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
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
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 e-mail or hyperlink in the form of a PDF file. By supplying the publisher with your email address, you agree to receive email notifications of forthcoming seminars, publications and related offers from Bsp Seminars. To unsubscribe at any time, send an email with the subject No more email 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
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 011 234 2434. Fax-to-e-mail 086 515 0955. Postnet Suite 72 Private Bag X87 Bryanston 2021. Business and Seminar Manager: Lesley Byrne. Contact Lesley Byrne: Mobile 082 854 2238; lesley@bspseminars.co.za. Contact Costa Divaris: Mobile 083 677 3333; cdivaris@icon.co.za. ISBN 978 0 928221 78 7 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 2017. Proposed amendments statutes Proposed amendments to statutory provisions, where relevant, have been culled from C Divaris The 2018 Tax Amendments (Bills) published in October 2018. 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
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
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... 11 Stylistic conventions legislation... 13 Contents chapters, topics, headings... 15 Contents principal sections... 23 Contents sections and subsections... 27 Contents from the Income Tax Act... 39 Contents external material... 43 Contents from the Tax Shock, Horror newsletter... 45 Chapter 1... 47 Basic principles... 47 Interpretation and tax avoidance... 47 Substance over form... 63 Fraud and misrepresentation... 81 Chapter 2... 89 Ring-fencing rules... 89 Limitations of deductions... 89 Allowance ring-fencing... 113 Trading stock... 119 Loss ring-fencing... 125 Reorganization and acquisition transactions... 131 Chapter 3... 145 Traditional avoidance... 145 Impermissible tax avoidance... 145 Assessed losses... 159 Assessed loss cases... 179 Famous avoidance cases... 187 Interspousal diversions: income tax... 215 Interspousal diversions: capital gains tax... 223 Chapter 4... 229 Special anti-avoidance rules... 229 The Income Tax Act: income tax... 229 The Income Tax Act: dividends tax... 241 The Income Tax Act: donations tax... 247 The Income Tax Act: CGT... 251 The Value-Added Tax Act... 273 The Transfer Duty Act... 281 9
Quick contents The other tax Acts... 285 Chapter 5... 289 Personal rewards... 289 Service-related awards... 289 Fruits of personal labours... 311 Chapter 6... 325 Tainted financial products... 325 Hybrid equity instruments... 325 Third-party backed shares... 331 Interest on hybrid debt instruments... 337 Hybrid interest... 347 Chapter 7... 353 Avoidance and evasion with trusts... 353 Introduction... 353 Income tax attribution... 361 Capital gains tax attribution... 375 Capping: income tax and the CGT... 383 The in duplum rule... 387 Loans by connected persons... 393 Fraud and money laundering... 433 Chapter 8... 435 Residence-based avoidance... 435 Offshore trusts... 435 Transfer pricing... 443 Offshore companies... 453 Chapter 9... 457 Reportable arrangements... 457 The Tax Administration Act... 457 The public notices... 463 10
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
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
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
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... 11 Stylistic conventions legislation... 13 Contents chapters, topics, headings... 15 Contents principal sections... 23 Contents sections and subsections... 27 Contents from the Income Tax Act... 39 Contents external material... 43 Contents from the Tax Shock, Horror newsletter... 45 Chapter 1... 47 Basic principles... 47 Interpretation and tax avoidance... 47 1.1 The golden rule... 47 1.2 The Endumeni Municipality case... 47 Construction is one unitary exercise... 48 Comment... 49 Intention of the legislature or of parties unhelpful... 49 Comment... 51 The context, unless it leads to an absurdity... 51 Comment... 52 1.3 Daniels v Scribante and Another 2017 (4) SA 341 (CC)... 52 A purposive interpretation compatible with the mischief being addressed... 52 1.4 Glen Anil Development Corporation Ltd 1975 (4) SA 715 (A)... 53 Advance the remedy, suppress the mischief... 53 1.5 Hleka v Johannesburg City Council1949 (1) SA 842 (AD)... 54 The mischief, the remedy, the reason of the remedy... 54 1.6 Olley v Maasdorp and Another (1948) (4) SA 657 (A)... 54 Suppress the mischief and advance the remedy... 54 1.7 Ovenstone v SIR 1980 (2) SA 721 (A)... 55 Anti-avoidance provisions do not necessarily self-identify... 55 Intention was to hit at certain gratuitous disposals of property... 56 1.8 CSARS v Airworld CC 2008 (3) SA 335 (SCA)... 58 The purpose behind the provision... 59 Substance over form... 63 1.9 A principle never in question... 63 1.10 CSARS v Bosch and Another 2015 (2) SA 174 (SCA)... 64 15
Contents chapters, topics, headings 1.11 Roshcon (Pty) Ltd v Anchor Auto 2014 (4) SA 319 (SCA)... 65 1.12 Bosch and Another v CSARS 2013 (5) SA 130 (WCC)... 66 1.13 Bosch and Another v CSARS 2013 (5) SA 130 (WCC)... 70 1.14 CSARS v NWK Ltd 2011 (2) SA 67 (SCA)... 72 1.15 Burgess v CIR 1993 (4) SA 161 (A)... 76 1.16 Rishworth v SIR 1964 (4) SA 493 (A)... 77 1.17 CIR v Estate Kohler and Others 1953 (2) SA 584 (A)... 78 Fraud and misrepresentation... 81 1.18 S V Gardener and Another 2011 (4) SA 79 (SCA)... 81 1.19 S V Macdonald 1982 (3) SA 220 (A)... 82 1.20 Standard Bank of SA Ltd v Coetsee 1981 (1) SA 1131 (A)... 83 1.21 Rex v Myers 1948 (1) SA 375 (A)... 84 Chapter 2... 89 Ring-fencing rules... 89 Limitations of deductions... 89 2.1 Scrapping allowance under earn-out s 20B... 89 2.2 Tax value of asset under leaseback s 23D... 90 2.3 Clogged prepayments s 23H... 92 2.4 Tainted intellectual property s 23I... 95 2.5 Clogged short-term insurance policies s 23L... 101 2.6 Interest on debts owed to non-taxpayers s 23M... 104 Background to s 23M... 108 Allowance ring-fencing... 113 2.7 Ring-fenced leases of affected assets s 23A... 113 2.8 Sale-and-leaseback arrangements s 23G... 115 Trading stock... 119 2.9 Trading stock on the water s 23F(1)... 119 2.10 Trading stock disposed of in earn-out s 23F(2)... 122 2.11 Disposal of rights in trading stock s 23F(3)... 124 Loss ring-fencing... 125 2.12 Loss ring-fencing... 125 Reorganization and acquisition transactions... 131 2.13 Limitation of deductions s 23K... 131 Regulations s 23K... 136 Background to s 23K... 136 2.14 Limitation of interest deductions s 23N... 137 Background to s 23N... 143 Chapter 3... 145 Traditional avoidance... 145 Impermissible tax avoidance... 145 3.1 Impermissible tax avoidance... 145 Introduction ss 80A to 80L... 145 Definition of a tax benefit s 1(1)... 145 Impermissible tax avoidance s 80A... 146 Tax consequences s 80B... 148 Lack of commercial substance s 80C... 149 Round-trip financing s 80D... 150 Accommodating or tax-indifferent parties s 80E... 151 Treatment of related parties s 80F... 152 Presumption of purpose s 80G... 153 16
Contents chapters, topics, headings Steps or parts of an arrangement s 80H... 154 Use in the alternative s 80I... 154 Notice s 80J... 155 Interest s 80K... 156 Definitions s 80L... 156 Assessed losses... 159 3.2 Assessed losses introduction... 159 What is an assessed loss, balance of assessed loss?... 160 Set-off of assessed losses... 162 Case law on s 20... 164 Relaxed rules for unincorporated persons... 168 3.3 Assessed losses how s 103(2) works... 169 3.4 The rebuttable presumption (reverse onus) s 103(4)... 174 3.5 Impermissible cessions s 103(5)... 174 3.6 Special provisions relating to s 103... 177 Assessed loss cases... 179 3.7 CIR v Ocean Manufacturing Ltd 1990 (3) SA 610 (A)... 179 3.8 Conshu (Pty) Ltd v CIR 1994 (4) SA 603 (A)... 179 3.9 Glen Anil Development Corp Ltd v SIR 1975 (4) SA 715 (A)... 181 3.10 New Urban Properties Ltd v SIR 1966 (1) SA 217 (A)... 183 Famous avoidance cases... 187 3.11 CSARS v NWK Ltd 2011 (2) SA 67 (SCA)... 187 3.12 CIR v Conhage (Pty) Ltd 1999 (4) SA 1149 (SCA)... 188 3.13 CIR v Louw 1983 (3) SA 551 (A)... 191 3.14 Hicklin v SIR 1980 (1) SA 481 (A)... 196 3.15 SIR v Gallagher 1978 (2) SA 463 (A)... 199 3.16 SIR v Geustyn, Forsyth & Joubert 1971 (3) SA 567 (A)... 201 3.17 Smith v CIR 1964 (1) SA 324 (A)... 205 3.18 Meyerowitz v CIR 1963 (3) SA 863 (A)... 209 3.19 CIR v IHB King; CIR v AH King 1947 (2) SA 196 (A)... 210 Interspousal diversions: income tax... 215 3.20 Diversion between spouses s 7... 215 3.21 In-community marriages s 7(2A)... 215 Fixed-property and non-trade income s 7(2A)(b)... 216 Other trade income s 7(2A)(a)... 216 3.22 More on in-community marriages s 7(2C)... 217 3.23 Inter-spousal diversion s 7(2)... 218 Recipient, donor, income... 219 Acts of liberality... 219 Motives of liberality or avoidance s 7(2)(a)... 220 Income derived s 7(2)(b)... 220 Income-diversion... 220 Act of liberality or avoidance scheme... 220 Trade diversion... 220 Personal, partnership or corporate diversion... 221 3.24 Deductions and allowances s 7(2B)... 221 Retirement fund benefits... 222 Annuity amounts... 222 Holder of intellectual property or similar property... 222 Interspousal diversions: capital gains tax... 223 17
Contents chapters, topics, headings 3.25 Inter-spousal diversion para 68... 223 Motives of liberality or avoidance... 224 Vested capital gains para 68(1)... 224 Capital gains from trade para 68(2)... 224 Comparison with the income tax inter-spousal rules... 225 Chapter 4... 229 Special anti-avoidance rules... 229 The Income Tax Act: income tax... 229 4.1. Debt concessions s 19... 229 4.2 Dividend-stripping s 22B... 236 The Income Tax Act: dividends tax... 241 4.3 Dividends tax... 241 The Income Tax Act: donations tax... 247 4.4 Introduction... 247 4.5 Instanced donations s 57... 247 4.6 Deemed donations s 58... 248 The Income Tax Act: CGT... 251 4.7 Introduction... 251 4.8 Debt concessions para 12A... 251 4.9 Value-shifting para 35... 257 4.10 Irregular disposals para 38... 261 4.11 Related-party disposals para 39... 263 4.12 Dividend-stripping para 43A... 266 4.13 Connected debt disposal para 56... 269 The Value-Added Tax Act... 273 4.14 Enterprise-splitting s 50A... 273 4.15 Dissembling recipients s 61... 276 4.16 Traditional anti-avoidance s 73... 277 4.17 Mpande Foodliner CC V CIR & Others 2000 (4) SA 1048 (T)... 278 The Transfer Duty Act... 281 4.18 Anti-avoidance provision... 281 The other tax Acts... 285 4.19 The Estate Duty Act... 285 4.20 The Mineral and Petroleum Resources Royalty Act... 285 4.21 The Securities Transfer Tax Act... 287 Chapter 5... 289 Personal rewards... 289 Service-related awards... 289 5.1 Service-related awards gross income... 289 5.2 Antedated remuneration s 7A... 293 Special provisions relating to s 7A... 295 5.3 Variable remuneration s 7B... 295 Special provisions relating to s 7B... 297 5.4 Gains on marketable securities s 8A... 297 Special provisions relating to s 8A... 300 5.5 Broad-based employee share plans s 8B... 300 When s 8B applies... 303 When s 8B does not apply... 304 Special provisions relating to s 8B... 304 5.6 Vesting of equity instruments s 8C... 305 18
Contents chapters, topics, headings Special provisions relating to s 8C... 310 Fruits of personal labours... 311 5.7 Fruits of your personal labours... 311 5.8 Nevertheless, incorporation is allowed... 316 Incorporation of a professional practice... 316 Incorporation of a sole-trader s business... 316 Incorporation of a farming operation... 317 Sheep leases... 317 Use of the restructuring provisions... 317 Abuse of the corporate form... 317 Deductibility of expenditure... 318 Where does remuneration stand?... 318 Can remuneration be non-productive?... 319 Can remuneration be of a capital nature?... 319 Employment of family members... 320 Excessive salaries... 320 Excessive dividends... 321 Chopping & changing... 322 5.9 Although personal service providers are beyond the pale... 322 Provisions relating to personal service providers... 323 5.10 And so are unincorporated, uncertificated labour brokers... 323 Provisions relating to labour brokers... 323 Chapter 6... 325 Tainted financial products... 325 Hybrid equity instruments... 325 6.1 Dividends deemed to be income s 8E... 325 Third-party backed shares... 331 6.2 Dividends deemed to be income s 8EA... 331 Interest on hybrid debt instruments... 337 6.3 Interest deemed to be dividends s 8F... 337 Commentary s 8F... 343 Hybrid interest... 347 6.4 Interest deemed to be dividends s 8FA... 347 Chapter 7... 353 Avoidance and evasion with trusts... 353 Introduction... 353 7.1 The primary rules s 7... 353 Primary rules: income tax s 7... 353 Primary rules: CGT paras 68 73... 353 Primary rules: consequences s 7... 354 Primary rules: deductions s 7... 354 Primary rules: losses s 7... 354 Primary rules: disallowable amounts s 7... 355 What about the CGT primary rules and deductions?... 356 7.2 The word income and defined term income... 356 Income tax attribution... 361 7.3 The primary rules s 7... 361 An obsolete provision s 7(1)... 361 7.4 Diversion to minor children s 7(4), (5)... 361 Direct diversion 7(3)... 362 19
Contents chapters, topics, headings Reciprocal diversion s 7(4)... 363 What about major children?... 363 7.5 Diversion to accumulator (trust) s 7(5)... 364 Distribution postponed... 364 Difference between s 7(5) and s 7(8)... 365 7.6 Income right revocable s 7(6)... 366 Revocable diversion... 366 7.7 Cession of income-streams s 7(7)... 367 Reversible diversion... 368 Transfer subject to clog s 7(7)(a)... 368 Transfer subject to claw-back s 7(7)(b)... 368 Attribution back to donor... 369 7.8 Diversion to nonresident s 7(8)... 369 Resident-to-nonresident diversion... 370 Expenditure, allowances and losses... 370 Difference between s 7(5) and s 7(8)... 370 7.9 Special rules s 7(9), (10), (11)... 371 Cheap disposal of assets s 7(9)... 372 Reporting requirement s 7(10)... 372 Maintenance orders and retirement funds 7(11)... 372 Capital gains tax attribution... 375 7.10 The primary rules paras 68 to 72... 375 7.11 Diversion to minor children para 69... 375 Diversion to minor child... 375 7.12 Diversion to accumulator (trust) para 70... 376 Distribution postponed... 377 Difference between s 7(5) and para 70... 378 Difference between para 70 and para 72... 379 7.13 Capital gain distributed but right revocable para 71... 379 Power to revoke or redirect... 379 7.14 Diversion to nonresident para 72... 380 Resident-to-nonresident diversion... 381 Difference between para 70 and para 72... 381 Capping: income tax and the CGT... 383 7.15 The mysterious capping rule para 73... 383 Rules of precedence... 383 This is a taxation system?... 383 Precedence rule... 385 The in duplum rule... 387 7.16 Calculation of amount of interest S 7D... 387 When s 7D will apply... 389 How s 7D applies... 390 Loans by connected persons... 393 7.17 Loans to trusts by connected persons s 7C... 393 7.18 Targeted loans s 7C(1)... 394 What is any loan, advance or credit?... 395 Who are the parties?... 395 What is the targeted transaction?... 397 7.19 Loan, advance or credit acquired by cession s 7C(1A)... 397 7.20 Yet more prohibited losses s 7C(2)... 398 20
Contents chapters, topics, headings A missing definition s 7C(1)... 399 Tax relief denied s 7C(2)... 399 Provisions already applying to a reduction of debt... 400 CGT provisions already prohibiting connected-person losses... 400 7.21 A new tax base, for a new donation s 7C(3)... 400 Trigger for an annual donation s 7C(3)... 401 7.22 How donations tax works, in the context s 7C(3)... 403 Validity... 403 Nonresidents... 404 Date of donation... 404 Exemptions... 404 Instanced transactions... 404 Marriages in community... 405 Liability for the tax... 405 Payment... 405 Rate of tax... 406 So what is the annual cost?... 406 What if the debt due is worth less?... 407 Policing?... 407 7.23 Multiple lenders s 7C(4)... 407 Identifying the debt due 7C(4)... 408 More than one connected instancing 7C(4)... 408 Part-donations 7C(4)... 408 Can we be clear here?... 408 7.24 The inevitable exemptions s 7C(5)... 408 The exemptions 7C(5)... 410 Identifying the debt due 7C(5)... 411 Exemption for vested beneficiaries (in a bewind) 7C(5)(b)... 411 Exemption for financing of primary residence 7C(5)(d)... 413 Exemption when dividends tax payable 7C(5)(g)... 415 Exemption when trust is share-incentive trust 7C(5)(h)... 417 7.25 Trigger-table s 7C... 419 7.25 Commentary s 7C... 419 Fraud and money laundering... 433 7.26 A national disgrace... 433 Chapter 8... 435 Residence-based avoidance... 435 Offshore trusts... 435 8.1 Fiscal location... 435 8.2 Validity... 436 8.3 An opportunity in principle... 436 Current distributions... 437 Distributions out of accumulated funds... 437 An enduring but nevertheless stupid mistake... 437 8.4 Capital distributions: income tax s 25B(2A)... 437 Capital of a nonresident trust... 438 8.5 Capital distributions: capital gains tax para 80(3)... 440 Capital of a nonresident trust... 441 Transfer pricing... 443 8.6 The arm s-length principle s 31... 443 21
Contents chapters, topics, headings You can try this at home... 446 The thin-capitalization scam... 446 Transfer-pricing triggers s 31(2)... 447 8.7. Trigger-table s 31... 450 Offshore companies... 453 8.8 And your company is resident, where?... 453 8.9 If offshore, who owns it (s 9D)?... 453 8.10 Afore ye go s 9H... 454 Chapter 9... 457 Reportable arrangements... 457 The Tax Administration Act... 457 10.1 Reportable arrangements... 457 The public notices... 463 10.2 Reportable arrangement public notices... 463 What, actually, is a reportable arrangement ss 35(2), 36(4)... 463 10.3 Schedule to GN 140 GG 39650... 465 22
Contents principal sections Contents principal sections Click on an item to go to that page Section 20B... 89 Section 23D... 90 Section 23H... 92 Section 23I... 96 Section 23L... 102 Section 23M... 104 Section 23A... 113 Section 23G... 115 Section 23F(1)... 119 Section 23F(2), (2A), (2B)... 123 Section 23F(3)... 124 Section 20A... 125 Section 23K... 131 Section 23N... 138 Section 1(1) sv tax benefit... 145 Section 1(1) sv tax... 146 Section 80A... 146 Section 80B... 148 Section 80C... 149 Section 80D... 150 Section 80E... 151 Section 80F... 152 Section 80G... 153 Section 80H... 154 Section 80I... 154 Section 80J... 155 Section 80K... 156 Section 80L... 156 Section 103(2)... 159 Section 20(2)... 161 Section 20(1)... 163 Section 20(2A)... 168 Section 103(4)... 174 Section 103(5)... 175 Section 7(2A)... 215 Section 7(2C)... 217 Section 7(2)... 218 Section 7(2B)... 221 8 th Sch para 68... 223 23
Contents principal sections Section 19... 229 Section 22B... 237 Section 64E(4)... 241 Section 57... 247 Section 58... 248 8 th Sch para 12A... 251 8 th Sch para 1 sv value shifting arrangement... 257 8 th Sch para 11(1)(g)... 258 8 th Sch para 35(2)... 259 8 th Sch para 13(1)(f)... 259 8 th Sch para 20(1)(h)(iv)... 260 8 th Sch para 23... 260 8 th Sch para 38(1)... 261 8 th Sch para 38(2)... 262 8 th Sch para 39... 264 8 th Sch para 43A... 266 8 th Sch para 56(1)... 270 8 th Sch para 56(2)... 270 Section 50A VATA... 273 Section 61 VATA... 276 Section 73 VATA... 277 Section 20B TDA... 281 Section 11 M&PRRA... 285 Section 12 M&PRRA... 285 Section 7 STTA... 287 Section 1(1) sv gross income... 289 7 th Sch para 16... 292 Section 7A(1), (2)... 293 Section 7B... 296 Section 8A(1), (10)... 298 Section 8B(1),(3), (4)... 301 Section 8C(1), (1A), (3), (7)... 305 4 th Sch para 1 sv personal service provider... 322 4 th Sch para 1... 323 Section 8E... 325 Section 8EA... 331 Section 8F... 337 Section 8FA... 347 Section 7(1)... 361 Section 7(3), (4)... 362 Section 7(5)... 364 Section 7(6)... 366 Section 7(7)... 367 Section 7(8)... 369 Section 7(9), (10), (11)... 371 8 th Sch para 69... 375 8 th Sch para 70... 377 8 th Sch para 71... 379 24
Contents principal sections 8 th Sch para 72... 380 8 th Sch para 73... 384 Section 7D... 387 Section 1(1) sv person... 393 Section 7C(1)... 394 Section 1(1) sv connected person... 396 Section 7C(1A)... 397 Section 7C(2)... 399 Section 7C(3)... 401 s 1(1) sv official rate of interest... 402 Section 60... 405 Section 7C(4)... 407 Section 7C(5)... 409 Section 7C(5)(b)... 411 Section 7C(5)(d)... 413 8 th Sch para 44... 413 8 th Sch para 44... 414 Section 7C(5)(g)... 415 Section 64E(4)... 416 Section 7C(5)(g)... 417 Section 8C(7)... 418 Section 25B(2A)... 438 8 th Sch para 80(3)... 440 Section 31... 443 Section 1(1) sv tax benefit... 449 Section 9H(3), (4)... 454 Sections 1, 35 TAA... 457 Section 36 TAA... 458 Section 37 TAA... 460 Section 38 TAA... 461 Section 38 TAA... 462 25
26
Contents sections and subsections Contents sections and subsections Click on an item to go to that page s 7(3), early version... 55 s 64C, obsolete provision... 58 Section 20B... 89 ITA s 20B(1)... 89 Section 23D... 90 ITA s 23D(1)... 90 ITA s 23D(2)... 90 ITA s 23D(2A)... 91 Section 23H... 92 ITA s 23H(1)... 92 ITA s 23H(2)... 94 ITA s 23H(3)... 94 Section 23I... 96 ITA s 23I(1)... 96 ITA s 23I(1) sv end user... 96 ITA s 23I(1) sv intellectual property... 96 ITA s 23I(1) sv tainted intellectual property... 97 ITA s 23I(1) sv taxable person... 97 ITA s 23I(2)... 98 ITA s 23I(3)... 98 ITA s 23I(4)... 98 Section 23L... 102 ITA s 23L(1)... 102 ITA s 23L(1) sv policy... 102 ITA s 23L(1) sv policy benefits... 102 ITA s 23L(1) sv premium... 102 ITA s 23L(2)... 102 ITA s 23L(3)... 102 Section 23M... 104 ITA s 23M(1)... 104 ITA s 23M(1) sv adjusted taxable income... 105 ITA s 23M(1) sv average repo rate... 105 ITA s 23M(1) sv controlling relationship... 105 ITA s 23M(1) sv debtor... 105 ITA s 23M(1) sv interest... 105 ITA s 23M(1) sv lending institution... 106 ITA s 23M(1) sv repo rate... 106 ITA s 23M(2)... 106 ITA s 23M(3)... 106 ITA s 23M(4)... 107 ITA s 23M(5)... 107 27
Contents sections and subsections ITA s 23M(6)... 107 Section 23A... 113 ITA s 23A(1)... 113 ITA s 23A(1) sv affected asset... 113 ITA s 23A(1) sv operating lease... 114 ITA s 23A(1) sv rental income... 114 ITA s 23A(2)... 114 ITA s 23A(3)... 114 ITA s 23A(4)... 115 Section 23G... 115 ITA s 23G(1)... 115 ITA s 23G(1) sv asset... 115 ITA s 23G(1) sv sale and leaseback arrangement... 116 ITA s 23G(2)... 116 ITA s 23G(3)... 116 ITA s 23G(4)... 116 Section 23F(1)... 119 ITA s 23F(1)... 119 Section 23F(2), (2A), (2B)... 123 ITA s 23F(2)... 123 ITA s 23F(2A)... 123 ITA s 23F(2B)... 123 Section 23F(3)... 124 ITA s 23F(3)... 124 Section 20A... 125 ITA s 20A(1)... 125 ITA s 20A(2)... 125 ITA s 20A(3)... 126 ITA s 20A(4)... 127 ITA s 20A(5)... 127 ITA s 20A(6)... 127 ITA s 20A(7)... 127 ITA s 20A(8)... 128 ITA s 20A(9)... 128 ITA s 20A(10)... 128 ITA s 20A(10)(a) sv assessed loss... 128 ITA s 20A(10)(b) sv relative... 128 Section 23K... 131 ITA s 23K(1)... 131 ITA s 23K(1) sv acquiring company... 131 ITA s 23K(1) sv acquisition transaction... 132 ITA s 23K(1) sv debt instrument... 132 ITA s 23K(1) sv interest... 132 ITA s 23K(1) sv reorganization transaction... 132 ITA s 23K(2)... 132 ITA s 23K(3)... 133 ITA s 23K(4)... 133 ITA s 23K(5)... 133 ITA s 23K(6)... 134 ITA s 23K(7)... 134 28
Contents sections and subsections ITA s 23K(8)(a)... 134 ITA s 23K(8)(b)... 135 ITA s 23K(9)... 135 ITA s 23K(10)... 135 Section 23N... 138 ITA s 23N(1)... 138 ITA s 23N(1) sv acquired company... 138 ITA s 23N(1) sv acquiring company... 138 ITA s 23N(1) sv acquisition transaction... 138 ITA s 23N(1) sv adjusted taxable income... 139 ITA s 23N(1) sv average repo rate... 139 ITA s 23N(1) sv interest... 139 ITA s 23N(1) sv issue... 139 ITA s 23N(1) sv reorganization transaction... 139 ITA s 23N(1) sv repo rate... 140 ITA s 23N(2)... 140 ITA s 23N(3)... 140 ITA s 23N(4)... 141 ITA s 23N(5)... 141 ITA s 23N(2)... 142 ITA s 23N(3)... 142 Section 1(1) sv tax benefit... 145 ITA s 1(1) sv tax benefit... 145 Section 1(1) sv tax... 146 ITA s 1(1) sv tax... 146 Section 80A... 146 ITA s 80A... 146 Section 80B... 148 ITA s 80B(1)... 148 ITA s 80B(2)... 148 Section 80C... 149 ITA s 80C(1)... 149 ITA s 80C(2)... 149 Section 80D... 150 ITA s 80D(1)... 150 ITA s 80D(2)... 150 ITA s 80D(3)... 150 Section 80E... 151 ITA s 80E(1)... 151 ITA s 80E(2)... 151 ITA s 80E(3)... 152 ITA s 80E(4)... 152 Section 80F... 152 ITA s 80F... 152 Section 80G... 153 ITA s 80G(1)... 153 ITA s 80G(1)... 153 Section 80H... 154 ITA s 80H... 154 29
Contents sections and subsections Section 80I... 154 ITA s 80I... 154 Section 80J... 155 ITA s 80J(1)... 155 ITA s 80J(2)... 155 ITA s 80J(3)... 155 ITA s 80J(4)... 155 Section 80K... 156 ITA s 80K... 156 Section 80L... 156 ITA s 80L... 156 ITA s 80L sv arrangement... 157 ITA s 80L sv avoidance arrangement... 157 ITA s 80L sv impermissible avoidance arrangement... 157 ITA s 80L sv party... 157 ITA s 80L sv tax... 157 Section 103(2)... 159 ITA s 103... 159 ITA s 103(2)... 159 ITA s 1(1) sv taxable income... 160 Section 20(2)... 161 ITA s 20(2)... 161 ITA s 11... 161 ITA s 11(x)... 161 ITA s 20(2)... 161 ITA s 1(1) sv taxable income... 161 ITA s 1(1) sv taxable income... 162 Section 20(1)... 163 ITA s 20(1)... 163 ITA s 20A(6)... 164 Section 20(2A)... 168 ITA s 20(2A)... 168 ITA s 103(2), annotated... 169 ITA s 1(1) sv trust... 170 Section 103(4)... 174 ITA s 103(4)... 174 Section 103(5)... 175 ITA s 103(5)... 175 ITA s 1(1) sv income... 215 Section 7(2A)... 215 ITA s 7(2A)... 215 Section 7(2C)... 217 ITA s 7(2C)... 217 Section 7(2)... 218 ITA s 7(2)... 218 Section 7(2B)... 221 ITA s 7(2B)... 221 ITA s 1(1) sv taxable income... 221 8 th Sch para 68... 223 30
Contents sections and subsections ITA 8 th Sch para 68(1)... 223 ITA 8 th Sch para 68(2)... 223 Section 19... 229 ITA s 19(1)... 229 ITA s 19(1) sv allowance asset... 229 ITA s 19(1) sv capital asset... 229 ITA s 19(1) sv concession or compromise... 230 ITA s 19(1) sv debt... 230 ITA s 19(1) sv debt benefit... 230 ITA s 19(1) sv group of companies... 231 ITA s 19(2)... 231 ITA s 19(3)... 231 ITA s 19(4)... 231 ITA s 19(5)... 232 ITA s 19(6)... 232 ITA s 19(7)... 233 ITA s 19(8)... 233 ITA s 19(1) sv concession or compromise... 235 ITA s 19(2)... 235 ITA s 19(1) sv debt benefit... 236 Section 22B... 237 ITA s 22B(1)... 237 ITA s 22B(2)... 238 Section 64E(4)... 241 ITA s 64E(4)(a)... 241 ITA s 64E(4)(b)... 241 ITA s 64E(4)(c)... 242 ITA s 64E(4)(d)... 242 ITA s 64E(4)(a)... 242 ITA s 64B(2)(g)... 243 Section 57... 247 ITA s 57... 247 Section 58... 248 ITA s 58(1)... 248 ITA s 58(2)... 249 8 th Sch para 12A... 251 ITA 8 th Sch para 12A(1)... 251 ITA 8 th Sch para 12A(1) sv allowance asset... 251 ITA 8 th Sch para 12A(1) sv capital asset... 252 ITA 8 th Sch para 12A(1) sv concession or compromise... 252 ITA 8 th Sch para 12A(1) sv debt... 252 ITA 8 th Sch para 12A(1) sv debt benefit... 252 ITA 8 th Sch para 12A(1) sv group of companies... 253 ITA 8 th Sch para 12A(2)... 253 ITA 8 th Sch para 12A(3)... 253 ITA 8 th Sch para 12A(4)... 254 ITA 8 th Sch para 12A(5)... 254 ITA 8 th Sch para 12A(6)... 254 ITA 8 th Sch para 12A(7)... 256 8 th Sch para 1 sv value shifting arrangement... 257 31
Contents sections and subsections ITA 8 th Sch para 1 sv value shifting arrangement... 257 8 th Sch para 11(1)(g)... 258 ITA 8 th Sch para 11(1)... 258 8 th Sch para 35(2)... 259 ITA 8 th Sch para 35(2)... 259 8 th Sch para 13(1)(f)... 259 ITA 8 th Sch para 13(1)... 259 8 th Sch para 20(1)(h)(iv)... 260 ITA 8 th Sch para 20(1)... 260 8 th Sch para 23... 260 ITA 8 th Sch para 23... 260 8 th Sch para 38(1)... 261 ITA 8 th Sch para 38(1)... 261 8 th Sch para 38(2)... 262 ITA 8 th Sch para 38(2)... 262 8 th Sch para 39... 264 ITA 8 th Sch para 39(1)... 264 ITA 8 th Sch para 39(2)... 264 ITA 8 th Sch para 39(3)... 265 ITA 8 th Sch para 39(4)... 265 8 th Sch para 43A... 266 ITA 8 th Sch para 43A(1)... 266 ITA 8 th Sch para 43A(1) sv exempt dividend... 267 ITA 8 th Sch para 43A(1) sv extraordinary dividend... 267 ITA 8 th Sch para 43A(1) sv qualifying interest... 267 ITA 8 th Sch para 43A(2)... 267 8 th Sch para 56(1)... 270 ITA 8 th Sch para 56(1)... 270 8 th Sch para 56(2)... 270 ITA 8 th Sch para 56(2)... 270 Section 50A VATA... 273 VATA s 50A(1)... 273 VATA s 50A(2)... 273 VATA s 50A(3)... 274 VATA s 50A(4)... 274 VATA s 50A(5)... 274 VATA s 50A(6)... 274 VATA s 50A(7)... 275 VATA s 50A(8)... 275 Section 61 VATA... 276 VATA s 61(1)... 276 VATA s 61(3)... 276 Section 73 VATA... 277 VATA s 73(1)... 277 VATA s 73(2)... 277 VATA s 73(3)... 278 Section 20B TDA... 281 TDA s 20B(1)... 281 TDA s 20B(2)... 281 32
Contents sections and subsections TDA s 20B(3)... 282 Section 11 M&PRRA... 285 M&PRRA s 11(1)... 285 M&PRRA s 11(2)... 285 Section 12 M&PRRA... 285 M&PRRA s 12(1)... 285 M&PRRA s 12(2)... 286 M&PRRA s 12(3)... 287 Section 7 STTA... 287 STTA s 9(1)... 287 STTA s 9(2)... 288 STTA s 9(3)... 288 Section 1(1) sv gross income... 289 ITA s 1(1) sv gross income... 289 ITA s 1(1) sv gross income, para (c)... 290 ITA s 1(1) sv gross income, para (d)... 290 ITA s 1(1) sv gross income, para (f)... 291 ITA s 1(1) sv gross income, para (i)... 291 ITA s 1(1) sv gross income, para (c), proviso (ii)... 292 7 th Sch para 16... 292 ITA 7 th Sch para 16(1)... 292 ITA 7 th Sch para 16(2)... 293 Section 7A(1), (2)... 293 ITA s 7A(1)... 293 ITA s 7A(1) sv antedated salary or pension... 293 ITA s 7A(1) sv pension... 294 ITA s 7A(1) sv salary... 294 ITA s 7A(2)... 294 Section 7B... 296 ITA s 7B(1)... 296 ITA s 7B(1) sv employee... 296 ITA s 7B(1) sv employer... 296 ITA s 7B(1) sv variable remuneration... 296 ITA s 7B(2)... 296 Section 8A(1), (10)... 298 ITA s 8A(1)(a)... 298 ITA s 8A(1)(b)... 298 ITA s 8A(1)(c)... 298 ITA s 8A(10)... 299 Section 8B(1),(3), (4)... 301 ITA s 8B(1)... 301 ITA s 8B(3)... 301 ITA s 8B(3) sv broad-based employee share plan... 301 ITA s 8B(3) sv date of grant... 302 ITA s 8B(3) sv gain... 302 ITA s 8B(3) sv market value... 303 ITA s 8B(3) sv qualifying equity share... 303 ITA s 8B(4)... 303 Section 8C(1), (1A), (3), (7)... 305 ITA s 8C(1)(a)... 305 33
Contents sections and subsections ITA s 8C(1)(b)... 306 ITA s 8C(1A)... 306 ITA s 8C(3)... 306 ITA s 8C(7)... 307 ITA s 8C(7) sv equity instrument... 307 ITA s 8C(7) sv restricted equity instrument... 308 ITA s 8C(7) sv unrestricted equity instrument... 308 4 th Sch para 1 sv personal service provider... 322 ITA 4 th Sch para 1 sv personal service provider... 322 4 th Sch para 1... 323 ITA 4 th Sch para 1 sv labour broker... 323 Section 8E... 325 ITA s 8E(1)... 325 ITA s 8E(1) sv date of issue... 325 ITA s 8E(1) sv equity instrument... 326 ITA s 8E(1) sv financial instrument... 326 ITA s 8E(1) sv hybrid equity instrument... 326 ITA s 8E(1) sv preference share... 327 ITA s 8E(1) sv qualifying purpose... 327 ITA s 8E(2)... 328 ITA s 8E(2A)... 328 Section 8EA... 331 ITA s 8EA(1)... 331 ITA s 8EA(1) sv enforcement obligation... 331 ITA s 8EA(1) sv enforcement right... 331 ITA s 8EA(1) sv equity instrument... 332 ITA s 8EA(1) sv operating company... 332 ITA s 8EA(1) sv preference share... 332 ITA s 8EA(1) sv qualifying purpose... 332 ITA s 8EA(1) sv third-party backed share... 334 ITA s 8EA(2)... 334 ITA s 8EA(2A)... 334 ITA s 8EA(3)(a)... 334 ITA s 8EA(3)(b)... 335 Section 8F... 337 ITA s 8F(1)... 337 ITA s 8F(1) sv enforcement right... 337 ITA s 8F(1) sv hybrid debt instrument... 337 ITA s 8F(1) sv instrument... 338 ITA s 8F(1) sv interest... 339 ITA s 8F(1) sv issue... 339 ITA s 8F(1) sv redeem... 339 ITA s 8F(1) sv third-party backed instrument... 339 ITA s 8F(2)... 339 ITA s 8F(3)... 339 ITA s 80L sv arrangement... 342 ITA s 8F(3)(f)... 343 Section 8FA... 347 ITA s 8FA(1)... 347 ITA s 8FA(1) sv hybrid interest... 347 34
Contents sections and subsections ITA s 8FA(1) sv instrument... 347 ITA s 8FA(1) sv interest... 348 ITA s 8FA(1) sv issue... 348 ITA s 8FA(2)... 348 ITA s 8FA(3)... 348 ITA s 8FA(1) sv hybrid interest, para (a)(i)... 350 ITA s 8FA(1) sv hybrid interest, para (a)(i)... 351 ITA s 1(1) sv income... 354 ITA s 1(1), preamble... 356 ITA s 66(13B)... 357 ITA s 20(2)... 357 ITA s 103(2)... 358 ITA S 1(1) sv representative taxpayer, proviso... 358 ITA s 1(1) sv representative taxpayer, para (c)... 359 ITA s 1(1) sv capital gain... 359 Section 7(1)... 361 ITA s 7(1)... 361 CA s 17... 362 Section 7(3), (4)... 362 ITA s 7(3)... 362 ITA s 7(4)... 362 Section 7(5)... 364 ITA s 7(5)... 364 Section 7(6)... 366 ITA s 7(6)... 366 Section 7(7)... 367 ITA s 7(7)... 367 Section 7(8)... 369 ITA s 7(8)(a)... 369 ITA s 7(8)(b)... 369 Section 7(9), (10), (11)... 371 ITA s 7(9)... 371 ITA s 7(10)... 371 ITA s 7(11)... 371 PFA s 37D(1)(d), (e)... 373 8 th Sch para 69... 375 ITA 8 th Sch para 69... 375 CA s 17... 376 8 th Sch para 70... 377 ITA 8 th Sch para 70... 377 8 th Sch para 71... 379 ITA 8 th Sch para 71... 379 8 th Sch para 72... 380 ITA 8 th Sch para 72... 380 ITA 8 th Sch para 73(2)... 383 8 th Sch para 73... 384 ITA 8 th Sch para 73(1)... 384 ITA 8 th Sch para 73(2)... 384 Section 7D... 387 35
Contents sections and subsections ITA s 7D... 387 ITA s 7D, extract... 389 ITA s 7D, extract... 390 ITA s 7D, extract... 390 Section 1(1) sv person... 393 ITA s 1(1) sv person... 393 Section 7C(1)... 394 ITA s 7C(1)... 394 ITA s 57... 396 Section 1(1) sv connected person... 396 ITA s 1(1) sv connected person, extract... 396 Section 7C(1A)... 397 ITA s 7C(1A)... 397 Section 7C(2)... 399 ITA s 7C(2)... 399 Section 7C(3)... 401 ITA s 7C(3)... 401 s 1(1) sv official rate of interest... 402 ITA s 1(1) sv official rate... 402 Section 60... 405 ITA s 60(1)... 405 ITA s 60(2)... 405 ITA s 60(3)... 406 ITA s 60(4)... 406 ITA s 60(5)... 406 Section 7C(4)... 407 ITA s 7C(4)... 407 Section 7C(5)... 409 ITA s 7C(5)... 409 Section 7C(5)(b)... 411 ITA s 7C(5)(b)... 411 Section 7C(5)(d)... 413 ITA s 7C(5)(d)... 413 8 th Sch para 44... 413 ITA 8 th Sch para 44 sv primary residence, para (b)... 413 8 th Sch para 44... 414 ITA 8 th Sch para 44 sv interest... 414 Section 7C(5)(g)... 415 ITA s 7C(5)(g)... 415 Section 64E(4)... 416 ITA s 64E(4)(a)... 416 ITA s 64E(4)(b)... 416 ITA s 64E(4)(c)... 416 ITA s 64E(4)(d)... 417 ITA s 64E(4)(e)... 417 Section 7C(5)(g)... 417 ITA s 7C(5)(g)... 417 Section 8C(7)... 418 ITA s 8C(7) sv equity instrument... 418 36
Contents sections and subsections ITA s 8C(7)... 418 ITA s 8C(7) sv equity instrument... 418 ITA s 1(1) sv resident, extract... 435 ITA s 108(2)... 435 Section 25B(2A)... 438 ITA s 25B(2A)... 438 8 th Sch para 80(3)... 440 ITA 8 th Sch para 80(3)... 440 Section 31... 443 ITA s 31(1)... 443 ITA s 31(1) sv affected transaction... 443 ITA s 31(1) sv financial assistance... 443 ITA s 31(2)... 444 ITA s 31(3)... 444 ITA s 31(4)... 445 ITA s 31(5)... 445 ITA s 31(2)... 447 ITA s 31(2)(a)... 447 ITA s 31(1) sv affected transaction, para (b)... 447 ITA s 31(1) sv affected transaction, para (a)... 448 ITA s 31(2)(b)(i)... 449 ITA s 31(1) sv affected transaction, para (b)... 449 ITA s 31(2)(b)... 449 Section 1(1) sv tax benefit... 449 ITA s 1(1) sv tax benefit... 449 ITA s 1(1) sv resident, extract... 453 ITA s 1(1) sv foreign company... 453 ITA s 9D(1) sv controlled foreign company... 453 Section 9H(3), (4)... 454 ITA s 9H(3)(a)... 454 ITA s 9H(3)(c)... 455 ITA s 9H(3)(e)... 455 ITA s 9H(3)(f)... 456 ITA s 9H(4)... 456 Sections 1, 35 TAA... 457 TAA s 1 sv reportable arrangement... 457 TAA s 35(1)... 457 TAA s 35(2)... 458 Section 36 TAA... 458 TAA s 36(1)... 458 TAA s 36(2)... 459 TAA s 36(3)... 459 TAA s 36(4)... 459 Section 37 TAA... 460 TAA s 37(1)... 460 TAA s 37(3)... 460 TAA s 37(5)... 460 Section 38 TAA... 461 TAA s 38... 461 Section 38 TAA... 462 37
Contents sections and subsections TAA s 39... 462 TAA s 35(2)... 463 TAA s 36(4)... 463 GN 140 GG 39650 para 1... 465 GN 140 GG 39650 para 2... 465 GN 140 GG 39650 para 2.1... 465 GN 140 GG 39650 para 2.2... 465 GN 140 GG 39650 para 2.3... 465 GN 140 GG 39650 para 2.4... 466 GN 140 GG 39650 para 2.5... 466 GN 140 GG 39650 para 2.6... 466 GN 140 GG 39650 para 3... 467 GN 140 GG 39650 para 3.1... 467 GN 140 GG 39650 para 3.2... 467 38
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)... 89 Income Tax Act 2 tax value of asset in leaseback (s 23D)... 90 Income Tax Act 3 clogged prepayments (s 20H)... 92 Income Tax Act 4 tainted intellectual property (s 23I)... 96 Income Tax Act 5 clogged short-term policies (s 23L)... 102 Income Tax Act 6 borrowings from tax-free persons (s 23M)... 104 Income Tax Act 7 ring-fenced leases of affected assets (s 23A)... 113 Income Tax Act 8 sale-and-leaseback arrangements (s 23G)... 115 Income Tax Act 9 trading stock on the water (s 23F(1))... 119 Income Tax Act 10 stock sold in earn-out (s 23F(2), (2A), (2B))... 123 Income Tax Act 11 rights in trading stock (s 23F(3))... 124 Income Tax Act 12 ring-fencing of assessed losses (s 20A)... 125 Income Tax Act 13 limitation of deductions (s 23K)... 131 Income Tax Act 14 limitation of interest deductions (s 23N)... 138 Income Tax Act 15 tax benefit (s 1(1))... 145 Income Tax Act 16 tax (s 1(1))... 146 Income Tax Act 17 impermissible tax avoidance (s 80A)... 146 Income Tax Act 18 tax consequences (s 80B)... 148 Income Tax Act 19 lack of commercial substance (s 80C)... 149 Income Tax Act 20 round trip financing (s 80D)... 150 Income Tax Act 21 accommodating or tax-indifferent (s 80E)... 151 Income Tax Act 22 treatment of related parties (s 80F)... 152 Income Tax Act 23 rebuttable presumption (s 80G)... 153 Income Tax Act 24 application to steps or parts (s 80H)... 154 Income Tax Act 25 use in the alternative (s 80I)... 154 Income Tax Act 26 notice (s 80J)... 155 Income Tax Act 27 interest (s 80K)... 156 Income Tax Act 28 definitions (s 80L)... 156 Income Tax Act 29 abusing an assessed loss (s 103(2))... 159 Income Tax Act 30 assessed loss (s 20(2))... 161 Income Tax Act 31 set-off of assessed losses (s 20(1))... 163 Income Tax Act 32 set-off of assessed losses (s 20(2A))... 168 Income Tax Act 33 rebuttable presumption (s 103(4))... 174 Income Tax Act 34 impermissible cessions (s 103(5))... 175 Income Tax Act 35 spousal attribution rules (8 th Sch para 68)... 223 Income Tax Act 36 debt concessions (s 19)... 229 Income Tax Act 37 dividend-stripping (s 22B)... 237 Income Tax Act 38 loans are dividends (s 64E(4))... 241 Income Tax Act 39 instanced donations (s 57)... 247 Income Tax Act 40 deemed donations (s 58)... 248 Income Tax Act 41 debt concessions (8 th Sch para 12A)... 251 39
Contents from the Income Tax Act Income Tax Act 42 value shifting (8 th Sch para 1)... 257 Income Tax Act 43 v/shifting disposal (8 th Sch para 11(1)(g))... 258 Income Tax Act 44 value-shifting proceeds (8 th Sch para 35(2))... 259 Income Tax Act 45 value-shifting time (8 th Sch para 13(1)(f))... 259 Income Tax Act 46 v/s base cost (8 th Sch para 20(1)(h)(iv))... 260 Income Tax Act 47 v/s base cost (8 th Sch para 23)... 260 Income Tax Act 48 irregular disposals (8 th Sch para 38(1))... 261 Income Tax Act 49 para 38 exclusions (8 th Sch para 38(2))... 262 Income Tax Act 50 related-party disposals (8 th Sch para 39)... 264 Income Tax Act 51 dividends as proceeds (8 th Sch para 43A)... 266 Income Tax Act 52 c/debt disposal (8 th Sch para 56(1))... 270 Income Tax Act 53 para 56 exclusions (8 th Sch para 56(2))... 270 Income Tax Act 54 gross income (s 1(1))... 289 Income Tax Act 55 diverted fringe benefits (7 th Sch para 16)... 292 Income Tax Act 56 antedated remuneration (s 7(1), (2))... 293 Income Tax Act 57 variable remuneration (s 7B)... 296 Income Tax Act 58 gains on securities (s 8A(1), (10))... 298 Income Tax Act 59 BB employee share plan (s 8B(1), (3), (4))... 301 Income Tax Act 60 vesting instruments (s 8C(1), (1A), (3), (7))... 305 Income Tax Act 61 personal service provider (4 th Sch para 1)... 322 Income Tax Act 62 labour broker (4 th Sch para 1)... 323 Income Tax Act 63 hybrid equity instruments (s 8E)... 325 Income Tax Act 64 third-party backed shares (s 8EA)... 331 Income Tax Act 65 interest on hybrid debt instrument (s 8F)... 337 Income Tax Act 66 hybrid interest (s 8FA)... 347 Income Tax Act 67 obsolete attribution rule (s 7(1))... 361 Income Tax Act 68 diversion to minor child (s 7(3), (4))... 362 Income Tax Act 69 undistributed income (s 7(5))... 364 Income Tax Act 70 revocable distributed income (s 7(6))... 366 Income Tax Act 71 cession of income-streams (s 7(7))... 367 Income Tax Act 72 diversion to nonresident (s 7(8))... 369 Income Tax Act 73 diversion to minor child (8 th Sch para 69)... 375 Income Tax Act 74 undistributed capital gain (8 th Sch para 70)... 377 Income Tax Act 75 revocable gain (8 th Sch para 71)... 379 Income Tax Act 76 diversion to nonresident (8 th Sch para 72)... 380 Income Tax Act 77 income & gain (8 th Sch para 73)... 384 Income Tax Act 78 calculation of interest (s 7D)... 387 Income Tax Act 79 person (s 1(1))... 393 Income Tax Act 80 loan to connected trust (s 7C(1))... 394 Income Tax Act 81 connected person (s 1(1))... 396 Income Tax Act 82 prohibited deduction of losses (s 7C(1A))... 397 Income Tax Act 83 prohibited deduction of losses (s 7C(2))... 399 Income Tax Act 84 deemed donation to trust (s 7C(3))... 401 Income Tax Act 85 official rate of interest (s 1(1))... 402 Income Tax Act 86 payment of donations tax (s 60)... 405 Income Tax Act 87 multiple lenders (s 7C(4))... 407 Income Tax Act 88 exemptions (s 7C(5))... 409 Income Tax Act 89 exemption, vested beneficiaries (s 7C(5)(b))... 411 Income Tax Act 90 financing primary residence (s 7C(5)(d))... 413 Income Tax Act 91 primary residence (para 44)... 413 40