Page 89 - SAIT Compendium 2016 Volume1

s 9D INCOME TAX ACT 58 OF 1962 s 9D
(g) a ship engaged in international traf c used mainly outside the Republic;
[Para. (g) added by s. 19 (1) (b) of Act 31 of 2013 – date of commencement: 1 April 2014; this new paragraph applies in respect of years of assessment commencing on or after that date.]
[De nition of ‘foreign business establishment’ inserted by s. 9 (1) (c) of Act 20 of 2006 and substituted by s. 9 (1) (b) of Act 8 of 2007.]
‘foreign company’ means any—
(a) cell or segregated account contemplated in the
de nition of ‘protected cell company’;
(b) protected cell company to the extent that—
(i) speci ed assets of that company are not segregated into structurally independent cells or segregated accounts as contemplated in paragraph (a) of the de nition of ‘protected cell company’; or
(ii) speci ed assets and liabilities of that company are not linked or attributed to cells or segregated accounts as contemplated in paragraph (b) of the de nition of ‘protected cell company’; or
(c) foreign company, as de ned in section 1, other than a protected cell company;
[De nition of ‘foreign company’ substituted by s. 22 (1) (a) of Act 45 of 2003 and by s. 9 (1) (c) of Act 8 of 2007, deleted by s. 16 (1) (b) of Act 7 of 2010 and inserted by s. 25 (1) (a) of Act 24 of 2011 – date of commencement: 1 January 2012. Inserted de nition applies in respect of foreign tax years of controlled foreign companies ending during years of assessment commencing on or after that date.]
‘foreign nancial instrument holding company’ . . . [De nition of ‘foreign nancial instrument holding
company’ substituted by s. 22 (1) (b) of Act 45 of 2003, amended by s. 14 (1) (b) of Act 31 of 2005 and by s. 9 (1) (d) and (e) of Act 20 of 2006 and deleted by s. 12 (1) (a) of Act 43 of 2014 – date of commencement: 20 January 2015.]
‘foreign tax year’ . . .
[De nition of ‘foreign tax year’ deleted by s. 14 (1) (a) of
Act 22 of 2012 – date of commencement deemed to have been 1 January 2012. The deletion applies in respect of foreign tax years ending during years of assessment commencing on or after that date.]
‘participation rights’ in relation to a foreign company means—
(a) the right to participate in all or part of the bene ts of the rights (other than voting rights) attaching to a share, or any interest of a similar nature, in that company; or
[Para. (a) substituted by s. 16 (1) (c) of Act 7 of 2010.] (b) in the case where no person has any right in that foreign company as contemplated in paragraph (a) or no such rights can be determined for any person, the right to exercise any voting rights in that company;
and
[De nition of ‘participation rights’ substituted by s. 14 (1) (c) of Act 31 of 2005, amended by s. 16 (1) (c) of Act 7 of 2010 and substituted by s. 13 (1) (a) of Act 60 of 2008 – commencement date: 1 April 2012. However, the said s. 13 (1) (a) of Act 60 of 2008 was deleted retrospectively by s. 156 (1) (a) of Act 22 of 2012 and this deletion is deemed to have come into operation on 8 January 2009; the substitution that came into operation on 1 April 2012 is therefore deemed not to have come into operation.]
‘protected cell company’ means any entity incorporated, established or formed, whether by way of conversion or otherwise, in terms of any law of any country other than the Republic—
(a) (b)
if the principal trading activities of that entity constitute the business of an insurer; and
where that law makes provision for—
(i) the segregation of speci ed assets of that entity into structurally independent cells or segregated accounts;
(ii) the linking or attribution of speci ed assets and liabilities to those cells or segregated accounts; or
(iii) separate participation rights in respect of each such cell or segregated account,
irrespective of whether or not that law provides that the establishment or formation of a cell or segregated account creates a legal person distinct from that entity.
[De nition of ‘protected cell company’ added by s. 25 (1) (c) of Act 24 of 2011 – date of commencement: 1 January 2012. Inserted de nition applies in respect of foreign tax years of controlled foreign companies ending during years of assessment commencing on or after that date.]
(2) There shall be included in the income for the year of assessment of any resident (other than a resident that is a headquarter company) who directly or indirectly holds any participation rights in a controlled foreign company— (a) on the last day of the foreign tax year of that
controlled foreign company which ends during that year of assessment, an amount equal to—
(i) where that foreign company was a controlled foreign company for the entire foreign tax year, the proportional amount of the net income of that controlled foreign company determined for that foreign tax year, which bears to the total net income of that company during that foreign tax year, the same ratio as the percentage of the participation rights of that resident in relation to that company bears to the total participation rights in relation to that company on that last day; or
(ii) where that foreign company became a controlled foreign company at any stage during that foreign tax year, at the option of the resident, either— (aa) an amount which bears to the proportional
amount determined in accordance with subparagraph (i), the same ratio as the number of days during that foreign tax year that the foreign company was a controlled foreign company bears to the total number of days in that foreign tax year; or
(bb)the proportional amount determined in the manner contemplated in subparagraph (i) (as if the day that foreign company commenced to be a controlled foreign company was the rst day of its foreign tax year), of the net income of that company for the period commencing on the day that the foreign company commenced to be a controlled foreign company and ending on the last day of that foreign tax year; or
[Item (bb) substituted by s. 22 (1) (c) of Act 45 of 2003.]
(b)
immediately before that foreign company ceased to be a controlled foreign company at any stage during that year of assessment before the last day of the foreign tax year of that controlled foreign company, an amount which shall be equal to, at the option of the resident, either—
(i)an amount determined in accordance with paragraph (a) (ii) (aa); or
(ii) the proportional amount determined in the manner contemplated in paragraph (a) (i) (as
SAIT CompendIum oF TAx LegISLATIon VoLume 1
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INCOME TAX ACT – SECTIONS