Page 91 - SAIT Compendium 2016 Volume1

s 9D
(f)
INCOME TAX ACT 58 OF 1962 s 9D
(j) (k)
. . .
[Para. (j) deleted by s. 14 (1) (g) of Act 31 of 2005.]
for the purposes of paragraph 43 of the Eighth Schedule, ‘local currency’ of a controlled foreign company otherwise than in relation to a permanent establishment of that controlled foreign company, means the functional currency of that company; and
(l)
[Para. (k) substituted by s. 16 (1) (g) of Act 7 of 2010.] where the functional currency of a controlled foreign company—
(i) was the currency of a country which—
(aa) abandoned its currency; and
(bb) had an of cial rate of in ation of 100 per cent
or more for the foreign tax year preceding
the abandonment of the currency; and
(ii) the controlled foreign company adopted a new functional currency as a consequence of the abandonment contemplated in subparagraph (i)
where the resident contemplated in subsection (2) is a natural person, special trust or an insurer in respect of its individual policyholder fund, the taxable capital gain of the controlled foreign company shall, for the purposes of paragraph 10 of the Eighth Schedule, be 33,3 per cent of that company’s net capital gain for the relevant foreign tax year;
(bb) all the receipts and accruals of that controlled foreign company are—
(i) attributable to any foreign business establishment of that controlled foreign company as contemplated in subsection (9) (b); and
(ii) not required to be taken into account in terms of subsection (9A); and
[Para. (i) of the further proviso substituted by s. 16 (1) (k) of Act 7 of 2010 and by s. 12 (1) (b) of Act 43 of 2014 – date of commencement: 31 December 2014; the substituted paragraph applies iro years of assessment ending on or after that date.]
[Para. (f) substituted by s. 14 (1) (b) of Act 22 of 2012 – date of commencement deemed to have been 1 March 2012. The substitution applies in respect of foreign tax years of controlled foreign companies ending during years of assessment commencing on or after that date.]
(g) and (h) . . .
[Paras. (g) and (h) deleted by s. 14 (1) (g) of Act 31 of 2005.]
(i) . . .
[Para. (i) deleted by s. 25 (1) (e) of Act 24 of 2011 – date
of commencement: 1 April 2012. This deletion applies in respect of foreign tax years of controlled foreign companies ending during years of assessment commencing on or after that date.]
(ii)
the aggregate amount of tax payable by a controlled foreign company in respect of a foreign tax year of that controlled foreign company as contemplated in subparagraph (i) must be determined—
(aa)after taking into account any applicable agreement for the prevention of double taxation and any credit, rebate or other right of recovery of tax from any sphere of government of any country other than the Republic;
(bb)after disregarding any loss in respect of a year other than that foreign tax year or from a company other than that controlled foreign company; and
(cc) before taking into account any amount which would, had that controlled foreign company been a resident for that foreign tax year, have been included in the income of that controlled foreign company in terms of subsection (2) for that foreign tax year.
(aa),
[Sub-para. (ii) substituted by s. 16 (1) (j) of Act 7 of 2010.]
the controlled foreign company must, for the purposes of determining the cost of an asset of the controlled foreign company, be deemed to have acquired the asset in the new currency contemplated in subparagraph (ii)—
(A) on the rst day of the foreign tax year of the controlled foreign company in which; and
(B) for an amount equal to the market value of the asset on the date on which,
the new currency was adopted by the controlled
foreign company:
[Para. (l) added by s. 16 (1) (h) of Act 7 of 2010 and amended by s. 16 (1) (i) of Act 7 of 2010.]
Provided further that—
(i) the net income of a controlled foreign company in
respect of a foreign tax year shall be deemed to be nil where—
(aa) the aggregate amount of taxes on income payable
to all spheres of government of any country other than the Republic by the controlled foreign company in respect of the foreign tax year of that controlled foreign company is at least 75 per cent of the amount of normal tax that would have been payable in respect of any taxable income of the controlled foreign company had the controlled foreign company been a resident for that foreign tax year; or
[Sub-para. (ii) substituted by s. 14 (1) (c) of Act 22 of 2012 – date of commencement deemed to have been 1 January 2008. The substitution applies in respect of foreign tax years of controlled foreign companies ending during years of assessment ending on or after that date.]
[Sub-s. (2A) amended by s. 22 (1) (d) of Act 45 of 2003, by s. 13 (1) of Act 32 of 2004, by s. 14 (1) (e) of Act 31 of 2005 and by s. 12 (1) (c) of Act 17 of 2009.]
(3), (4), (4A) and (5) . . .
[Sub-ss. (3), (4), (4A) and (5) deleted by s. 10 (1) (h) of Act 59 of 2000.]
(6) The net income of a controlled foreign company in respect of a foreign tax year shall be determined in the functional currency of that controlled foreign company and shall, for purposes of determining the amount to be included in the income of any resident during any year of assessment under the provisions of this section, be translated to the currency of the Republic by applying the average exchange rate for that foreign tax year: Provided that any exchange item denominated in any currency other than the functional currency of that controlled foreign company shall be deemed not to be attributable to any permanent establishment of the controlled foreign company if the functional currency is the currency of a country which has an of cial rate of in ation of 100 per cent or more for that foreign tax year.
[Proviso to sub-s. (6) substituted by s. 19 (1) (f) of Act 31 of 2013 – date of commencement: 1 April 2014; the substitution applies in respect of years of assessment commencing on or after that date.]
[Sub-s. (6) substituted by s. 14 (1) (h) of Act 31 of 2005, amended by s. 15 (1) (h) of Act 35 of 2007, substituted by s. 16 (1) (l) of Act 7 of 2010 and amended by s. 25 (1) (f) of Act 24 of 2011 – date of commencement: 1 January 2012. This amendment applies in respect of foreign tax years of controlled
SAIT CompendIum oF TAx LegISLATIon VoLume 1
83
INCOME TAX ACT – SECTIONS