Page 75 - SAIT Compendium 2016 Volume1

s 8 INCOME TAX ACT 58 OF 1962 s 8A
the case of a lease referred to in the said subparagraph (ii), whereafter the consideration payable by him becomes nominal as aforesaid.
[Sub-para. (iv) added by s. 5 (1) (e) of Act 121 of 1984.]
(v) . . .
[Sub-para. (v) added by s. 5 (1) (e) of Act 121 of 1984 and deleted by s. 9 (1) (k) of Act 31 of 2013 – date of commencement: 12 December 2013.]
[Para. (bB) inserted by s. 8 (d) of Act 94 of 1983.] (bC) Any person who, as a former lessor of property referred to in paragraph (bA) or as the owner thereof, has after the termination of the lease of such property consented to the former lessee thereof using, enjoying or dealing with such property as contemplated in the said paragraph, or is deemed to have so consented under the provisions of paragraph (bB) (ii) shall not later than 14 days after the end of three months after the termination of the relevant lease advise the former lessee of the fair market value of such property as determined in accordance
with paragraph (bA).
[Para. (bC) inserted by s. 8 (d) of Act 94 of 1983 and
substituted by s. 271 of Act 28 of 2011 – date of commencement: 1 October 2012.]
(c) . . .
[Para. (c) substituted by s. 8 (e) of Act 94 of 1983 and deleted by s. 271 of Act 28 of 2011 – date of
commencement: 1 October 2012.]
8A Gains made by directors of companies or by employees in respect of rights to acquire marketable securities
(1) (a) There shall be included in the taxpayer’s income for the year of assessment the amount of any gain made by the taxpayer after the rst day of June, 1969, by the exercise, cession or release during such year of any right to acquire any marketable security (whether such right be exercised, ceded or released in whole or part), if such right was obtained by the taxpayer before 26 October 2004 as a director or former director of any company or in respect of services rendered or to be rendered by him as an employee to an employer.
[Para. (a) substituted by s. 7 of Act 32 of 2004 and by s. 17 (1) (a) of Act 24 of 2011 – date of commencement: 1 January 2012.]
(b) Where the taxpayer has exercised such right but, by reason of a condition imposed by the said company or employer or the grantor of the right, the taxpayer is not entitled to dispose of the marketable security until after the end of the said year of assessment, the gain made by the exercise of the right shall, if the taxpayer makes an election as provided in paragraph (c), not be included in his income for such year of assessment but shall be included in his income for the year of assessment during which he becomes entitled to dispose of the marketable security: Provided that in the event of the taxpayer’s death or insolvency before he becomes entitled to dispose of the marketable security the said gain shall be deemed to have been made by him on the day before the date of his death or insolvency, as the case may be, and shall be assessed accordingly.
[Para. (b) substituted by s. 8 (a) of Act 88 of 1971.]
(c) The taxpayer may, in the circumstances contem- plated in paragraph (b), elect that the provisions of that paragraph shall apply in respect of the gain referred to in that paragraph, and such election shall be in writing and shall be furnished to the Commissioner not later than the date on which the taxpayer’s return of income is furnished for the year of assessment referred to in paragraph (a), or
within such further time as the Commissioner may allow. (2) For the purposes of this section—
(a) a gain shall be deemed to have been made by the taxpayer by the exercise of a right to acquire any marketable security if the amount by which the market value of such marketable security at the time such right was exercised exceeds the consideration given by the taxpayer for such marketable security and any consideration given by him for such right or the grant of such right: Provided that such market value shall for the purpose of this paragraph be deemed to be the sum which a person having the right freely to dispose of such marketable security might reasonably expect to obtain from a sale of such marketable security in the open market;
(b) where the taxpayer for a consideration accepts a restriction upon his right to acquire any marketable security such right shall be deemed to be released in part;
(c) where any gain is made by the exercise, cession or release of a right to acquire any marketable security, such gain shall be deemed to be made at the time when such right is exercised, ceded or released, as the case may be.
(3) The amount to be included in the taxpayer’s income in respect of any gain referred to in subsection (1) shall be—
(a) where such gain is made by the exercise of a right to
obtain any marketable security, the amount referred
to in subsection (2) (a); or
(b) where such gain is made by the cession or release of
a right to obtain any marketable security, the amount by which the amount or value of the consideration received by or accrued to the taxpayer for the cession or release, exceeds the amount or value of any consideration given by the taxpayer for such right or the grant of such right.
(4) In determining under subsections (2) (a) and (3) whether any gain has been made by the exercise, cession or release of a right to obtain any marketable security, and in determining the amount of such gain—
(a) where any consideration was given by the taxpayer for such right or the grant of such right and the right is exercised, ceded or released in part only or the consideration was given for something in addition to the right, only the portion of such consideration which relates to so much of the right as is exercised, ceded or released, as the case may be, shall be deductible and for that purpose a fair apportionment of such consideration shall be made; and
(b) no deduction shall be made in respect of any consideration in the form of services rendered or to be rendered or anything done or to be done or not to be done.
(5) Where any right (hereinafter referred to as the rst right) to acquire any marketable security is ceded or released by the taxpayer in whole or in part for a consideration which consists of or includes another right (hereinafter referred to as the second right) to acquire such marketable security or any other marketable security— (a) the second right shall for the purposes of this section
not be deemed to be consideration for the cession or
release of the rst right; and
(b) any gain made by the taxpayer (other than a gain in
respect of which section 8C applies or will apply) by the exercise, cession or release of the second right, shall be determined and included in the taxpayer’s income as though such gain had been made by the exercise, cession or release of the rst right, and for the purpose of determining such gain, the amount to be deducted under subsection (2) (a) or (3) in
SAIT CompendIum oF TAx LegISLATIon VoLume 1
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INCOME TAX ACT – SECTIONS