A Bsp Seminars Publication

Transcription

1 A Bsp Seminars Publication All current publications Bsp Seminars Subscription Service Bsp Stylebook Principles and Practice of Tax Avoidance All the anti-avoidance provisions of all the tax Acts Our rules-based tax system has gone berserk, and now includes a great many provisions most of us are unaware of, much less understand Volume 1 By Costa Divaris

2

3 Principles and Practice of Tax Avoidance Our rules-based tax system has gone berserk, and now includes a great many provisions most of us are unaware of, much less understand By Costa Divaris Launch Edition (2018) Version 2

4

5 Terms and conditions Terms and conditions User rights This work is made available subject to the authors and publisher s copyright and nonexclusive user rights granted to you to use it solely for your personal or professional purposes and not to distribute it in any form. Electronic version The electronic version of this work is available by way of or hyperlink in the form of a PDF file. By supplying the publisher with your address, you agree to receive notifications of forthcoming seminars, publications and related offers from Bsp Seminars. To unsubscribe at any time, send an with the subject No more to lesley@bspseminars.co.za. Should you be a subscriber, such an e- mail will also terminate your free subscription to the Tax Shock, Horror newsletter. Provenance, edition and product number Product number in the Bsp Seminars Store of this Launch Edition (2018) version 2 (November 2018): nb1806. Disclaimer This work is not intended to constitute advice on the topics covered. The views expressed are those of the authors and publisher. While reasonable care has been taken to ensure the accuracy of this publication, the author and publisher expressly disclaim all and any liability to any person relating to anything done or omitted to be done or to the consequences thereof in reliance upon this work, and do not accept responsibility for any loss or damage that may be sustained as a result of reliance by any person on the information contained herein. In particular, anyone who may be affected by statutory provisions dealt with in this work is strongly advised to refer to the relevant Government Gazette as originally published. Copyright 2018 Costa Divaris/The Electronic Publishing Corp CC (referred to here as the author and the publisher respectively) Gauteng South Africa. This work is copyright under the Berne Convention. In terms of the Copyright Act 98 of 1978 and subject to the user rights detailed above, no part of this work may be reproduced or transmitted in any form or by any means, presently known or that may be devised, 5

6 Terms and conditions electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without permission in writing from the publisher. While any compilation and original features of legislation included in this work are copyright, s 12(8) of the Copyright Act provides, in part, that no copyright shall subsist in official texts of a legislative, administrative or legal nature. BSP Seminars and Knowledge in Business are registered trademarks. Publisher The Electronic Publishing Corp CC (C Divaris). Bsp Seminars is a division of The Electronic Publishing Corp CC. 12 Eshowe Street Paulshof Extension 10. Telephone Fax-to Postnet Suite 72 Private Bag X87 Bryanston Business and Seminar Manager: Lesley Byrne. Contact Lesley Byrne: Mobile ; lesley@bspseminars.co.za. Contact Costa Divaris: Mobile ; cdivaris@icon.co.za. ISBN Latest legislation upon which this work is based The Tax Administration Laws Amendment Act 13 of 2017, the Rates and Monetary Amounts and Amendment of Revenue Laws Act 14 of 2017 and the Taxation Laws Amendment Act 17 of Proposed amendments statutes Proposed amendments to statutory provisions, where relevant, have been culled from C Divaris The 2018 Tax Amendments (Bills) published in October BSP Seminars Subscribe free to the Tax Shock, Horror newsletter the law journal in drag. Subscribe to the Bsp Seminars Subscription Service and attend all Bsp Seminars seminars (and, at a low additional cost, bring a guest) and receive all of its new publications as these are published, receive the Tax Shock, Horror Database monthly, the Bsp Seminars Subscription Service Database at intervals, the Tax Administration Weekly, and enjoy a half-hour of free advice each month. For current details, click on the links on the cover of this publication. The images in this publication show views of the Bsp Seminars miniature sculpture garden. 6

7 South African fiscal legislation South African fiscal legislation Warning on the tax Acts Every reasonable effort has been taken in this work accurately to represent the statute law in its latest form at the time of publication, with amendments being indicated by references to the relevant amending act given in small print below affected provisions. Actual application of the law requires knowledge of the detailed effective dates of such amendments; certainly, of those made seemingly close to the year of assessment or to the date of the transaction concerned On the other hand, never consult earlier versions of South African fiscal legislation without checking forward in time to look for retroactive amendments. 7

8 8

9 Quick contents Quick contents Click on an item to go to that page Principles and Practice of Tax Avoidance... 3 Terms and conditions... 5 South African fiscal legislation... 7 Warning on the tax Acts... 7 Quick contents... 9 Stylistic conventions text Stylistic conventions legislation Contents chapters, topics, headings Contents principal sections Contents sections and subsections Contents from the Income Tax Act Contents external material Contents from the Tax Shock, Horror newsletter Chapter Basic principles Interpretation and tax avoidance Substance over form Fraud and misrepresentation Chapter Ring-fencing rules Limitations of deductions Allowance ring-fencing Trading stock Loss ring-fencing Reorganization and acquisition transactions Chapter Traditional avoidance Impermissible tax avoidance Assessed losses Assessed loss cases Famous avoidance cases Interspousal diversions: income tax Interspousal diversions: capital gains tax Chapter Special anti-avoidance rules The Income Tax Act: income tax The Income Tax Act: dividends tax The Income Tax Act: donations tax The Income Tax Act: CGT The Value-Added Tax Act The Transfer Duty Act

10 Quick contents The other tax Acts Chapter Personal rewards Service-related awards Fruits of personal labours Chapter Tainted financial products Hybrid equity instruments Third-party backed shares Interest on hybrid debt instruments Hybrid interest Chapter Avoidance and evasion with trusts Introduction Income tax attribution Capital gains tax attribution Capping: income tax and the CGT The in duplum rule Loans by connected persons Fraud and money laundering Chapter Residence-based avoidance Offshore trusts Transfer pricing Offshore companies Chapter Reportable arrangements The Tax Administration Act The public notices

11 Stylistic conventions text Stylistic conventions text This work follows all of the conventions set out in the latest edition of the Bsp Stylebook (C Divaris, DS McAllister), a free publication. Legislative or contractual elements that are expressly and formally defined are referred to as terms, and are embraced, when necessary, by quotation marks. Other words (single words) and expressions (a group of words) that are effectively defined or are used by me as personal terms of art are shown, when necessary, in italics, without quotation marks. Thus gross income but hidden definition. Otherwise, quotation marks are used purely to indicate a formal, verbatim quotation arising within the text. When a quotation appears separately from the text and indented, no quotation marks are used, while paragraph-indentations are dispensed with in the first line of the quotation and in every first line following an interruption of the quotation by indented or hanging material. Tables might not necessarily follow these rules. Inside a quotation, quotations within the text of the quotation are embraced by single quotation marks and quotations within those quotations with double quotation marks, subject to recycling should the nesting continue. Quotations shown separately from the text of a quotation are presented without quotation marks but subject to a further indentation. Legislative material included here is, where relevant, reproduced from my: The Diamond Export Levy (Administration) Act (14 of 2007) 2017 ed (December 2017). The Diamond Export Levy Act (15 of 2007) 2017 ed (January 2018). The Employment Tax Incentive Act (26 of 2013) 2017 ed (January 2018). The Estate Duty Act (45 of 1955) 2017 ed (December 2017). The Merchant Shipping (International Oil Pollution Compensation Fund) Administration Act (35 of 2013) 2017 ed (January 2018). The Merchant Shipping (International Oil Pollution Compensation Fund) Contributions Act (36 of 2013) 2017 ed (January 2018). The Mineral and Petroleum Resources Royalty (Administration) Act (29 of 2008) 2017 ed (January 2018). The Mineral and Petroleum Resources Royalty Act (28 of 2008) 2017 ed (January 2018). The Securities Transfer Tax Act (25 of 2007) 2017 ed ver 2 (January 2018). 11

12 Stylistic conventions text The Securities Transfer Tax Administration Act (26 of 2007) 2017 ed (January 2018). The Skills Development Levies Act (9 of 1999) 2017 ed (December 2017). The Tax Administration Act (28 of 2011) 2017 ed ver 3 (May 2018). The Transfer Duty Act (40 of 1949) 2017 ed (January 2018). The Unemployment Insurance Contributions Act (4 of 2002) 2017 ed (January 2018). The Value-Added Tax Act (89 of 1991) 2017 ed (December 2017). Extracts from the Income Tax Act are taken from my private representation and adaptation of parts of the act, based upon the consolidated version published by LexisNexis and, for contemporary or researched amendments, the relevant statutes. Where lists of defined terms are provided, recognition is given only to terms defined in the legislation concerned. 12

13 Stylistic conventions legislation Stylistic conventions legislation Identifier Act, provision number (usually section, subsection; paragraph, subparagraph) Boxed heading, capitals and small capitals, title case, centred Principal subject-matter (usually section, subsection, continuation; paragraph, subparagraph, continuation. Followed by provision number in square parentheses Boxed heading, italicized, sentence case, centred Principal subject-matter of item, continuation, followed by provision number in square parentheses Boxed heading, sentence case, right-justified Principal subject-matter of sub-item, continuation Dates, periods, percentages, fractions Rendered in bold Outside parties Rendered in italics Cross-references Restated in short form within square parentheses Acts, self-references, Schedules, Parts Underlined Defined words within quotation marks Rendered in bold Defined words without quotation marks ( as defined in ) Rendered in bold italics Quasi-defined words ( as contemplated in, referred to, as defined in as determined by ) Rendered in bold italics Apparent errors Either rectified within square parentheses or correction suggested within square parentheses and indicated by question mark Extracts from explanatory memoranda Rendered against shaded background Commentary, without heading, boxed, italicized Opinion on meaning or significance of or aid to interpretation of immediately preceding provision or part of a provision Commentary, headed Legislative history, boxed, italicized Details and effective date of amendment Commentary, headed Past wording, boxed, italicized Immediately preceding text of amended legislation 13

14 14

15 Contents chapters, topics, headings Contents chapters, topics, headings Click on an item to go to that page Principles and Practice of Tax Avoidance... 3 Terms and conditions... 5 South African fiscal legislation... 7 Warning on the tax Acts... 7 Quick contents... 9 Stylistic conventions text Stylistic conventions legislation Contents chapters, topics, headings Contents principal sections Contents sections and subsections Contents from the Income Tax Act Contents external material Contents from the Tax Shock, Horror newsletter Chapter Basic principles Interpretation and tax avoidance The golden rule The Endumeni Municipality case Construction is one unitary exercise Comment Intention of the legislature or of parties unhelpful Comment The context, unless it leads to an absurdity Comment Daniels v Scribante and Another 2017 (4) SA 341 (CC) A purposive interpretation compatible with the mischief being addressed Glen Anil Development Corporation Ltd 1975 (4) SA 715 (A) Advance the remedy, suppress the mischief Hleka v Johannesburg City Council1949 (1) SA 842 (AD) The mischief, the remedy, the reason of the remedy Olley v Maasdorp and Another (1948) (4) SA 657 (A) Suppress the mischief and advance the remedy Ovenstone v SIR 1980 (2) SA 721 (A) Anti-avoidance provisions do not necessarily self-identify Intention was to hit at certain gratuitous disposals of property CSARS v Airworld CC 2008 (3) SA 335 (SCA) The purpose behind the provision Substance over form A principle never in question CSARS v Bosch and Another 2015 (2) SA 174 (SCA)

16 Contents chapters, topics, headings 1.11 Roshcon (Pty) Ltd v Anchor Auto 2014 (4) SA 319 (SCA) Bosch and Another v CSARS 2013 (5) SA 130 (WCC) Bosch and Another v CSARS 2013 (5) SA 130 (WCC) CSARS v NWK Ltd 2011 (2) SA 67 (SCA) Burgess v CIR 1993 (4) SA 161 (A) Rishworth v SIR 1964 (4) SA 493 (A) CIR v Estate Kohler and Others 1953 (2) SA 584 (A) Fraud and misrepresentation S V Gardener and Another 2011 (4) SA 79 (SCA) S V Macdonald 1982 (3) SA 220 (A) Standard Bank of SA Ltd v Coetsee 1981 (1) SA 1131 (A) Rex v Myers 1948 (1) SA 375 (A) Chapter Ring-fencing rules Limitations of deductions Scrapping allowance under earn-out s 20B Tax value of asset under leaseback s 23D Clogged prepayments s 23H Tainted intellectual property s 23I Clogged short-term insurance policies s 23L Interest on debts owed to non-taxpayers s 23M Background to s 23M Allowance ring-fencing Ring-fenced leases of affected assets s 23A Sale-and-leaseback arrangements s 23G Trading stock Trading stock on the water s 23F(1) Trading stock disposed of in earn-out s 23F(2) Disposal of rights in trading stock s 23F(3) Loss ring-fencing Loss ring-fencing Reorganization and acquisition transactions Limitation of deductions s 23K Regulations s 23K Background to s 23K Limitation of interest deductions s 23N Background to s 23N Chapter Traditional avoidance Impermissible tax avoidance Impermissible tax avoidance Introduction ss 80A to 80L Definition of a tax benefit s 1(1) Impermissible tax avoidance s 80A Tax consequences s 80B Lack of commercial substance s 80C Round-trip financing s 80D Accommodating or tax-indifferent parties s 80E Treatment of related parties s 80F Presumption of purpose s 80G

17 Contents chapters, topics, headings Steps or parts of an arrangement s 80H Use in the alternative s 80I Notice s 80J Interest s 80K Definitions s 80L Assessed losses Assessed losses introduction What is an assessed loss, balance of assessed loss? Set-off of assessed losses Case law on s Relaxed rules for unincorporated persons Assessed losses how s 103(2) works The rebuttable presumption (reverse onus) s 103(4) Impermissible cessions s 103(5) Special provisions relating to s Assessed loss cases CIR v Ocean Manufacturing Ltd 1990 (3) SA 610 (A) Conshu (Pty) Ltd v CIR 1994 (4) SA 603 (A) Glen Anil Development Corp Ltd v SIR 1975 (4) SA 715 (A) New Urban Properties Ltd v SIR 1966 (1) SA 217 (A) Famous avoidance cases CSARS v NWK Ltd 2011 (2) SA 67 (SCA) CIR v Conhage (Pty) Ltd 1999 (4) SA 1149 (SCA) CIR v Louw 1983 (3) SA 551 (A) Hicklin v SIR 1980 (1) SA 481 (A) SIR v Gallagher 1978 (2) SA 463 (A) SIR v Geustyn, Forsyth & Joubert 1971 (3) SA 567 (A) Smith v CIR 1964 (1) SA 324 (A) Meyerowitz v CIR 1963 (3) SA 863 (A) CIR v IHB King; CIR v AH King 1947 (2) SA 196 (A) Interspousal diversions: income tax Diversion between spouses s In-community marriages s 7(2A) Fixed-property and non-trade income s 7(2A)(b) Other trade income s 7(2A)(a) More on in-community marriages s 7(2C) Inter-spousal diversion s 7(2) Recipient, donor, income Acts of liberality Motives of liberality or avoidance s 7(2)(a) Income derived s 7(2)(b) Income-diversion Act of liberality or avoidance scheme Trade diversion Personal, partnership or corporate diversion Deductions and allowances s 7(2B) Retirement fund benefits Annuity amounts Holder of intellectual property or similar property Interspousal diversions: capital gains tax

18 Contents chapters, topics, headings 3.25 Inter-spousal diversion para Motives of liberality or avoidance Vested capital gains para 68(1) Capital gains from trade para 68(2) Comparison with the income tax inter-spousal rules Chapter Special anti-avoidance rules The Income Tax Act: income tax Debt concessions s Dividend-stripping s 22B The Income Tax Act: dividends tax Dividends tax The Income Tax Act: donations tax Introduction Instanced donations s Deemed donations s The Income Tax Act: CGT Introduction Debt concessions para 12A Value-shifting para Irregular disposals para Related-party disposals para Dividend-stripping para 43A Connected debt disposal para The Value-Added Tax Act Enterprise-splitting s 50A Dissembling recipients s Traditional anti-avoidance s Mpande Foodliner CC V CIR & Others 2000 (4) SA 1048 (T) The Transfer Duty Act Anti-avoidance provision The other tax Acts The Estate Duty Act The Mineral and Petroleum Resources Royalty Act The Securities Transfer Tax Act Chapter Personal rewards Service-related awards Service-related awards gross income Antedated remuneration s 7A Special provisions relating to s 7A Variable remuneration s 7B Special provisions relating to s 7B Gains on marketable securities s 8A Special provisions relating to s 8A Broad-based employee share plans s 8B When s 8B applies When s 8B does not apply Special provisions relating to s 8B Vesting of equity instruments s 8C

19 Contents chapters, topics, headings Special provisions relating to s 8C Fruits of personal labours Fruits of your personal labours Nevertheless, incorporation is allowed Incorporation of a professional practice Incorporation of a sole-trader s business Incorporation of a farming operation Sheep leases Use of the restructuring provisions Abuse of the corporate form Deductibility of expenditure Where does remuneration stand? Can remuneration be non-productive? Can remuneration be of a capital nature? Employment of family members Excessive salaries Excessive dividends Chopping & changing Although personal service providers are beyond the pale Provisions relating to personal service providers And so are unincorporated, uncertificated labour brokers Provisions relating to labour brokers Chapter Tainted financial products Hybrid equity instruments Dividends deemed to be income s 8E Third-party backed shares Dividends deemed to be income s 8EA Interest on hybrid debt instruments Interest deemed to be dividends s 8F Commentary s 8F Hybrid interest Interest deemed to be dividends s 8FA Chapter Avoidance and evasion with trusts Introduction The primary rules s Primary rules: income tax s Primary rules: CGT paras Primary rules: consequences s Primary rules: deductions s Primary rules: losses s Primary rules: disallowable amounts s What about the CGT primary rules and deductions? The word income and defined term income Income tax attribution The primary rules s An obsolete provision s 7(1) Diversion to minor children s 7(4), (5) Direct diversion 7(3)

20 Contents chapters, topics, headings Reciprocal diversion s 7(4) What about major children? Diversion to accumulator (trust) s 7(5) Distribution postponed Difference between s 7(5) and s 7(8) Income right revocable s 7(6) Revocable diversion Cession of income-streams s 7(7) Reversible diversion Transfer subject to clog s 7(7)(a) Transfer subject to claw-back s 7(7)(b) Attribution back to donor Diversion to nonresident s 7(8) Resident-to-nonresident diversion Expenditure, allowances and losses Difference between s 7(5) and s 7(8) Special rules s 7(9), (10), (11) Cheap disposal of assets s 7(9) Reporting requirement s 7(10) Maintenance orders and retirement funds 7(11) Capital gains tax attribution The primary rules paras 68 to Diversion to minor children para Diversion to minor child Diversion to accumulator (trust) para Distribution postponed Difference between s 7(5) and para Difference between para 70 and para Capital gain distributed but right revocable para Power to revoke or redirect Diversion to nonresident para Resident-to-nonresident diversion Difference between para 70 and para Capping: income tax and the CGT The mysterious capping rule para Rules of precedence This is a taxation system? Precedence rule The in duplum rule Calculation of amount of interest S 7D When s 7D will apply How s 7D applies Loans by connected persons Loans to trusts by connected persons s 7C Targeted loans s 7C(1) What is any loan, advance or credit? Who are the parties? What is the targeted transaction? Loan, advance or credit acquired by cession s 7C(1A) Yet more prohibited losses s 7C(2)

21 Contents chapters, topics, headings A missing definition s 7C(1) Tax relief denied s 7C(2) Provisions already applying to a reduction of debt CGT provisions already prohibiting connected-person losses A new tax base, for a new donation s 7C(3) Trigger for an annual donation s 7C(3) How donations tax works, in the context s 7C(3) Validity Nonresidents Date of donation Exemptions Instanced transactions Marriages in community Liability for the tax Payment Rate of tax So what is the annual cost? What if the debt due is worth less? Policing? Multiple lenders s 7C(4) Identifying the debt due 7C(4) More than one connected instancing 7C(4) Part-donations 7C(4) Can we be clear here? The inevitable exemptions s 7C(5) The exemptions 7C(5) Identifying the debt due 7C(5) Exemption for vested beneficiaries (in a bewind) 7C(5)(b) Exemption for financing of primary residence 7C(5)(d) Exemption when dividends tax payable 7C(5)(g) Exemption when trust is share-incentive trust 7C(5)(h) Trigger-table s 7C Commentary s 7C Fraud and money laundering A national disgrace Chapter Residence-based avoidance Offshore trusts Fiscal location Validity An opportunity in principle Current distributions Distributions out of accumulated funds An enduring but nevertheless stupid mistake Capital distributions: income tax s 25B(2A) Capital of a nonresident trust Capital distributions: capital gains tax para 80(3) Capital of a nonresident trust Transfer pricing The arm s-length principle s

22 Contents chapters, topics, headings You can try this at home The thin-capitalization scam Transfer-pricing triggers s 31(2) Trigger-table s Offshore companies And your company is resident, where? If offshore, who owns it (s 9D)? Afore ye go s 9H Chapter Reportable arrangements The Tax Administration Act Reportable arrangements The public notices Reportable arrangement public notices What, actually, is a reportable arrangement ss 35(2), 36(4) Schedule to GN 140 GG

23 Contents principal sections Contents principal sections Click on an item to go to that page Section 20B Section 23D Section 23H Section 23I Section 23L Section 23M Section 23A Section 23G Section 23F(1) Section 23F(2), (2A), (2B) Section 23F(3) Section 20A Section 23K Section 23N Section 1(1) sv tax benefit Section 1(1) sv tax Section 80A Section 80B Section 80C Section 80D Section 80E Section 80F Section 80G Section 80H Section 80I Section 80J Section 80K Section 80L Section 103(2) Section 20(2) Section 20(1) Section 20(2A) Section 103(4) Section 103(5) Section 7(2A) Section 7(2C) Section 7(2) Section 7(2B) th Sch para

24 Contents principal sections Section Section 22B Section 64E(4) Section Section th Sch para 12A th Sch para 1 sv value shifting arrangement th Sch para 11(1)(g) th Sch para 35(2) th Sch para 13(1)(f) th Sch para 20(1)(h)(iv) th Sch para th Sch para 38(1) th Sch para 38(2) th Sch para th Sch para 43A th Sch para 56(1) th Sch para 56(2) Section 50A VATA Section 61 VATA Section 73 VATA Section 20B TDA Section 11 M&PRRA Section 12 M&PRRA Section 7 STTA Section 1(1) sv gross income th Sch para Section 7A(1), (2) Section 7B Section 8A(1), (10) Section 8B(1),(3), (4) Section 8C(1), (1A), (3), (7) th Sch para 1 sv personal service provider th Sch para Section 8E Section 8EA Section 8F Section 8FA Section 7(1) Section 7(3), (4) Section 7(5) Section 7(6) Section 7(7) Section 7(8) Section 7(9), (10), (11) th Sch para th Sch para th Sch para

25 Contents principal sections 8 th Sch para th Sch para Section 7D Section 1(1) sv person Section 7C(1) Section 1(1) sv connected person Section 7C(1A) Section 7C(2) Section 7C(3) s 1(1) sv official rate of interest Section Section 7C(4) Section 7C(5) Section 7C(5)(b) Section 7C(5)(d) th Sch para th Sch para Section 7C(5)(g) Section 64E(4) Section 7C(5)(g) Section 8C(7) Section 25B(2A) th Sch para 80(3) Section Section 1(1) sv tax benefit Section 9H(3), (4) Sections 1, 35 TAA Section 36 TAA Section 37 TAA Section 38 TAA Section 38 TAA

26 26

27 Contents sections and subsections Contents sections and subsections Click on an item to go to that page s 7(3), early version s 64C, obsolete provision Section 20B ITA s 20B(1) Section 23D ITA s 23D(1) ITA s 23D(2) ITA s 23D(2A) Section 23H ITA s 23H(1) ITA s 23H(2) ITA s 23H(3) Section 23I ITA s 23I(1) ITA s 23I(1) sv end user ITA s 23I(1) sv intellectual property ITA s 23I(1) sv tainted intellectual property ITA s 23I(1) sv taxable person ITA s 23I(2) ITA s 23I(3) ITA s 23I(4) Section 23L ITA s 23L(1) ITA s 23L(1) sv policy ITA s 23L(1) sv policy benefits ITA s 23L(1) sv premium ITA s 23L(2) ITA s 23L(3) Section 23M ITA s 23M(1) ITA s 23M(1) sv adjusted taxable income ITA s 23M(1) sv average repo rate ITA s 23M(1) sv controlling relationship ITA s 23M(1) sv debtor ITA s 23M(1) sv interest ITA s 23M(1) sv lending institution ITA s 23M(1) sv repo rate ITA s 23M(2) ITA s 23M(3) ITA s 23M(4) ITA s 23M(5)

28 Contents sections and subsections ITA s 23M(6) Section 23A ITA s 23A(1) ITA s 23A(1) sv affected asset ITA s 23A(1) sv operating lease ITA s 23A(1) sv rental income ITA s 23A(2) ITA s 23A(3) ITA s 23A(4) Section 23G ITA s 23G(1) ITA s 23G(1) sv asset ITA s 23G(1) sv sale and leaseback arrangement ITA s 23G(2) ITA s 23G(3) ITA s 23G(4) Section 23F(1) ITA s 23F(1) Section 23F(2), (2A), (2B) ITA s 23F(2) ITA s 23F(2A) ITA s 23F(2B) Section 23F(3) ITA s 23F(3) Section 20A ITA s 20A(1) ITA s 20A(2) ITA s 20A(3) ITA s 20A(4) ITA s 20A(5) ITA s 20A(6) ITA s 20A(7) ITA s 20A(8) ITA s 20A(9) ITA s 20A(10) ITA s 20A(10)(a) sv assessed loss ITA s 20A(10)(b) sv relative Section 23K ITA s 23K(1) ITA s 23K(1) sv acquiring company ITA s 23K(1) sv acquisition transaction ITA s 23K(1) sv debt instrument ITA s 23K(1) sv interest ITA s 23K(1) sv reorganization transaction ITA s 23K(2) ITA s 23K(3) ITA s 23K(4) ITA s 23K(5) ITA s 23K(6) ITA s 23K(7)

29 Contents sections and subsections ITA s 23K(8)(a) ITA s 23K(8)(b) ITA s 23K(9) ITA s 23K(10) Section 23N ITA s 23N(1) ITA s 23N(1) sv acquired company ITA s 23N(1) sv acquiring company ITA s 23N(1) sv acquisition transaction ITA s 23N(1) sv adjusted taxable income ITA s 23N(1) sv average repo rate ITA s 23N(1) sv interest ITA s 23N(1) sv issue ITA s 23N(1) sv reorganization transaction ITA s 23N(1) sv repo rate ITA s 23N(2) ITA s 23N(3) ITA s 23N(4) ITA s 23N(5) ITA s 23N(2) ITA s 23N(3) Section 1(1) sv tax benefit ITA s 1(1) sv tax benefit Section 1(1) sv tax ITA s 1(1) sv tax Section 80A ITA s 80A Section 80B ITA s 80B(1) ITA s 80B(2) Section 80C ITA s 80C(1) ITA s 80C(2) Section 80D ITA s 80D(1) ITA s 80D(2) ITA s 80D(3) Section 80E ITA s 80E(1) ITA s 80E(2) ITA s 80E(3) ITA s 80E(4) Section 80F ITA s 80F Section 80G ITA s 80G(1) ITA s 80G(1) Section 80H ITA s 80H

30 Contents sections and subsections Section 80I ITA s 80I Section 80J ITA s 80J(1) ITA s 80J(2) ITA s 80J(3) ITA s 80J(4) Section 80K ITA s 80K Section 80L ITA s 80L ITA s 80L sv arrangement ITA s 80L sv avoidance arrangement ITA s 80L sv impermissible avoidance arrangement ITA s 80L sv party ITA s 80L sv tax Section 103(2) ITA s ITA s 103(2) ITA s 1(1) sv taxable income Section 20(2) ITA s 20(2) ITA s ITA s 11(x) ITA s 20(2) ITA s 1(1) sv taxable income ITA s 1(1) sv taxable income Section 20(1) ITA s 20(1) ITA s 20A(6) Section 20(2A) ITA s 20(2A) ITA s 103(2), annotated ITA s 1(1) sv trust Section 103(4) ITA s 103(4) Section 103(5) ITA s 103(5) ITA s 1(1) sv income Section 7(2A) ITA s 7(2A) Section 7(2C) ITA s 7(2C) Section 7(2) ITA s 7(2) Section 7(2B) ITA s 7(2B) ITA s 1(1) sv taxable income th Sch para

31 Contents sections and subsections ITA 8 th Sch para 68(1) ITA 8 th Sch para 68(2) Section ITA s 19(1) ITA s 19(1) sv allowance asset ITA s 19(1) sv capital asset ITA s 19(1) sv concession or compromise ITA s 19(1) sv debt ITA s 19(1) sv debt benefit ITA s 19(1) sv group of companies ITA s 19(2) ITA s 19(3) ITA s 19(4) ITA s 19(5) ITA s 19(6) ITA s 19(7) ITA s 19(8) ITA s 19(1) sv concession or compromise ITA s 19(2) ITA s 19(1) sv debt benefit Section 22B ITA s 22B(1) ITA s 22B(2) Section 64E(4) ITA s 64E(4)(a) ITA s 64E(4)(b) ITA s 64E(4)(c) ITA s 64E(4)(d) ITA s 64E(4)(a) ITA s 64B(2)(g) Section ITA s Section ITA s 58(1) ITA s 58(2) th Sch para 12A ITA 8 th Sch para 12A(1) ITA 8 th Sch para 12A(1) sv allowance asset ITA 8 th Sch para 12A(1) sv capital asset ITA 8 th Sch para 12A(1) sv concession or compromise ITA 8 th Sch para 12A(1) sv debt ITA 8 th Sch para 12A(1) sv debt benefit ITA 8 th Sch para 12A(1) sv group of companies ITA 8 th Sch para 12A(2) ITA 8 th Sch para 12A(3) ITA 8 th Sch para 12A(4) ITA 8 th Sch para 12A(5) ITA 8 th Sch para 12A(6) ITA 8 th Sch para 12A(7) th Sch para 1 sv value shifting arrangement

32 Contents sections and subsections ITA 8 th Sch para 1 sv value shifting arrangement th Sch para 11(1)(g) ITA 8 th Sch para 11(1) th Sch para 35(2) ITA 8 th Sch para 35(2) th Sch para 13(1)(f) ITA 8 th Sch para 13(1) th Sch para 20(1)(h)(iv) ITA 8 th Sch para 20(1) th Sch para ITA 8 th Sch para th Sch para 38(1) ITA 8 th Sch para 38(1) th Sch para 38(2) ITA 8 th Sch para 38(2) th Sch para ITA 8 th Sch para 39(1) ITA 8 th Sch para 39(2) ITA 8 th Sch para 39(3) ITA 8 th Sch para 39(4) th Sch para 43A ITA 8 th Sch para 43A(1) ITA 8 th Sch para 43A(1) sv exempt dividend ITA 8 th Sch para 43A(1) sv extraordinary dividend ITA 8 th Sch para 43A(1) sv qualifying interest ITA 8 th Sch para 43A(2) th Sch para 56(1) ITA 8 th Sch para 56(1) th Sch para 56(2) ITA 8 th Sch para 56(2) Section 50A VATA VATA s 50A(1) VATA s 50A(2) VATA s 50A(3) VATA s 50A(4) VATA s 50A(5) VATA s 50A(6) VATA s 50A(7) VATA s 50A(8) Section 61 VATA VATA s 61(1) VATA s 61(3) Section 73 VATA VATA s 73(1) VATA s 73(2) VATA s 73(3) Section 20B TDA TDA s 20B(1) TDA s 20B(2)

33 Contents sections and subsections TDA s 20B(3) Section 11 M&PRRA M&PRRA s 11(1) M&PRRA s 11(2) Section 12 M&PRRA M&PRRA s 12(1) M&PRRA s 12(2) M&PRRA s 12(3) Section 7 STTA STTA s 9(1) STTA s 9(2) STTA s 9(3) Section 1(1) sv gross income ITA s 1(1) sv gross income ITA s 1(1) sv gross income, para (c) ITA s 1(1) sv gross income, para (d) ITA s 1(1) sv gross income, para (f) ITA s 1(1) sv gross income, para (i) ITA s 1(1) sv gross income, para (c), proviso (ii) th Sch para ITA 7 th Sch para 16(1) ITA 7 th Sch para 16(2) Section 7A(1), (2) ITA s 7A(1) ITA s 7A(1) sv antedated salary or pension ITA s 7A(1) sv pension ITA s 7A(1) sv salary ITA s 7A(2) Section 7B ITA s 7B(1) ITA s 7B(1) sv employee ITA s 7B(1) sv employer ITA s 7B(1) sv variable remuneration ITA s 7B(2) Section 8A(1), (10) ITA s 8A(1)(a) ITA s 8A(1)(b) ITA s 8A(1)(c) ITA s 8A(10) Section 8B(1),(3), (4) ITA s 8B(1) ITA s 8B(3) ITA s 8B(3) sv broad-based employee share plan ITA s 8B(3) sv date of grant ITA s 8B(3) sv gain ITA s 8B(3) sv market value ITA s 8B(3) sv qualifying equity share ITA s 8B(4) Section 8C(1), (1A), (3), (7) ITA s 8C(1)(a)

34 Contents sections and subsections ITA s 8C(1)(b) ITA s 8C(1A) ITA s 8C(3) ITA s 8C(7) ITA s 8C(7) sv equity instrument ITA s 8C(7) sv restricted equity instrument ITA s 8C(7) sv unrestricted equity instrument th Sch para 1 sv personal service provider ITA 4 th Sch para 1 sv personal service provider th Sch para ITA 4 th Sch para 1 sv labour broker Section 8E ITA s 8E(1) ITA s 8E(1) sv date of issue ITA s 8E(1) sv equity instrument ITA s 8E(1) sv financial instrument ITA s 8E(1) sv hybrid equity instrument ITA s 8E(1) sv preference share ITA s 8E(1) sv qualifying purpose ITA s 8E(2) ITA s 8E(2A) Section 8EA ITA s 8EA(1) ITA s 8EA(1) sv enforcement obligation ITA s 8EA(1) sv enforcement right ITA s 8EA(1) sv equity instrument ITA s 8EA(1) sv operating company ITA s 8EA(1) sv preference share ITA s 8EA(1) sv qualifying purpose ITA s 8EA(1) sv third-party backed share ITA s 8EA(2) ITA s 8EA(2A) ITA s 8EA(3)(a) ITA s 8EA(3)(b) Section 8F ITA s 8F(1) ITA s 8F(1) sv enforcement right ITA s 8F(1) sv hybrid debt instrument ITA s 8F(1) sv instrument ITA s 8F(1) sv interest ITA s 8F(1) sv issue ITA s 8F(1) sv redeem ITA s 8F(1) sv third-party backed instrument ITA s 8F(2) ITA s 8F(3) ITA s 80L sv arrangement ITA s 8F(3)(f) Section 8FA ITA s 8FA(1) ITA s 8FA(1) sv hybrid interest

35 Contents sections and subsections ITA s 8FA(1) sv instrument ITA s 8FA(1) sv interest ITA s 8FA(1) sv issue ITA s 8FA(2) ITA s 8FA(3) ITA s 8FA(1) sv hybrid interest, para (a)(i) ITA s 8FA(1) sv hybrid interest, para (a)(i) ITA s 1(1) sv income ITA s 1(1), preamble ITA s 66(13B) ITA s 20(2) ITA s 103(2) ITA S 1(1) sv representative taxpayer, proviso ITA s 1(1) sv representative taxpayer, para (c) ITA s 1(1) sv capital gain Section 7(1) ITA s 7(1) CA s Section 7(3), (4) ITA s 7(3) ITA s 7(4) Section 7(5) ITA s 7(5) Section 7(6) ITA s 7(6) Section 7(7) ITA s 7(7) Section 7(8) ITA s 7(8)(a) ITA s 7(8)(b) Section 7(9), (10), (11) ITA s 7(9) ITA s 7(10) ITA s 7(11) PFA s 37D(1)(d), (e) th Sch para ITA 8 th Sch para CA s th Sch para ITA 8 th Sch para th Sch para ITA 8 th Sch para th Sch para ITA 8 th Sch para ITA 8 th Sch para 73(2) th Sch para ITA 8 th Sch para 73(1) ITA 8 th Sch para 73(2) Section 7D

36 Contents sections and subsections ITA s 7D ITA s 7D, extract ITA s 7D, extract ITA s 7D, extract Section 1(1) sv person ITA s 1(1) sv person Section 7C(1) ITA s 7C(1) ITA s Section 1(1) sv connected person ITA s 1(1) sv connected person, extract Section 7C(1A) ITA s 7C(1A) Section 7C(2) ITA s 7C(2) Section 7C(3) ITA s 7C(3) s 1(1) sv official rate of interest ITA s 1(1) sv official rate Section ITA s 60(1) ITA s 60(2) ITA s 60(3) ITA s 60(4) ITA s 60(5) Section 7C(4) ITA s 7C(4) Section 7C(5) ITA s 7C(5) Section 7C(5)(b) ITA s 7C(5)(b) Section 7C(5)(d) ITA s 7C(5)(d) th Sch para ITA 8 th Sch para 44 sv primary residence, para (b) th Sch para ITA 8 th Sch para 44 sv interest Section 7C(5)(g) ITA s 7C(5)(g) Section 64E(4) ITA s 64E(4)(a) ITA s 64E(4)(b) ITA s 64E(4)(c) ITA s 64E(4)(d) ITA s 64E(4)(e) Section 7C(5)(g) ITA s 7C(5)(g) Section 8C(7) ITA s 8C(7) sv equity instrument

37 Contents sections and subsections ITA s 8C(7) ITA s 8C(7) sv equity instrument ITA s 1(1) sv resident, extract ITA s 108(2) Section 25B(2A) ITA s 25B(2A) th Sch para 80(3) ITA 8 th Sch para 80(3) Section ITA s 31(1) ITA s 31(1) sv affected transaction ITA s 31(1) sv financial assistance ITA s 31(2) ITA s 31(3) ITA s 31(4) ITA s 31(5) ITA s 31(2) ITA s 31(2)(a) ITA s 31(1) sv affected transaction, para (b) ITA s 31(1) sv affected transaction, para (a) ITA s 31(2)(b)(i) ITA s 31(1) sv affected transaction, para (b) ITA s 31(2)(b) Section 1(1) sv tax benefit ITA s 1(1) sv tax benefit ITA s 1(1) sv resident, extract ITA s 1(1) sv foreign company ITA s 9D(1) sv controlled foreign company Section 9H(3), (4) ITA s 9H(3)(a) ITA s 9H(3)(c) ITA s 9H(3)(e) ITA s 9H(3)(f) ITA s 9H(4) Sections 1, 35 TAA TAA s 1 sv reportable arrangement TAA s 35(1) TAA s 35(2) Section 36 TAA TAA s 36(1) TAA s 36(2) TAA s 36(3) TAA s 36(4) Section 37 TAA TAA s 37(1) TAA s 37(3) TAA s 37(5) Section 38 TAA TAA s Section 38 TAA

38 Contents sections and subsections TAA s TAA s 35(2) TAA s 36(4) GN 140 GG para GN 140 GG para GN 140 GG para GN 140 GG para GN 140 GG para GN 140 GG para GN 140 GG para GN 140 GG para GN 140 GG para GN 140 GG para GN 140 GG para

39 Contents from the Income Tax Act Contents from the Income Tax Act Click on an item to go to that page Income Tax Act 1 scrapping allowance clog (s 20B) Income Tax Act 2 tax value of asset in leaseback (s 23D) Income Tax Act 3 clogged prepayments (s 20H) Income Tax Act 4 tainted intellectual property (s 23I) Income Tax Act 5 clogged short-term policies (s 23L) Income Tax Act 6 borrowings from tax-free persons (s 23M) Income Tax Act 7 ring-fenced leases of affected assets (s 23A) Income Tax Act 8 sale-and-leaseback arrangements (s 23G) Income Tax Act 9 trading stock on the water (s 23F(1)) Income Tax Act 10 stock sold in earn-out (s 23F(2), (2A), (2B)) Income Tax Act 11 rights in trading stock (s 23F(3)) Income Tax Act 12 ring-fencing of assessed losses (s 20A) Income Tax Act 13 limitation of deductions (s 23K) Income Tax Act 14 limitation of interest deductions (s 23N) Income Tax Act 15 tax benefit (s 1(1)) Income Tax Act 16 tax (s 1(1)) Income Tax Act 17 impermissible tax avoidance (s 80A) Income Tax Act 18 tax consequences (s 80B) Income Tax Act 19 lack of commercial substance (s 80C) Income Tax Act 20 round trip financing (s 80D) Income Tax Act 21 accommodating or tax-indifferent (s 80E) Income Tax Act 22 treatment of related parties (s 80F) Income Tax Act 23 rebuttable presumption (s 80G) Income Tax Act 24 application to steps or parts (s 80H) Income Tax Act 25 use in the alternative (s 80I) Income Tax Act 26 notice (s 80J) Income Tax Act 27 interest (s 80K) Income Tax Act 28 definitions (s 80L) Income Tax Act 29 abusing an assessed loss (s 103(2)) Income Tax Act 30 assessed loss (s 20(2)) Income Tax Act 31 set-off of assessed losses (s 20(1)) Income Tax Act 32 set-off of assessed losses (s 20(2A)) Income Tax Act 33 rebuttable presumption (s 103(4)) Income Tax Act 34 impermissible cessions (s 103(5)) Income Tax Act 35 spousal attribution rules (8 th Sch para 68) Income Tax Act 36 debt concessions (s 19) Income Tax Act 37 dividend-stripping (s 22B) Income Tax Act 38 loans are dividends (s 64E(4)) Income Tax Act 39 instanced donations (s 57) Income Tax Act 40 deemed donations (s 58) Income Tax Act 41 debt concessions (8 th Sch para 12A)

40 Contents from the Income Tax Act Income Tax Act 42 value shifting (8 th Sch para 1) Income Tax Act 43 v/shifting disposal (8 th Sch para 11(1)(g)) Income Tax Act 44 value-shifting proceeds (8 th Sch para 35(2)) Income Tax Act 45 value-shifting time (8 th Sch para 13(1)(f)) Income Tax Act 46 v/s base cost (8 th Sch para 20(1)(h)(iv)) Income Tax Act 47 v/s base cost (8 th Sch para 23) Income Tax Act 48 irregular disposals (8 th Sch para 38(1)) Income Tax Act 49 para 38 exclusions (8 th Sch para 38(2)) Income Tax Act 50 related-party disposals (8 th Sch para 39) Income Tax Act 51 dividends as proceeds (8 th Sch para 43A) Income Tax Act 52 c/debt disposal (8 th Sch para 56(1)) Income Tax Act 53 para 56 exclusions (8 th Sch para 56(2)) Income Tax Act 54 gross income (s 1(1)) Income Tax Act 55 diverted fringe benefits (7 th Sch para 16) Income Tax Act 56 antedated remuneration (s 7(1), (2)) Income Tax Act 57 variable remuneration (s 7B) Income Tax Act 58 gains on securities (s 8A(1), (10)) Income Tax Act 59 BB employee share plan (s 8B(1), (3), (4)) Income Tax Act 60 vesting instruments (s 8C(1), (1A), (3), (7)) Income Tax Act 61 personal service provider (4 th Sch para 1) Income Tax Act 62 labour broker (4 th Sch para 1) Income Tax Act 63 hybrid equity instruments (s 8E) Income Tax Act 64 third-party backed shares (s 8EA) Income Tax Act 65 interest on hybrid debt instrument (s 8F) Income Tax Act 66 hybrid interest (s 8FA) Income Tax Act 67 obsolete attribution rule (s 7(1)) Income Tax Act 68 diversion to minor child (s 7(3), (4)) Income Tax Act 69 undistributed income (s 7(5)) Income Tax Act 70 revocable distributed income (s 7(6)) Income Tax Act 71 cession of income-streams (s 7(7)) Income Tax Act 72 diversion to nonresident (s 7(8)) Income Tax Act 73 diversion to minor child (8 th Sch para 69) Income Tax Act 74 undistributed capital gain (8 th Sch para 70) Income Tax Act 75 revocable gain (8 th Sch para 71) Income Tax Act 76 diversion to nonresident (8 th Sch para 72) Income Tax Act 77 income & gain (8 th Sch para 73) Income Tax Act 78 calculation of interest (s 7D) Income Tax Act 79 person (s 1(1)) Income Tax Act 80 loan to connected trust (s 7C(1)) Income Tax Act 81 connected person (s 1(1)) Income Tax Act 82 prohibited deduction of losses (s 7C(1A)) Income Tax Act 83 prohibited deduction of losses (s 7C(2)) Income Tax Act 84 deemed donation to trust (s 7C(3)) Income Tax Act 85 official rate of interest (s 1(1)) Income Tax Act 86 payment of donations tax (s 60) Income Tax Act 87 multiple lenders (s 7C(4)) Income Tax Act 88 exemptions (s 7C(5)) Income Tax Act 89 exemption, vested beneficiaries (s 7C(5)(b)) Income Tax Act 90 financing primary residence (s 7C(5)(d)) Income Tax Act 91 primary residence (para 44)