Page 76 - SAIT Compendium 2016 Volume1

s 8A
INCOME TAX ACT 58 OF 1962 s 8B
respect of the amount or value of the consideration given by the taxpayer for the second right shall be deemed to be the consideration given by the taxpayer for the rst right or the grant of such right, less so much of the amount or value of that consideration as has been offset by any consideration other than the consideration consisting of the second right.
[Para. (b) substituted by s. 8 (b) of Act 88 of 1971 and by s. 10 (1) of Act 31 of 2005.]
(6) For the purposes of this section, a gain made by any person other than the taxpayer by the exercise, cession or release of a right to acquire any marketable security shall be deemed to be made by the taxpayer and shall be included in the taxpayer’s income as though it were a gain referred to in subsection (1)—
(a) if that right was originally obtained by any person other than the taxpayer by reason of the taxpayer’s of ce or former of ce as a director of any company or any services rendered or to be rendered by the taxpayer as an employee of any employer; or
(b) if that right was originally obtained by the taxpayer 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, and—
(i) the right was ceded by the taxpayer to any person otherwise than by or under a cession made by way of a bargain at arm’s length; or
(ii) the gain was made by a relative of the taxpayer.
[Sub-s. (6) substituted by s. 8 (c) of Act 88 of 1971.]
(7) The provisions of subsections (2), (3), (4) and (5) shall mutatis mutandis apply in relation to the
determination of any gain referred to in subsection (6). (8) Where any gain is made after the rst day of June, 1969, by the exercise, cession or release of a right to acquire any marketable security granted to any person on or before that date, the amount required to be included in income under this section in respect of such gain shall be reduced by an amount which bears to the amount of the gain, as determined under the preceding provisions of this section, the same ratio as the exemption period, as determined under subsection (9) in relation to the said
gain, bears to the accrual period, as so determined.
[Sub-s. (8) substituted by s. 8 (1) of Act 52 of 1970.]
(9) For the purposes of determining any reduction to be made under subsection (8) in respect of any gain made by the exercise, cession or release or any right to acquire any marketable security—
(a) the exemption period shall be deemed to be the period commencing on the date on which the person referred to in subsection (8) was granted such right and ending on the rst day of June, 1969; and
(b) the accrual period shall be deemed to be the period commencing on the rst day of the exemption period and ending on the date on which such right is exercised, ceded or released, as the case may be.
(10) For the purposes of this section ‘marketable security’ means any security, debenture, share, option or other interest capable of being sold in a share-market or exchange or otherwise.
[Sub-s. (10) substituted by s. 17 (1) (b) of Act 24 of 2011 – date of commencement: 1 January 2012.]
[S. 8A inserted by s. 11 of Act 89 of 1969.]
8B Taxation of amounts derived from broad- based employee share plan
(1) Notwithstanding section 9C, there must be included in the income of a person for a year of assessment any gain made by that person during that year from the disposal
of any qualifying equity share or any right or interest in a qualifying equity share, which is disposed of by that person within ve years from the date of grant of that qualifying equity share, otherwise than—
(a) in exchange for another qualifying equity share as contemplated in subsection (2);
(b) on the death of that person; or (c) on the insolvency of that person.
[Sub-s. (1) substituted by s. 11 (1) (a) of Act 31 of 2005 and amended by s. 10 (1) of Act 35 of 2007.]
(2) If a person disposes of a qualifying equity share in exchange solely for any other equity share in that employer or any company that is an associated institution as de ned in the Seventh Schedule in relation to that employer, that other equity share acquired in exchange is deemed to be— (a) a qualifying equity share which was acquired by that
person on the date of grant of the qualifying equity
share disposed of in exchange; and
(b) acquired for a consideration equal to any consideration
given for the qualifying equity share disposed of in
exchange.
[Sub-s. (2) substituted by s. 11 (1) (b) of Act 31 of 2005 and amended by s. 10 (1) (a) of Act 60 of 2008 and by s. 11 (1) (a) of Act 7 of 2010.]
(2A) If a person acquires any equity share by virtue of any qualifying equity share held by that person, that other equity share so acquired is deemed to be a qualifying equity share which was acquired by that person on the date of grant of the qualifying equity share so held by that person.
[Sub-s. (2A) inserted by s. 11 (1) (c) of Act 31 of 2005.]
(2B) If a person disposes of any right or interest in a qualifying equity share, the amount of consideration incurred in respect of the acquisition of that qualifying equity share that is attributable to that right or interest must be determined in accordance with the ratio that the amount received for the disposal of that right or interest bears to the market value of that qualifying equity share immediately before that disposal.
[Sub-s. (2B) inserted by s. 11 (1) (c) of Act 31 of 2005.] (3) For the purposes of this section—
‘broad-based employee share plan’ of an employer
means a plan in terms of which—
(a) equity shares in that employer, or in a company that
is an associated institution as de ned in the Seventh Schedule in relation to the employer, are acquired by employees of that employer, for consideration which does not exceed the minimum consideration required by the Companies Act, 1973 (Act 61 of 1973);
[Para. (a) substituted by s. 10 (1) (b) of Act 60 of 2008.] (b) employees who participate in any other equity scheme of that employer or of a company that is an associated institution as de ned in the Seventh Schedule in relation to that employer are not entitled to participate and where at least 80 per cent of all other employees who are employed by that employer on a permanent basis on the date of grant (and who have continuously been so employed on a full-time basis for at least one
year) are entitled to participate;
[Para. (b) substituted by s. 10 (1) (b) of Act 60 of 2008.] (c) the employees who acquire the equity shares as contemplated in paragraph (a) are entitled to all dividends and foreign dividends and full voting rights
in relation to those equity shares; and
[Para. (c) substituted by s. 11 (1) (d) of Act 31 of 2005, by s. 6 (1) (a) of Act 20 of 2006, by s. 10 (1) (b) of Act 60 of 2008 and by s. 18 (1) of Act 24 of 2011 – date of commencement: 1 April 2012.]
(d) no restrictions have been imposed in respect of the disposal of those equity shares, other than—
68 SAIT CompendIum oF TAx LegISLATIon VoLume 1