Page 82 - SAIT Compendium 2016 Volume1

s 8EA INCOME TAX ACT 58 OF 1962 s 8F
(A) all the activities of that organisation are carried on in a non-pro t manner; and
(B) none of the activities of that organisation are
intended to directly or indirectly promote the economic self-interest of any duciary or employee of that organisation, otherwise than by way of reasonable remuneration payable to that duciary or employee; or
(vii) any person that holds equity shares in an issuer contemplated in subparagraph (ii) if—
(aa) that issuer used the funds provided by that person
solely for the acquisition by that issuer, other than from a company that immediately before that acquisition formed part of the same group of companies as the issuer, of equity shares in an operating company; and
(bb) the enforcement right exercisable or enforcement obligation enforceable against that person is limited to any rights in and claims against that issuer that are held by that person.
[Sub-para. (vii) added retrospectively by s. 7 (1) (d) of Act 43 of 2014 – date of commencement deemed to have been 1 January 2013; the subparagraph applies iro any dividend or foreign dividend received or accrued during years of assessment commencing on or after that date.]
[Sub-s. (3) added by s. 11 (1) (d) of Act 31 of 2013 – date of commencement: see footnote*.]
[S. 8EA inserted by s. 21 (1) of Act 24 of 2011 and substituted by s. 12 (1) of Act 22 of 2012 – date of commencement: see footnote†.]
[Note: S. 21 of Act 24 of 2011 was retrospectively repealed by s. 165 (1) of Act 22 of 2012. The date of commencement of this repeal is deemed to have been 10 January 2012.]
8F Interest on hybrid debt instruments deemed to be dividends in specie
(1) For the purposes of this section—
‘hybrid debt instrument’ means any instrument in respect of which a company owes an amount during a year of assessment if in terms of any arrangement as de ned in section 80L—
(a) that company is in that year of assessment entitled or obliged to—
(b) (c)
(i) convert that instrument (or any part thereof) in any year of assessment to; or
(ii) exchange that instrument (or any part thereof) in any year of assessment for,
shares unless the market value of those shares is equal to the amount owed in terms of the instrument at the time of conversion or exchange;
the obligation to pay an amount in respect of that instrument is conditional upon the market value of the assets of that company not being less than the market value of the liabilities of that company; or
that company owes the amount to a connected person in relation to that company and is not obliged to redeem the instrument, excluding any instrument payable on demand, within 30 years from the date of issue of that instrument: Provided that, for the purposes of this paragraph, where the company has the right to—
(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.
[Words preceding the proviso in para. (c) of the de nition of ‘hybrid debt instrument’ substituted by s. 9 (1) (a) of Taxation Laws Amendment Act, 2015 – date of commencement: 1 January 2016.]
Prelex
Words and subparagraphs preceding the proviso in para. (c) of the de nition of ‘hybrid debt instrument’ in force until 1 January 2016
(c) that company owes the amount to a connected
person in relation to that company and is not obliged to redeem the instrument, excluding any instrument payable on demand, within 30 years—
(i) from the date of issue of the instrument; or (ii) from the end of that year of assessment:
(aa) convert that instrument to; or
(bb) exchange that instrument for,
a nancial instrument other than a share—
(A) that conversion or exchange must be deemed to be an arrangement in respect of that instrument; and (B)thatinstrumentandthat nancialinstrumentmustbe
deemed to be one and the same instrument for the purposes of determining the period within which the company is obliged to redeem that instrument;
‘instrument’ means any form of interest-bearing arrangement or debt;
* Section 11 (1) of Act 31 of 2013 (containing amendments to s. 8EA) 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 12 (1) of Act 22 of 2012 comes into operation—
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SAIT CompendIum oF TAx LegISLATIon VoLume 1