of 2002, by s. 30 of Act 16 of 2004 and by s. 119 (1) (c) of Act 24 of 2011 (retrospectively wef 1 January 2011) and deleted by s. 132 (1) (e) of Act 22 of 2012 – date of commencement deemed to have been 1 January 2011.]
(4) Every—
(a) company that makes a distribution to any other person; and
(b) person that pays a distribution to any other person on behalf of a company,
on or after 1 April 2012 must, by the time of the distribution or payment, notify that other person in writing of the extent to which the distribution or payment constitutes a return of capital.
[Sub-para. (4) substituted by s. 107 (1) (b) of Act 60 of 2001, deleted by s. 96 (1) (c) of Act 74 of 2002, added by s. 84 (1) of Act 60 of 2008 and substituted by s. 119 (1) (c) of Act 24 of 2011 (date of commencement: 1 January 2011) and by s. 132 (1) (f) of Act 22 of 2012 – date of commencement deemed to have been 1 January 2011.]
76A Part-disposal of shares
[Heading substituted by s. 61 (1) (a) of Act 3 of 2008.]
(1) Where—
(a) a return of capital or foreign return of capital by way of a distribution of cash or an asset in specie (other than a
share distributed in terms of an unbundling transaction contemplated in section 46 (1)) is received by or accrues to
a shareholder in respect of a share; and
(b) that return of capital or foreign return of capital is received by or accrues to that shareholder on or after 1 October
2007 and before 1 April 2012,
SAIT CompendIum oF TAx LegISLATIon VoLume 1 407
INCOME TAX ACT – SCHEDULES