Page 80 - SAIT Compendium 2016 Volume1

s 8E
INCOME TAX ACT 58 OF 1962 s 8EA
(c)
consideration of all the facts at that
time; and
(ii) (aa) that share does not rank pari passu as
regards its participation in dividends or foreign dividends with all other ordinary shares in the capital of the relevant company or, where the ordinary shares in such company are divided into two or more classes, with the shares of at least one of such classes; or
(bb) any dividend or foreign dividend payable on such share is to be calculated directly or indirectly with reference to any speci ed rate of interest or the time value of money; or
any preference share if that share is—
(i) secured by a nancial instrument; or
(ii) subject to an arrangement in terms of which a nancial instrument may not be disposed of, unless that share was issued for a qualifying purpose;
‘enforcement obligation’ in relation to a share means any obligation, whether xed or contingent, of any person other than the issuer of that share to—
(a) acquire the share from the holder of that share;
(b) make any payment in respect of that share in terms of
a guarantee, indemnity or similar arrangement; or
(c) procure, facilitate or assist with any acquisition contemplated in paragraph (a) or the making of any
payment contemplated in paragraph (b); ‘enforcement right’ in relation to a share means any right, whether xed or contingent, of the holder of that share or of any person that is a connected person in relation to that holder to require any person other than the
issuer of that share to—
(a) acquire that share from the holder;
(b) make any payment in respect of that share in terms of
a guarantee, indemnity or similar arrangement; or
(c) procure, facilitate or assist with any acquisition contemplated in paragraph (a) or the making of any
payment contemplated in paragraph (b); ‘operating company’ means—
(a) any company that carries on business continuously, and in the course or furtherance of that business—
(i) provides goods or services for consideration; or (ii) carries on exploration for natural resources;
[Para. (a) substituted by s. 7 (1) (a) of Act 43 of 2014 – date of commencement deemed to have been 1 January 2013; the substituted paragraph applies iro any dividend or foreign dividend received or accrued during years of assessment commencing on or after that date.]
(b) any company that is a controlling group company in relation to a company contemplated in paragraph (a); or
(c) any company that is a listed company; ‘preference share’ means any share—
(a) other than an equity share; or
(b) that is an equity share, if an amount of any dividend
or foreign dividend in respect of that share is based on or determined with reference to a speci ed rate of interest or the time value of money;
[Para. (b) substituted by s. 11 (1) (a) of Act 31 of 2013 – date of commencement: see footnote.†]
‘preference share’ means a preference share as de ned in section 8EA (1);
‘qualifying purpose’ means a qualifying purpose as de ned in section 8EA (1).
(2) Any dividend or foreign dividend received by or accrued to a person during any year of assessment in respect of a share must be deemed in relation to that person to be an amount of income accrued to that person if that share constitutes a hybrid equity instrument at any time during that year of assessment.
[S. 8E inserted by s. 6 of Act 70 of 1989, amended by s. 19 (1) of Act 45 of 2003, by s. 9 (1) (a), (b), (c), (d), (e) and (f) of Act 32 of 2004, by s. 7 of Act 8 of 2007, by s. 13 (1) (a), (b) and (c) of Act 7 of 2010, by s. 20 (1) (a), (b), (c), (d), (f), (g) and (h) of Act 24 of 2011 and by s. 10 (1) (a), (b), (c), (e), (f) and (g) of Act 22 of 2012 and substituted by s. 11 (1) of Act 22 of 2012 – date of commencement: see footnote*.]
8EA Dividends on third-party backed shares deemed to be income in relation to recipients thereof
(1) For the purposes of this section—
* Section 11 (1) of Act 22 of 2012 (the substitution of s. 8E of the Income Tax Act) comes into operation—
(a) in the case of dividends or foreign dividends received in cash by any person during any year of assessment of that person that commences on or after 1 January 2013, on 1 April 2012 and applies in respect of any dividend or foreign
dividend so received if that dividend or foreign dividend— (i) accrued to that person on or after 1 April 2012; and
(ii) is received by that person on or after a date three months after the date on which that dividend or foreign dividend accrued to that person; or
(b) in the case of dividends or foreign dividends— (i) received by or accrued to any person; and
(ii) that are not received by and accrued to that person as contemplated in paragraph (a),
on 1 January 2013 and applies in respect of any dividend or foreign dividend so received and accrued during years of assessment of that person that commence on or after that date.
† Section 11 (1) of Act 31 of 2013 (containing amendments to s. 8EA) comes into operation—
(a)
(b)
in the case of dividends or foreign dividends received in cash by any person during any year of assessment of that person that commences on or after 1 January 2013, on 1 April 2012 and applies in respect of any dividend or foreign dividend so received if that dividend or foreign dividend—
(i) accrued to that person on or after 1 April 2012; and
(ii) is received by that person on or after a date three months after the date on which that dividend or foreign
dividend accrued to that person; or
in the case of dividends or foreign dividends—
(i) received by or accrued to any person; and
(ii) that are not received by and accrued to that person as contemplated in paragraph (a),
on 1 January 2013 and applies in respect of any dividend or foreign dividend so received and accrued during years of assessment of that person that commence on or after that date.
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SAIT CompendIum oF TAx LegISLATIon VoLume 1