Page 74 - SAIT Compendium 2016 Volume1

s 8 INCOME TAX ACT 58 OF 1962 s 8
consideration which is less than the fair market value of such property, it shall for the purposes of paragraph (a) be deemed that the said amount, or so much thereof as does not exceed the fair market value of such property less the amount of the consideration, if any, for which it has been acquired as aforesaid, has been applied in reduction or towards settlement of the purchase price of such property. [Para. (b) substituted by s. 8 (c) of Act 94 of 1983, by
s. 5 (1) (c) of Act 43 of 2014 (date of commencement: 20 January 2015) and by s. 8 (a) of Taxation Laws Amendment Act, 2015 – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
Prelex
Words following sub-para. (ii) of sub-s. (5) (bA) in force until date of promulgation of Taxation Laws Amendment Act, 2015
the former lessee shall be deemed for the purposes of paragraph (b) to have acquired the property for no consideration and, if the property was owned by the former lessor, the fair market value thereof shall, unless and until that value is otherwise determined to the satisfaction of the Commissioner, be deemed for the said purposes to be the cost to the former lessor of the property (or, where the said lease was a nancial lease contemplated in paragraph (b) of the de nition of ‘instalment credit agreement’ in section 1 of the Value- Added Tax Act, the cash value as de ned in that Act of the property, less a depreciation allowance calculated in accordance with paragraph (bB) (i) for the period from the commencement to the termination of the lease.
Prelex
Wording of para. (b) in force until date of promulgation of Taxation Laws Amendment Act, 2015
(b) Where any amount has been paid by any person for the right of use or occupation of any property which is thereafter acquired by that or any other person for a consideration which in the opinion of the Commissioner is not an adequate consideration or for no consideration, it shall for the purposes of paragraph (a) be deemed, unless the Commissioner having regard to the circumstances of the case otherwise decides, that the said amount, or so much thereof as does not exceed the fair market value of such property less the amount of the consideration, if any, for which it has been acquired as aforesaid, has been applied in reduction or towards settlement of the purchase price of such property.
(bA) If after the termination by the ef uxion of time or otherwise of a lease of property consisting of corporeal movable goods or of any machinery or plant in respect of which the lessor under such lease was entitled to any allowance under the provisions of this Act, the person who was the lessee under such lease (hereinafter referred to as the former lessee) is, with the express or implied consent or acquiescence of the person who was the lessor under such lease (hereinafter referred to as the former lessor) or of the owner of the property, allowed to use, enjoy or deal with the property as the former lessee may deem t—
(i) without the payment of any consideration; or
(ii) in the case of a lease without the payment of any rental or other consideration or subject to the payment of any consideration which is nominal in relation to
the fair market value of the property,
the former lessee shall be deemed for the purposes of paragraph (b) to have acquired the property for no consideration and, if the property was owned by the former lessor, the fair market value thereof shall be deemed for the said purposes to be the cost to the former lessor of the property (or, where the said lease was a nancial lease contemplated in paragraph (b) of the de nition of ‘instalment credit agreement’ in section 1 of the Value- Added Tax Act, the cash value as de ned in that Act of the property, less a depreciation allowance calculated in accordance with paragraph (bB) (i) for the period from the commencement to the termination of the lease.
[Words following sub-para. (ii) substituted by s. 8 (b)
of Taxation Laws Amendment Act, 2015 – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
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[Para. (bA) inserted by s. 8 (d) of Act 94 of 1983, amended by s. 5 (1) (c) of Act 121 of 1984 and substituted by s.
9 (1) (h) of Act 31 of 2013 – date of commencement:
12 December 2013.]
(bB) For the purposes of paragraph (bA)—
(i) the depreciation allowance shall be calculated as an aggregate of annual allowances for the years in the period for which the depreciation allowance may be made, the allowance for the rst year in the said period being calculated at the rate of 20 per cent of the said cost or cash value, as the case may be, of the property in question and the allowance for each succeeding year in that period being calculated at the said rate on the balance of the said cost or cash value, as the case may be, remaining after the deduction therefrom of the allowance or allowances calculated for the year or years preceding such succeeding year; (ii) the former lessor of the property in question, or the owner thereof, as the case may be, shall, unless and until the contrary is proved, be deemed to have consented to the former lessee using, enjoying or dealing with the property as contemplated in the said paragraph if, at the end of a period of three months reckoned after the date on which the lease in question terminated, the former lessor has not instituted proceedings to compel the former lessee to return the property to the former lessor or to relinquish possession thereof or to dispose
thereof in accordance with the terms of the lease;
[Proviso to sub-para. (ii) deleted by s. 9 (1) (i) of Act 31 of 2013 – date of commencement: 12 December 2013.]
[Sub-para. (ii) substituted by s. 5 (1) (d) of Act 121 of 1984.] (iii) where any consideration is payable in respect of the property in question for the period after the termination of the lease in question, such consideration shall be deemed to be nominal in relation to the fair market value of the property if that consideration, in relation to the period for which it is payable, amounts to less than
10 per cent per annum of the said fair market value; (iv) if after the termination of a lease referred to in the said paragraph (bA) the former lessee is required to pay a consideration in respect of his right to use, enjoy or deal with the property in question but ceases to pay such consideration or, in the case of a lease referred to in subparagraph (ii) of the said paragraph (bA), pays a consideration in respect of such right which is nominal in relation to the fair market value of the property, the said lease shall be deemed to have been terminated on the date from which the former lessee is no longer required to pay such consideration or in
SAIT CompendIum oF TAx LegISLATIon VoLume 1