Page 96 - SAIT Compendium 2016 Volume1

s 9G INCOME TAX ACT 58 OF 1962 s 9H
9G . . .
[S. 9G inserted by s. 25 (1) of Act 60 of 2001, amended by s. 15 of Act 31 of 2005, by s. 17 (1) of Act 74 of 2002, by s. 25 (1) (a) and (b) of Act 45 of 2003 and by s. 15 of Act 60 of 2008 and repealed by s. 20 of Act 31 of 2013 – date of commencement: 12 December 2013.]
9H Change of residence, ceasing to be controlled foreign company or becoming headquarter company
(1) For the purposes of this section—
‘asset’ means an asset as de ned in paragraph 1 of the Eighth Schedule; and
‘market value’, in relation to an asset, means the price which could be obtained upon a sale of that asset between a willing buyer and a willing seller dealing at arm’s length in an open market.
(2) Subject to subsection (4), where a person (other than a company) that is a resident ceases during any year of assessment of that person to be a resident—
(a) that person must be treated as having—
(i) disposed of each of that person’s assets to a person that is a resident on the date immediately before the day on which that person so ceases to be a resident for an amount received or accrued equal to the market value of the asset on that date; and
[Sub-para. (i) substituted by s. 14 (1) (a) of Taxation Laws Amendment Act, 2015 (‘to a person that is a resident’ inserted) – date of commencement deemed to have been 5 June 2015*.]
(ii) reacquired each of those assets on the day on which that person so ceases to be a resident at an expenditure equal to the market value contemplated in subparagraph (i);
(b) that year of assessment must be deemed to have ended on the date immediately before the day on which that person so ceases to be a resident; and
(c) the next succeeding year of assessment of that person must be deemed to have commenced on the day on which that person so ceases to be a resident.
(3) (a) Where a company that is a resident ceases during any year of assessment of that company to be a resident or where a company that is a resident becomes a headquarter company in respect of a year of assessment, that company must be treated as having—
(i) disposed of each of that company’s assets to a person that is a resident on the date immediately before the day on which that company so ceased to be a resident or became a headquarter company; and
(ii) reacquired each of those assets on the day on which that company so ceased to be a resident or became a headquarter company,
for an amount equal to the market value of each of those assets.
[Para. (a) substituted by s. 14 (1) (b) of Taxation Laws Amendment Act, 2015 – date of commencement deemed to have been 5 June 2015*.]
(b) Where a controlled foreign company ceases, otherwise than by way of becoming a resident, to be a controlled foreign company during any foreign tax year of that controlled foreign company, that controlled foreign company must be treated as having—
(i) disposed of each of the assets of that controlled foreign company, to a person that is a resident, on the date immediately before the day on which that controlled foreign company so ceased to be a controlled foreign company; and
(ii) reacquired each of the assets disposed of as contemplated in subparagraph (i) on the day on which that controlled foreign company so ceased to be a controlled foreign company,
for an amount equal to the market value of each of those assets.
[Para. (b) substituted by s. 14 (1) (b) of Taxation Laws Amendment Act, 2015 – date of commencement deemed to have been 5 June 2015*.]
Prelex
Wording of paras. (a) and (b) in force until retrospective substitution wef 5 June 2015
(3) (a) Subject to subsections (4) and (5), this subsection applies where a company that is—
(i) a resident ceases to be a resident or becomes a headquarter company during any year of assessment of that company; or
(ii) a controlled foreign company ceases, otherwise than by way of becoming a resident, to be a controlled foreign company during any foreign tax year of that controlled foreign company.
(b) Where, during any year of assessment or foreign tax year of a company, the company ceases to be a resident, becomes a headquarter company or ceases to be a controlled foreign company as contemplated in paragraph (a), that company must be treated as having— (i) disposed of each of that company’s assets on the date
immediately before the day on which that company so ceased to be a resident, became a headquarter company or ceased to be a controlled foreign company for an amount received or accrued equal to the market value of that asset on that date; and
* Substitution applies iro—
(a) (i) any person that ceases to be a resident; or
(ii) any controlled foreign company that ceases to be a controlled foreign company in relation to a resident,
on or after that date; and
(b) any person that becomes a headquarter company during years of assessment commencing on or after that date.
88 SAIT CompendIum oF TAx LegISLATIon VoLume 1