Acts Online
GT Shield

Income Tax Act, 1962 (Act 58 of 1962)

Preliminary

1. Interpretation

 

1) In this Act, unless the context otherwise indicates—

 

"agent"

includes any partnership or company or any other body of persons corporate or unincorporate acting as an agent;

 

"aggregate capital gain"

means an amount determined in terms of paragraph 6 of the Eighth Schedule;

 

"aggregate capital loss"

means an amount determined in terms of paragraph 7 of the Eighth Schedule;

 

"assessed capital loss"

means an amount determined in terms of paragraph 9 of the Eighth Schedule;

 

"assessment"

has the meaning assigned under section 1 of the Tax Administration Act, and includes a determination by the Commissioner—

a) [Paragraph (a) deleted by the Tax Administration Act, 2011 (Act No. 28 of 2011)];
b) [Paragraph (b) deleted by the Tax Administration Act, 2011 (Act No. 28 of 2011)];
c) of any loss ranking for set-off;
d) of any assessed capital loss determined in terms of paragraph 9 of the Eighth Schedule; or
e) of any amounts to be taken into account in the determination of tax payable on income in future years;

 

"average exchange rate"

in relation to a year of assessment means the average determined by using the closing spot rates at the end of daily, or monthly intervals during that year of assessment, which must be consistently applied within that year of assessment;

 

"Banks Act"

means the Banks Act, 1990 (Act No. 94 of 1990);

[Definition inserted by section 4 of Act No. 31 of 2013]

 

"beneficiary"

in relation to a trust means a person who has a vested or contingent interest in all or a portion of the receipts or accruals or the assets of that trust.

 

"benefit fund"

means—

a) any friendly society registered under the Friendly Societies Act, 1956 (Act No.25 of 1956), or any fund established before 13 June 1986 which is not so registered solely because of the provisions of section 2(2)(a) of that Act; or
b) any medical scheme registered under the provisions of the Medical Schemes Act.

 

"bonus debentures or securities"

means debentures or securities issued by a company, whether by way of a bonus award or otherwise, in such manner that the company's reserves or unappropriated profits are in whole or in part applied in paying up such debentures or securities;

 

"building society"

[Definition deleted by the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)];

 

"business day"

[Definition deleted by the Tax Administration Act, 2011 (Act No. 28 of 2011)];

 

"capital gain"

means an amount determined in terms of paragraph 3 of the Eighth Schedule;

 

"capital loss"

means an amount determined in terms of paragraph 4 of the Eighth Schedule;

 

"capitalization shares"

[Definition deleted by the Taxation Laws Amendment Act, No. 7 of 2010];

 

"child"

in relation to any person, includes any person adopted by him or her—

a) under the law of the Republic; or
b) under the law of any country other than the Republic, provided the adopted person is under such law accorded the status of a legitimate child of the adoptive parent and the adoption was made at a time when the adoptive parent was ordinarily resident in such country;

 

"close corporation"

means a close corporation within the meaning of the Close Corporations Act, 1984 (Act No. 69 of 1984);

 

"collateral arrangement"

means a collateral arrangement as defined in section 1 of the Securities Transfer Tax Act, 2007 (Act No. 25 of 2007);

[Definition inserted by section 3(1) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

 

"Collective Investment Schemes Control Act"

means the Collective Investment Schemes Control Act, 2002 (Act No. 45 of 2002);

[Definition inserted by section 4(c) of Act No. 31 of 2013]

 

"Commissioner"

means the Commissioner for the South African Revenue Service appointed in terms of section 6 of the South African Revenue Service Act, 1997 (Act No. 34 of 1997), or the Acting Commissioner designated in terms of section 7 of that Act;

 

"Companies Act"

means the Companies Act, 2008 (Act No. 71 of 2008);

[Definition inserted by section 4(c) of Act No. 31 of 2013]

 

"company"

includes—

a) any association, corporation or company (other than a close corporation) incorporated or deemed to be incorporated by or under any law in force or previously in force in the Republic or in any part thereof, or any body corporate formed or established or deemed to be formed or established by or under any such law; or
b) any association, corporation or company incorporated under the law of any country other than the Republic or any body corporate formed or established under such law; or
c) any co-operative; or
d) any association (not being an association referred to in paragraph (a) or (f)) formed in the Republic to serve a specified purpose, beneficial to the public or a section of the public; or
e) any—
i) [Subparagraph (e)(i) deleted by the Taxation Laws Amendment Act, 2009 (Act No. 17 of 2009)]
ii) portfolio comprised in any investment scheme carried on outside the Republic that is comparable to a portfolio of a collective investment scheme in participation bonds or a portfolio of a collective investment scheme in securities in pursuance of any arrangement in terms of which members of the public (as defined in section 1 of the Collective Investment Schemes Control Act) are invited or permitted to contribute to and hold participatory interests in that portfolio through shares, units or any other form of participatory interest; or
iii) portfolio of a collective investment scheme in property that qualifies as a REIT as defined in paragraph 13.1(x) of the JSE Limited Listings Requirements; or

[Subparagraph (e)(iii) amended by section 3(1)(b) of the Taxation Laws Amendment Act,2015 ( Act No. 25 of 2015)]

f) a close corporation,

but does not include a foreign partnership;

 

"connected person"

means—

a) in relation to a natural person—
i) any relative; and
ii) any trust (other than a portfolio of a collective investment scheme) of which such natural person or such relative is a beneficiary;

[Subparagraph(a)(ii) amended by section 3(1)(c) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

b) in relation to a trust (other than a portfolio of a collective investment scheme)—
i) any beneficiary of such trust; and
ii) any connected person in relation to such beneficiary;

[Paragraph (b) amended by section 3(1)(d) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

bA) in relation to a connected person in relation to a trust (other than a portfolio of a collective investment scheme), any other person who is a connected person in relation to such trust;

[Paragraph (bA) substituted by section 5(1)(a) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]

c) in relation to a member of any partnership or foreign partnership—
i) any other member; and
ii) any connected person in relation to any member of such partnership or foreign partnership;
d) in relation to a company—
i) any other company that would be part of the same group of companies as that company if the expression ‘at least 70 per cent of the equity shares in’ in paragraphs (a) and (b) of the definition of ‘group of companies’ in this section were replaced by the expression ’more than 50 per cent of the equity shares or voting rights in’;
ii) [Subparagraph (ii) deleted by Revenue Laws Amendment Act, 2006 (Act No. 20 of 2006)];
iii) [Subparagraph (iii) deleted by Revenue Laws Amendment Act, 2006 (Act No. 20 of 2006];
iv) any person, other than a company as defined in section 1 of the Companies Act that individually or jointly with any connected person in relation to that person, holds, directly or indirectly, at least 20 per cent of—
aa) the equity shares in the company; or
bb) the voting rights in the company;
v) any other company if at least 20 per cent of the equity shares or voting rights in the company are held by that other company, and no holder of shares holds the majority voting rights in that company;
vA) any other company if such other company is managed or controlled by—
aa) any person who or which is a connected person in relation to such company; or
bb) any person who or which is a connected person in relation to a person contemplated in item (aa); and
vi) where such company is a close corporation—
aa) any member;
bb) any relative of such member or any trust (other than a portfolio of a collective investment scheme which is a connected person in relation to such member; and

[Item (bb) amended by section 3(1)(f) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015]

cc) any other close corporation or company which is a connected person in relation to—
i) any member contemplated in item (aa); or
ii) the relative or trust contemplated in item (bb); and
e) in relation to any person who is a connected person in relation to any other person in terms of the foregoing provisions of this definition, such other person;

Provided that for the purposes of this definition, a company includes a portfolio of a collective investment scheme in securities;

 

"contributed tax capital"

in relation to a class of shares in a company, means—

[Words preceding paragraph (a) substituted by section 1(1)(a) of the Taxation Laws Amendment Act, 2014 Act No. 43 of 2014)]

a) in relation to a class of shares issued by a company, in the case of a foreign company that becomes a resident on or after 1 January 2011, an amount equal to the sum of—
i) the market value of all the shares in that company of that class immediately before the date on which that company becomes a resident;

[Subparagraph (a)(i) amended by section 1(1)(d) of Act No. 43 of 2014]

ii) the consideration received by or accrued to that company for the issue of shares of that class on or after the date on which that company becomes a resident, and

[Subparagraph (a)(ii) amended by section 1(1)(d) of Act No. 43 of 2014]

iii) if the shares of that class include or consist of shares that were converted from another class of shares of that company to that class of shares—
(aa) any consideration received by or accrued to that company in respect of that conversion; and
(bb) the amount contemplated in subparagraph (cc) that was determined in respect of shares of the other class of shares that were so converted,

[Subparagraph (a)(iii) inserted by section 1(1)(d) of Act No. 43 of 2014]

reduced by so much of that amount as—

aa) the company has transferred on or after the date on which the company becomes a resident for the benefit of any person holding a share in that company of that class in respect of that share;
bb) has by the date of the transfer been determined by the directors of the company or by some other person or body of persons with comparable authority to be an amount so transferred; and
cc) in the case of a convertible class of shares some of the shares of which have been converted to another class of shares, so much of the amount contemplated in this paragraph in respect of that convertible class of shares immediately prior to that conversion as bears to that amount the same ratio as the number of shares so converted bears to the total number of that convertible class of shares prior to that conversion; or

[Subparagraph (a)(cc) inserted by section 1(1)(e) of Act No. 43 of 2014]

 

b) in relation to a class of shares issued by a company, in the case of any other company, an amount equal to the sum of—
i) the stated capital or share capital and share premium of that company immediately before 1 January 2011 in relation to shares in that company of that class issued by that company before that date, less so much of that stated capital or share capital and share premium as would have constituted a dividend, as defined before that date, had the stated capital or share capital and share premium been distributed by that company immediately before that date;

[Subparagraph (b)(i) amended by section 1(1)(g) of Act No. 43 of 2014]

ii) the consideration received by or accrued to that company for the issue of shares of that class on or after 1 January 2011: and

[Subparagraph (b)(ii) amended by section 1(1)(g) of Act No. 43 of 2014]

(iii) if the shares of that class include or consist of shares that were converted from another class of shares of that company to that class of shares—
(aa) any consideration received by or accrued to that company in respect of that conversion; and
(bb) the amount contemplated in subparagraph (cc) that was determined in respect of shares of the other class of shares that were so converted,

[Subparagraph (b)(iii) inserted by section 1(1)(g) of Act No. 43 of 2014]

reduced by so much of that amount as—

aa) the company has transferred on or after 1 January 2011 for the benefit of any person holding a share in that company of that class in respect of that share;
bb) has by the date of the transfer been determined by the directors of the company or by some other person or body of persons with comparable authority to be an amount so transferred; and
cc) in the case of a convertible class of shares some of the shares of which have been converted to another class of shares, so much of the amount contemplated in this paragraph in respect of that convertible class of shares immediately prior to that conversion as bears to that amount the same ratio as the number of shares so converted bears to the total number of that convertible class of shares prior to that conversion;

[Subparagraph (cc) inserted by section 1(1)(h) of Act No. 43 of 2014]

[Paragraph (b) amended by section 1(1)(f) of Act No. 43 of 2014]

Provided that the amount transferred by a company as contemplated in paragraph (a) or (b) for the benefit of a person holding shares of any class of shares of that company must not exceed an amount that bears to the total of the amount of contributed tax capital attributable to that class of shares immediately before the transfer the same ratio as the number of shares of that class held by that person bears to the total number of shares of that class;

[Definition amended by section 1(1)(b) of Act No. 43 of 2014]

 

"controlled group company"

means a controlled group company contemplated in the definition of ‘group of companies’;

 

"controlling group company"

means a controlling group company contemplated in the definition of ‘group of companies’;

 

"controlled foreign company"

means a controlled foreign company as defined in section 9D, and includes any reference in this Act, prior to the amendment thereof by the Revenue Laws Amendment Act, 2002, to a controlled foreign entity;

 

"co-operative"

means any association of persons registered in terms of section 27 of the Co-operatives Act, 1981 (Act No. 91 of 1981) or section 7 of the Co-operatives Act, 2005 (Act No. 14 of 2005);

 

"Copyright Act"

means the Copyright Act, 1978 (Act No. 98 of 1978);

 

"date of deep level production"

[Definition deleted by the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)];

 

"date of assessment"

[Definition deleted by the Tax Administration Act, 2011 (Act No. 28 of 2011)];

 

"date of sequestration"

means—

a) the date of voluntary surrender of an estate, if accepted by the Court; or
b) the date of provisional sequestration of an estate, if a final order of sequestration is granted by the Court;

 

"depreciable asset"

means an asset as defined in paragraph 1 of the Eighth Schedule (other than trading stock and any debt), in respect of which a deduction or allowance determined wholly or partly with reference to the cost or value of that asset is allowable in terms of this Act for purposes other than the determination of any capital gain or capital loss;

 

"Designs Act"

means the Designs Act, 1993 (Act No. 195 of 1993);

 

"director"

in relation to a close corporation, means any person who in respect of such close corporation holds any office or performs any functions similar to the office or functions of a director of a company other than a close corporation;

 

"dividend"

means any amount transferred or applied by a company that is a resident for the benefit or on behalf of any person in respect of any share in that company, whether that amount is transferred or applied—

a) by way of a distribution made by; or
b) as consideration for the acquisition of any share in,

that company, but does not include any amount so transferred or applied to the extent that the amount so transferred or applied—

i) results in a reduction of contributed tax capital of the company;
ii) constitutes shares in the company; or
iii) constitutes an acquisition by the company of its own securities by way of a general repurchase of securities as contemplated in subparagraph (b) of paragraph 5.67(B) of section 5 of the JSE Limited Listings Requirements, where that acquisition complies with any applicable requirements prescribed by paragraphs 5.68 and 5.72 to 5.84 of section 5 of the JSE Limited Listings Requirements;

 

"domestic treasury management company"

means a company—

(a) incorporated or deemed to be incorporated by or under any law in force in the Republic;
(b) that has its place of effective management in the Republic; and
(c) that is not subject to exchange control restrictions by virtue of being registered with the financial surveillance department of the South African Reserve Bank;

 

"entertainment expenditure"

[Definition deleted by the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)]

 

"equity share"

means any share in a company, excluding any share that, neither as respects dividends nor as respects returns of capital, carries any right to participate beyond a specified amount in a distribution;

 

"Estate Duty Act"

means the Estate Duty Act, 1955 (Act No. 45 of 1955);

[Definition inserted by section 1(1)(i) of Act No. 43 of 2014]

 

"executor"

means any person to whom letters of administration have been granted by a Master or an Assistant Master of the High Court appointed under the Administration of Estates Act, 1965 (Act No. 66 of 1965), in respect of the estate of a deceased person under any law relating to the administration of estates, and includes a person acting or authorised to act under letters of administration granted outside the Republic but signed and sealed by such a Master or Assistant Master for use within the Republic and, in any case where the estate is not required to be administered under the supervision of such a Master or Assistant Master, the person administering the estate;

 

"financial instrument"

includes—

a) a loan, advance, debt, bond, debenture, bill, share, promissory note, banker’s acceptance, negotiable certificate of deposit, deposit with a financial institution, a participatory interest in a portfolio of a collective investment scheme, or a similar instrument;
b) any repurchase or resale agreement, forward purchase arrangement, forward sale arrangement, futures contract, option contract or swap contract;
c) any other contractual right or obligation, the value of which is determined directly or indirectly with reference to—
i) a debt security or equity;
ii) any commodity,  as quoted on an exchange; or
iii) a rate index or a specified index;
d) any interest-bearing arrangement; and
e) any financial arrangement based on or determined with reference to the time value of money or cash flow or the exchange or transfer of an asset;

 

"Financial Markets Act"

means the Financial Markets Act, 2012 (Act No. 19 of 2012);

 

"Financial Services Board"

means the board established by the Financial Services Board Act;

[Definition inserted by section 1(1)(j) of Act No. 43 of 2014]

 

"Financial Services Board Act"

means the Financial Services Board Act, 1990 (Act No. 97 of 1990);

[Definition inserted by section 1(j) of Act No. 43 of 2014]

 

"financial year"

in relation to any company, means—

a) the period, whether of 12 months or not, commencing upon the date of incorporation or creation of such company and ending upon the last day of February immediately succeeding such date or upon such other date as the Commissioner having regard to the circumstances of the case may approve; or
b) any period subsequent to the period referred to in paragraph (a), whether of 12 months or not, commencing immediately after the last day of the immediately preceding financial year of such company and ending upon the first anniversary of such last day or upon such other date as the Commissioner having regard to the circumstances of the case may approve.

 

"foreign company"

means any company which is not a resident;

 

"foreign dividend"

means any amount that is paid or payable by a foreign company in respect of a share in that foreign company where that amount is treated as a dividend or similar payment by that foreign company for the purposes of the laws relating to—

a) tax on income on companies of the country in which that foreign company has its place of effective management; or
b) companies of the country in which that foreign company is incorporated, formed or established, where the country in which that foreign company has its place of effective management does not have any applicable laws relating to tax on income,

but does not include any amount so paid or payable that—

i) constitutes a redemption of a participatory interest in an arrangement or scheme contemplated in paragraph (e) (ii) of the definition of ‘company’; or
ii) [Paragraph deleted by the Taxation Laws Amendment Act, 2012 (Act No. 22 of 2012)];
iii) constitutes a share in that foreign company

 

"foreign equity instrument"

[Definition deleted by the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013) Government Gazette 37158 dated 12 December 2013.]

 

"foreign investment entity"

means any person other than a natural person—

a) that is not incorporated, established or formed in the Republic;
b) the assets of which consist solely of a portfolio of one or more of the following:
i) amounts in cash or that constitute cash equivalents;
ii) financial instruments that—
aa) are issued by a listed company or by the government of the Republic in the national, provincial or local sphere; or
bb) if not issued by a listed company or by the government of the Republic in the national, provincial or local sphere, are traded by members of the general public and a market for that trade exists;
iii) financial instruments, the values of which are determined with reference to financial instruments contemplated in subparagraph (ii); or
iv) rights to receive any asset contemplated in subparagraph (i), (ii) or (iii), which amounts, financial instruments and rights are held by that person for investment purposes;
c) where no more than 10 per cent of the shares, units or other form of 10 participatory interest in that person are directly or indirectly held by persons that are residents; and
d) where that person has no employees and has no directors or trustees that are engaged in the management of that person on a full-time basis;

[Definition inserted by the Taxation Laws Amendment Act, 2012 (Act No. 22 of 2012)]

 

"foreign partnership"

in respect of any year of assessment, means any partnership, association, body of persons or entity formed or established under the laws of any country other than the Republic if—

a) for the purposes of the laws relating to tax on income of the country in which that partnership, association, body of persons or entity is formed or established—
i) each member of the partnership, association, body of persons or entity is required to take into account the member’s interest in any amount received by or accrued to that partnership, association, body of persons or entity when that amount is received by or accrued to the partnership, association, body of persons or entity; and
ii) the partnership, association, body of persons or entity is not liable for or subject to any tax on income, other than a tax levied by a municipality, local authority or a comparable authority, in that country; or

[Subparagraph (ii) amended by section 3(1)(g) of the Taxation Laws Amendment Act, (Act No. 25 of 2015]

b) where the country in which that partnership, association, body of persons or entity is formed or established does not have any applicable laws relating to tax on income—
i) any amount—
aa) that is received by or accrued to; or
bb) of expenditure that is incurred by,
cc) the partnership, association, body of persons or entity is allocated concurrently with the receipt, accrual or incurral to the members of that partnership, association, body of persons or entity in terms of an agreement between those members; and
ii) no amount distributed to a member of a partnership, association, body of persons or entity may exceed the allocation contemplated in subparagraph (i) after taking into account any prior distributions made by the partnership, association, body of persons or entity;

 

"foreign return of capital"

means any amount that is paid or payable by a foreign company in respect of any share in that foreign company where that amount is treated as a distribution or similar payment (other than an amount that constitutes a foreign dividend) by that foreign company for the purposes of the laws relating to—

a) tax on income on companies of the country in which that foreign company has its place of effective management; or
b) companies of the country in which that foreign company is incorporated, formed or established, where that country in which that foreign company has its place of effective management does not have any applicable laws relating to tax on income,

but does not include any amount so paid or payable to the extent that the amount so paid or payable—

i) is deductible by that foreign company in the determination of any tax on income of companies of the country in which that foreign company has its place of effective management; or
ii) constitutes shares in that foreign company;

[Subparagraph (b)(ii) inserted by the Taxation Laws Amendment Act, 2012 (Act No. 22 of 2012)]

 

"foreign tax year"

in relation to a foreign company, means any year or period of reporting for foreign income tax purposes by that company or, if that company is not subject to foreign income tax, any annual period of financial reporting by that company;

 

"functional currency"

in relation to—

a) a person, means the currency of the primary economic environment in which the business operations of that person are conducted; and
b) a permanent establishment of any person, means the currency of the primary economic environment in which the business operations of that permanent establishment are conducted;

 

"government grant

[Definition deleted by the Taxation Laws Amendment Act, 2012 (Act No. 22 of 2012)]

 

"government scrapping payment"

[Definition deleted by the Taxation Laws Amendment Act, 2012 (Act No. 22 of 2012)]

 

"gross income"

in relation to any year or period of assessment, means,

i) in the case of any resident, the total amount, in cash or otherwise, received by or accrued to or in favour of such resident, or
ii) in the case of any person other than a resident, the total amount, in cash or otherwise, received by or accrued to or in favour of such person from a source within the Republic,

during such year or period of assessment, excluding receipts or accruals of a capital nature, but including, without in any way limiting the scope of this definition, such amounts (whether of a capital nature or not) so received or accrued as are described hereunder, namely—

a) any amount received or accrued by way of annuity, including any amount contemplated in the definition of ‘living annuity’ or the definition of 'annuity amount' in section 10A(1), other than an amount contemplated in paragraph (d)(ii);
b) any amount payable to the taxpayer
i) by the spouse or former spouse of that taxpayer, under any judicial order or written agreement of separation or under any order of divorce, by way of alimony or allowance or maintenance of the taxpayer ; or
ii) in terms of any maintenance order for the maintenance of a child as contemplated in section 15(1) of the Maintenance Act, 1998 (Act No. 99 of 1998);
c) any amount, including any voluntary award, received or accrued in respect of services rendered or to be rendered or any amount (other than an amount referred to in section 8(1), 8B or 8C) received or accrued in respect of any employment or the holding of any office: Provided that—

[Words preceding proviso substituted by 5(1)(b) of The Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]

i) the provisions of this paragraph shall not apply in respect of any benefit or advantage in respect of which the provisions of paragraph (i) apply:
ii) any amount received by or accrued to or for the benefit of any person in respect of services rendered or to be rendered by any other person shall for the purposes of this definition be deemed to have bean received by or to have accrued to the said other person;

[Subparagraphs (c)(iii), (iv), (v) and (vi) deleted by the Taxation Laws Amendment Act, 2002]

cA) any amount received by or accrued to any person who—
i) [Subparagraph (i) deleted by section 1(1)(k) of Act No. 43 of 2014];
ii) is or was a labour broker as defined in the Fourth Schedule (other than a labour broker in respect of which a certificate of exemption has been issued in terms of that Schedule);
iii) is or was a personal service provider as defined in the Fourth Schedule; or
iv) was a personal service company or personal service trust as defined in the Fourth Schedule prior to section 66 of the Revenue Laws Amendment Act, 2008, coming into operation,

as consideration for any restraint of trade imposed on such person.

cB) any amount received by or accrued to any natural person as consideration for any restraint of trade imposed on that person in respect or by virtue of—
(i) employment or the holding of any office; or
(ii) any past or future employment or the holding of an office;

[Paragraph (cB) inserted by section 1(1)(l) of Act No. 43 of 2014]

d) any amount (other than an amount contemplated in paragraph (a)), including any voluntary award, received or accrued—
i) in respect of the relinquishment, termination, loss, repudiation, cancellation or variation of any office or employment or of any appointment (or right or claim to be appointed) to any office or employment;
ii) by or to a person, or dependent or nominee of the person, directly or indirectly in respect of proceeds from a policy of insurance where the person is or was an employee or director of the policyholder; or
iii) by or to a person, or dependant or nominee of the person, in respect of any policy of insurance (other than a risk policy with no cash value or surrender value) that has been ceded to—
aa) the person;
bb) a dependant or nominee of the person; or
cc) [Subparagraph deleted by the Taxation Laws Amendment Act, 2012 (Act No. 22 of 2012)]

for the benefit of the person, or dependant or nominee of the person, by—

(A) the employer or former employer of the person; or
(B) the company of which the person is or was a director:

Provided that—

(aa) the provisions of subparagraphs (i) and (ii) shall not apply to any lump sum award from any pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund;
(bb) any such amount which becomes payable in consequences of or following upon the death of any person shall be deemed to be an amount which accrued to such person immediately prior to his or her death;
(cc) for the purposes of subparagraphs (ii) and (iii), any amount received by or accrued to a dependant or nominee of a person shall be deemed to be received by or to accrue to that person;
e) a retirement fund lump sum benefit or retirement fund lump sum withdrawal benefit other than any amount included under paragraph (eA);
eA) where, in relation to a member who effectively remains in the employment of the same employer, or the dependants or nominees of a deceased member—
i) any amount in a fund contemplated in paragraph (a) or (b) of the definition of 'pension fund', the rules of which provide that on retirement of such member a portion of his benefit has to be taken in the form of an annuity, has been transferred to a fund, the rules of which entitle such member, or the dependants or nominees of a deceased member, to a benefit on retirement in the form of a lump sum exceeding one-third of the capitalised value of all benefits (including lump sum payments and annuities); or
ii) a fund contemplated in paragraph (a) or (b) of the definition of 'pension fund', the rules of which provide that on retirement of such member a portion of his benefit has to be taken in the form of an annuity, is wholly or partially converted by way of an amendment to its rules or otherwise, to entitle such member, or the dependants or nominees of a deceased member, to a benefit on retirement in the form of a lump sum exceeding one-third of the capitalised value of all benefits (including lump sum payments and annuities); or
iii) any amount in a fund contemplated in paragraph (a), (b) or (d) of the definition of 'pension fund' or paragraph (b) or (c) of the definition of 'provident fund' has become payable to the member or is being utilised to redeem a debt,

an amount equal to two-thirds—

aa) of the amount so transferred; or
bb) in the case of a conversion, of the amount representing the amount converted for the benefit or ultimate benefit of the member or the dependants or nominees of the deceased member, and such amount shall be deemed to have been received by or accrued to or in favour of such member, dependants or nominees, as the case may be: Provided that where a court granting a decree of divorce in respect of such member has made an order that any part of such amount shall be paid to the former spouse of such member, as provided for in section 7(8) of the Divorce Act, 1979 (Act No. 70 of 1979), such part shall for the purposes of this paragraph be deemed to be an amount converted for the benefit or ultimate benefit of such member; or
cc) in the case of an amount becoming payable to a member or being utilised to redeem a debt, of the amount so payable or so utilised:

Provided that the Commissioner may, on application by a fund, in particular circumstances, increase the proportion of one-third contemplated in subparagraph (i) up to a maximum of one-half on the following conditions:

a) that on 12 March 1997 the proportion of the benefit on retirement in such fund that could be taken in the form of a lump sum was greater than one-third, but not greater than one-half, of the total capitalized value of all benefits;
b) that the rules of such fund are amended so that the maximum proportion of such member's benefit on retirement that can be taken in the form of a lump sum is one-third of the total capitalized value of all benefits; and
c) such further conditions as the Commissioner may determine from time to time;
eB) [Paragraph deleted by the Taxation Laws Amendment Act No. 17 of 2009];
eC) [Paragraph deleted by the Taxation Laws Amendment Act No. 17 of 2009];
f) any amount received or accrued in commutation of amounts due under any contract of employment or service;
g) any amount received or accrued from another person, as a premium or consideration in the nature of a premium—
(i) for the use or occupation or the right of use or occupation of land or buildings; or
ii) for the use or the right of use of plant or machinery; or
ii)bis for the use or the right of use of any motion picture film or any film or video tape or disc for use in connection with television or any sound recording or advertising matter connected with such motion picture film, film or video tape or disc; or
iii) for the use or right of use of any patent as defined in the Patents Act or any design as defined in the Designs Act or any trade mark as defined in the Trade Marks Act or any copyright as defined in the Copyright Act or any model, pattern, plan, formula or process or any other property or right of a similar nature;

[Subparagraph (iii) amended by section 4(1)(r) of Act No. 31 of 2013]

gA) any amount received or accrued from another person as consideration for the imparting of or the undertaking to impart any scientific, technical, industrial or commercial knowledge or information, or for the rendering of or the undertaking to render any assistance or service in connection with the application or utilisation of such knowledge or information;
h) in the case of any person to whom, in terms of any agreement relating to the grant to any other person of the right of use or occupation of land or buildings, or by virtue of the cession of any rights under any such agreement, there has accrued in any such year or period the right to have improvements effected on the land or to the buildings by any other person—
i) the amount stipulated in the agreement as the value of the improvements or as the amount to be expended on the improvements; or
ii) if no amount is so stipulated, an amount representing the fair and reasonable value of the improvements;
i) the cash equivalent, as determined under the provisions of the Seventh Schedule, of the value during the year of assessment of any benefit or advantage granted in respect of employment or to the holder of any office, being a taxable benefit as defined in the said Schedule, and any amount required to be included in the taxpayer's income under section 8A;
j) so much of the sum of any amounts received or accrued during any year of assessment in respect of disposals of assets the cost of which has in whole or in part been included in capital expenditure taken into account (whether under this Act or any previous Income Tax Act) for the purposes of any deduction in respect of any mine under section 15(a) of this Act or the corresponding provisions of any previous Income Tax Act, as exceeds the sum of so much of any capital expenditure as in the case of such mine is unredeemed at the commencement of the said year of assessment and the capital expenditure that is incurred during that year in respect of such mine, as determined before applying the definition of "capital expenditure incurred" in section 36(11);
jA) any amount received by or accrued to any person during the year of assessment in respect of the disposal of any asset manufactured, produced, constructed or assembled by that person, which is similar to any other asset manufactured, produced, constructed or assembled by that person for purposes of manufacture, sale or exchange by that person or on that person’s behalf;
k) any amount received or accrued by way of a dividend or a foreign dividend;
l) any amount received or accrued by way of grant or subsidy in respect of any soil erosion works referred to in section 17A(1) or any of the matters mentioned in items (a) to (i), inclusive, of paragraph 12(1) of the First Schedule;
lA) any amount received by or accrued to a company or association as contemplated in subparagraph (ii) of section 11E;
lB) [Paragraph deleted by Revenue Laws Second Amendment Act No. 32 of 2005];
lC) any amount received or accrued to a person by way of a government grant as defined in section 12P;

[Paragraph (lA) inserted by section 5(1)(d) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]

m) any amount received or accrued in respect of a policy of insurance of which the taxpayer is the policyholder, where the policy relates to the death, disablement or severe illness of an employee or director (or former employee or director) of the taxpayer, including by way of any loan or advance: Provided that any amount so received or accrued shall be reduced by the amount of any such loan or advance which is or has been included in the taxpayer’s gross income;
n) any amount which in terms of any other provision of this Act is specifically required to be included in the taxpayer's income, and that amount must—
i) for the purposes of this paragraph be deemed to have been received by or to have accrued to the taxpayer; and
ii) in the case of any amount required to be included in the taxpayer’s income in terms of section 8(4), be deemed to have been received or accrued from a source within the Republic notwithstanding that such amounts may have been recovered or recouped outside the Republic:

Provided that where during any year of assessment a person has become entitled to any amount which is payable on a date or dates falling after the last day of such year, that amount shall be deemed to have accrued to the person during such year;

 

"group of companies"

means two or more companies in which one company (hereinafter referred to as the ‘controlling group company’) directly or indirectly holds shares in at least one other company (hereinafter referred to as the ‘controlled group company’), to the extent that—

a) at least 70 per cent of the equity shares in each controlled group company are directly held by the controlling group company, one or more other controlled group companies or any combination thereof; and
b) the controlling group company directly holds at least 70 per cent of the equity shares in at least one controlled group company;

 

"headquarter company"

in respect of any year of assessment means a company contemplated in section 9I(1) in respect of which an election has been made in terms of that section;

 

"hotel keeper"

means any person carrying on the business of hotel keeper or boarding or lodging house keeper where meals and sleeping accommodation are supplied to others for money or its equivalent;

 

"identical security"

means in respect of a listed security, as defined in the Securities Transfer Tax Act, 2007 (Act No. 25 of 2007), that is the subject of a securities lending arrangement—

(a) a security of the same class in the same company as that security; or
(b) any other security that is substituted for that listed security in terms of arrangement that is announced and released as a corporate action as contemplated in the JSE Limited Listing Requirements in the SENS (Stock Exchange News Service) as defined in the JSE Limited Listing Requirements.

[Paragraph (b) substituted by section 5(1)(e) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]

[Definition inserted by section 3(1)(h) of the Taxation Laws Amendment Act, 2015  (Act No. 25 of 2015]

 

"identical share"

means in respect of a share—

(a) a share of the same class in the same company as that share; or
(b) any other share that is substituted for that listed share in terms of an arrangement that is announced and released as a corporate action as contemplated in the JSE Limited Listing Requirements in the SENS (Stock Exchange News Service) as defined in the JSE Limited Listing Requirements;

[Paragraph (b) substituted by section 5(1)(f) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]

[Definition inserted by section 3(1)(h) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

 

"IFRS"

means the International Financial Reporting Standards issued by the International Accounting Standards Board;

[Definition inserted by the Taxation Laws Amendment Act, 2012 (Act No. 22 of 2012)]

 

"income"

means the amount remaining of the gross income of any person for any year or period of assessment after deducting therefrom any amounts exempt from normal tax under Part I of Chapter II;

 

"insolvent estate"

means an insolvent estate as defined in section 2 of the Insolvency Act, 1936 (Act No. 24 of 1936);

 

"JSE Limited Listings Requirements"

Means the JSE Limited Listings Requirements, 2003, made by the JSE Limited in terms of section 11 of the Financial Markets Act;

[Definition amended by section 4(u) of Act No. 31 of 2013]

 

" unit"

means a unit comprising a share and a debenture in a company, where that share and that debenture are linked and are traded together as a single unit;

[Definition amended by section 4(v) of Act No. 31 of 2013]

 

"listed company"

means a company where its shares or depository receipts in respect of its shares are listed on —

a) an exchange as defined in section 1 of the Financial Markets Act and licensed under section 9 of that Act; or
b) a stock exchange in a country other than the Republic which has been recognised by the Minister as contemplated in paragraph (c) of the definition of ‘recognised exchange’ in paragraph 1 of the Eighth Schedule;

 

"listed share"
means a share that is listed on an exchange as defined in section 1 of the Financial Markets Act and licensed under section 9 of that Act;

[Definition amended by section 4(x) of Act No. 31 of 2013]

 

"living annuity"

means a right of a member or former member of a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund, or his or her dependant or nominee, or any subsequent nominee, to an annuity purchased from a person or provided by that fund on or after the retirement date of that member or former member in respect of which—

a) the value of the annuity is determined solely by reference to the value of assets which are specified in the annuity agreement and are held for purposes of providing the annuity;
b) the amount of the annuity is determined in accordance with a method or formula prescribed by the Minister by notice in the Gazette;
c) the full remaining value of the assets contemplated in paragraph (a) may be paid as a lump sum when the value of those assets become at any time less than an amount prescribed by the Minister by notice in the Gazette;
d) the amount of the annuity is not guaranteed by that person or fund;
e) on the death of the member or former member, the value of the assets referred to in paragraph (a) may be paid to a nominee of the member or former member as an annuity or lump sum or as an annuity and a lump sum, or, in the absence of a nominee, to the deceased’s estate as a lump sum; and
f) further requirements regarding the annuity may be prescribed by the Minister by notice in the Gazette;

 

"local authority"

[Definition deleted by Revenue Laws Amendment Act, 2006 (Act 20 of 2006)]

 

"Long-term Insurance Act"

means the Long-term Insurance Act, 1998 (Act No. 52 of 1998);

[Definition amended by section 4(y) of Act No. 31 of 2013]

 

"low-cost residential unit"

means—

a) an apartment qualifying as a residential unit in a building located within the Republic, where—
i) the cost of the apartment does not exceed R350 000; and
ii) the owner of the apartment does not charge a monthly rental in respect of that apartment that exceeds one per cent of the cost; or
b) a building qualifying as a residential unit located within the Republic, where—
i) the cost of the building does not exceed R300 000; and
ii) the owner of the building does not charge a monthly rental in respect of that building that exceeds one per cent of the cost contemplated in subparagraph (i) plus a proportionate share of the cost of the land and the bulk infrastructure:

Provided that for the purposes of paragraphs (a)(ii) and (b)(ii), the cost is deemed to be increased by 10 per cent in each year succeeding the year in which the apartment or building is first brought into use;

 

"lump sum benefit"

means a retirement fund lump sum benefit or retirement fund lump sum withdrawal benefit;

 

"married woman"

[Definition deleted by the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)];

 

"Medical Schemes Act"

means the Medical Schemes Act, 1998 (Act No. 131 of 1998);

[Definition amended by section 4(z) of Act No. 31 of 2013]

 

"Mineral and Petroleum Resources Development Act"

means the Mineral and Petroleum Resources Development Act, 2002 (Act No. 28 of 2002);

[Definition amended by section 4(z) of Act No. 31 of 2013]

 

"mining for gold" or "to mine for gold"

includes mining for uranium or to mine for uranium;

 

"mining operations" and "mining"
include every method or process by which any mineral is won from the soil or from any substance or constituent thereof.

 

"Minister"

means the Minister of Finance;

 

"municipality"

means a municipality which is within a category listed in section 155(1) of the Constitution of the Republic of South Africa, 1996, and which is an organ of state within the local sphere of government exercising legislative and executive authority within an area determined in terms of the Local Government: Municipal Demarcation Act, 1998 (Act No. 27 of 1998);

 

"municipal value"

means an amount determined in terms of section 46 of the Local Government: Municipal Property Rates Act, 2004 (Act No. 6 of 2004);

[Definition amended by section 4(zA) of Act No. 31 of 2013]

 

"mutual building society"

[Definition deleted by the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)];

 

"natural oil"

means any liquid or solid hydrocarbon or combustible gas existing in a natural condition in the earth's crust, but does not include coal or bituminous shales or other stratified deposits from which oil can be obtained by destructive distillation, or gas arising from marsh or other surface deposits;

 

"neighbouring country"

means Botswana, Lesotho, Namibia and Swaziland;

 

"nominal value"

[Definition deleted by the Taxation Laws Amendment Act, No. 7 of 2010]

 

"normal retirement age"

means—

a) in the case of a member of a pension fund or provident fund, the date on which the member becomes entitled to retire from employment for reasons other than sickness, accident, injury or incapacity through infirmity of mind or body;
b) in the case of a member of a retirement annuity fund, a pension preservation fund or a provident preservation fund, the date on which the member attains 55 years of age; or
c) in the case of a member of any fund contemplated in this definition, the date on which that member becomes permanently incapable of carrying on his or her occupation due to sickness, accident, injury or incapacity through infirmity of mind or body;

 

"normal tax"

means income tax referred to in section 5(1);

 

"officer"

means, where used in the context of a person who is engaged by the Commissioner in carrying out the provisions of this Act, a SARS official as defined in section 1 of the Tax Administration Act;

 

"Patents Act"

means the Patents Act, 1978 (Act No. 57 of 1978);

[Definition inserted by section 4(zB) of Act No. 31 of 2013]

 

"other deep level gold mine"

[Definition deleted by the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)]

 

"pension fund"

means—

a)
i) any pension, provident or dependants' fund or pension scheme established by law, other than the Government Employees Pension Fund, as contemplated in the Government Employees Pension Law, 1996 (Proclamation No. 21 of 1996);

[Subparagraph (i) amended by section 3(1)(k) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

ii) any pension or dependant’s fund or pension scheme established for the benefit of the employees of any municipality or of any local authority (as defined in the definition of "local authority" in this section prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006 (Act No. 20 of 2006), that was established prior to the date that section so came into operation); or

[Subparagraph (ii) amended by section 3(1)(l) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

iii) any fund contemplated in subparagraph (ii), which includes as members employees of any municipal entity created in accordance with the provisions of the Municipal Systems Act, 2000 (Act No. 32 of 2000), over which one or more municipalities or local authorities as defined in section 1 prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006, and that was established prior to the date that section so came into operation) exercise ownership control as contemplated by that Act, where such fund was established –
aa) on or before 14 November 2000, and such employees were employees of a local authority (as defined in section 1 prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006, and that was established prior to the date that section so came into operation) immediately prior to becoming employees of such municipal entity; or
bb) after 14 November 2000, and such fund has been approved by the Commissioner subject to such limitations, conditions and requirements as contemplated in paragraph (c).
b) with effect from a date determined by the Commissioner in relation to any fund hereinafter referred to (not being a date earlier than 4 December 1981), any pension fund established for the benefit of employees of a control board as defined in section 1 of the Marketing of Agricultural Products Act, 1996 (Act No. 47 of 1996), or for the benefit of employees of the Development Bank of Southern Africa, if the rules of such fund are in all material respects identical to those of the Government Employees' Pension Fund; or

[Paragraph (b) amended by section 3(1)(m) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

c) the Municipal Councillors Pension Fund provisionally registered under the Pension Funds Act on 23 May 1988, or any fund (other than a retirement annuity fund , a pension preservation fund or a fund contemplated in paragraph (a) or (b)) which is approved by the Commissioner in respect of the year of assessment in question and, in the case of any such fund established on or after 1 July 1986, is registered under the provisions of that Act:

Provided that the Commissioner may approve a fund subject to such limitations or conditions as he may determine, and shall not approve a fund in respect of any year of assessment unless he is in respect of that year of assessment satisfied—

i) that the fund is a permanent fund bona fide established for the purpose of providing annuities for employees on retirement from employment or for the dependants or nominees of deceased employees, or mainly for the said purpose and also for the purpose of providing benefits other than annuities for the persons aforesaid or for the purpose of providing any benefit contemplated in paragraph 2C of the Second Schedule or section 15A or 15E of the Pension Funds Act; and
ii) that the rules of the fund provide—
aa) that all annual contributions of a recurrent nature to the fund shall be in accordance with specified scales;
bb) that membership of the fund throughout the period of employment shall be a condition of the employment by the employer of all persons of the class or classes specified therein who enter his employment on or after the date upon which—
A) the fund comes into operation; or
B) the employer becomes a participant in that fund;
cc) that persons who immediately prior to the said date were employed by the employer and who on the said date fall within the said class or classes may, on application made within a period of not more than 12 months as from the said date, be permitted to become members of the fund on such conditions as may be specified in the rules;
dd) that not more than one-third of the total value of the retirement interest may be commuted for a single payment, and that the remainder must be paid in the form of an annuity (including a living annuity) except where two-thirds of the total value does not exceed R165 000 or where the employee is deceased.

[Subparagraph (dd) amended by section 3(1)(n) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

ee) that a partner of a partnership is regarded as an employee of the partnership; and
A) Any monetary advantage approved by the Registrar of Pension Funds, or
B) that where the employer is a partnership, a member of the partnership may be permitted to derive such monetary advantage if he was previously an employee and, on becoming a partner, was permitted to retain his membership of the fund as though he had not ceased to be an employee, his contributions being based upon his pensionable emoluments during the 12 months which ended on the day on which he ceased to be an employee and his benefits from the fund being calculated accordingly;
ff) that the Commissioner shall be notified of all amendments of the rules; and
gg) [Subparagraph deleted by the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)]
d) the Government Employees Pension Fund, as contemplated in the Government Employees Pension Law, 1996 (Proclamation No. 21 of 1996);

[Paragraph (d) inserted by section 3(1)(o) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

iii) that the rules of the fund have been complied with:

Provided further that a fund contemplated in paragraph (i) of the further proviso to the definition of ‘pension preservation fund’ which is deemed to be approved or which is approved in terms of that definition or which fails to submit its rules as required by that paragraph is deemed with effect from the earlier of the date of the deemed approval or 30 September 2010 to be a fund which is not approved in terms of this definition;

:Provided that in respect of any fund contemplated in paragraph (a) or (b)—

(a) the fund is a permanent fund bona fide established for the purpose of providing annuities for employees on retirement from employment or for the dependants or nominees of deceased employees, or mainly for the said purpose and also for the purpose of providing benefits other than annuities for the persons aforesaid or for the purpose of providing any benefit contemplated in paragraph 2C of the Second Schedule or section 15A or 15E of the Pension Funds Act; and
(b) the rules of the fund provide—
(i) that all annual contributions of a recurrent nature to the fund shall be in accordance with specified scales;
(ii) that membership of the fund throughout the period of employment shall be a condition of the employment by the employer of all persons of the class or classes specified therein who enter his employment on or after the date upon which—
(aa) the fund comes into operation; or
(bb) the employer becomes a participant in that fund;
(iii) that persons who immediately prior to the said date were employed by the employer and who on the said date fall within the said class or classes may, on application made within a period of not more than 12 months as from the said date, be permitted to become members of the fund on such conditions as may be specified in the rules;
(iv) that not more than one-third of the total value of the retirement interest may be commuted for a single payment, and that the remainder must be paid in the form of an annuity (including a living annuity) except where two-thirds of the total value does not exceed R165 000 or where the employee is deceased: Provided that in determining the value of the retirement interest an amount calculated as follows must not be taken into account:
(a) in the case of a person who is a member of a provident fund and who is 55 years of age or older on 1 March 2016—
(i) any amount contributed to a provident fund of which that person is a member on 1 March 2016;
(ii) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2016; and
(iii) any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subparagraph (i) or amounts credited contemplated in subparagraph (ii); or
(b) in any other case of a person who is a member of a provident fund—
(i) any amount contributed to a provident fund prior to 1 March 2016;
(ii) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2016; and
(iii) any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subparagraph (i) or amounts credited contemplated in subparagraph (ii),

reduced by any amounts permitted in terms of any law to be deducted from the member’s individual account of the provident fund;

(c)        that a partner is regarded as an employee of the partnership;

(d)        that the rules of the fund have been complied with;

[Proviso inserted by section 3(1)(p) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

 

"Pension Funds Act"

means the Pension Funds Act, 1956 (Act No. 24 of 1956);

 

"pension preservation fund"

means a pension fund organisation which is registered under the Pension Funds Act and which is approved by the Commissioner in respect of the year of assessment in question: Provided that the Commissioner may approve a fund subject to such limitations and conditions as the Commissioner may determine, and shall not approve a fund in respect of any year of assessment unless the Commissioner is satisfied in respect of that year of assessment that the rules of the fund provide that—

a) membership of the fund consists of—
i) former members of a pension fund or provident fund whose membership of that fund has terminated due to—
aa) resignation, retrenchment or dismissal from employment and who elected to have any lump sum benefit that is payable as a result of the termination transferred to that fund;
bb) the winding up or partial winding up of that fund, if the member elects or is required in terms of the rules to transfer to this fund; or
cc) a transfer of business from one employer to another in terms of section 197 of the Labour Relations Act, 1995 (Act No. 66 of 1995), and the employment of the employee with the transferor employer is transferred to the transferee employer, if the member elects or is required in terms of the rules to transfer to this fund;
ii) former members of any other pension fund, pension preservation fund, provident fund or provident preservation fund; or—
aa) if that fund was wound up or partially wound up; or
bb) if the member elected to have any lump sum benefit contemplated in paragraph 2(1)(b)(ii) of the Second Schedule transferred to this pension preservation fund and who made this election while they were members of that other fund;

[Subparagraph (ii) amended by section 3(1)(q) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

iii) former members of a pension fund or nominees or dependants of that former member in respect of whom an ‘unclaimed benefit’ as defined in the Pension Funds Act is due or payable by that fund; or
iv) persons who have elected to transfer to that fund amounts awarded to those persons in terms of any court order contemplated in section 7(8) of the Divorce Act, 1979 (Act No. 70 of 1979), from any pension fund or pension preservation fund for the benefit of those persons;
b) payments or transfers to the fund in respect of a member are limited to any amount contemplated in paragraph 2(1)(a)(ii) or (b) of the Second Schedule or any unclaimed benefit as defined in the Pension Funds Act, that is paid or transferred to the fund by—

[Words preceding paragraph (b)(i) substituted by section 5(1)(g) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]

i) a pension fund, pension preservation fund, provident fund or provident preservation fund of which that member was previously a member; or

[Subparagraph (i) amended by section 3(1)(r) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

ii) a pension fund or pension preservation fund of which such member’s former spouse is or was previously a member and such payment or transfer was made pursuant to an election by such member in terms of section 37D(4)(b)(ii) of the Pension Funds Act;
c) with the exception of amounts transferred to any other pension fund, pension preservation fund or retirement annuity fund, not more than one amount contemplated in paragraph 2(1)(b)(ii) of the Second Schedule is allowed to be paid to the member during the period of membership of the fund or any other pension preservation fund : Provided that this paragraph applies separately to each payment or transfer to the fund contemplated in paragraph (b);
d) a member, other than a member contemplated in paragraph (a)(iii) of this proviso, will become entitled to a benefit on his or her retirement date; and
e) not more than one-third of the total value of the retirement interest may be commuted for a single payment and that the remainder must be paid in the form of an annuity (including a living annuity) except where two-thirds of the total value does not exceed R165 000 or where the member is deceased:

[Paragraph (e) amended by section 3(1)(s) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

Provided that in determining the value of the retirement interest an amount calculated as follows must not be taken into account:

(a) in the case of a person who is a member of a provident fund and who is 55 years of age or older on 1 March 2016—
(i) any amount contributed to a provident fund of which that person is a member on 1 March 2016;
(ii) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2016; and
(iii) any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subparagraph (i) or amounts credited contemplated in subparagraph (ii); or
(b) in any other case of a person who is a member of a provident fund—
(i) any amount contributed to a provident fund prior to 1 March 2016;
(ii) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2016; and
(iii) any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subparagraph (i) or amounts credited contemplated in subparagraph (ii),

reduced by any amounts permitted in terms of any law to be deducted from the member's individual account of the provident fund;

[Paragraph (e) amended by section 3(1)(t) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

 

"permanent establishment"

means a permanent establishment as defined from time to time in Article 5 of the Model Tax Convention on Income and on Capital of the Organisation for Economic Co-operation and Development: Provided that in determining whether a qualifying investor in relation to a partnership, trust or foreign partnership has a permanent establishment in the Republic, any act of that partnership, trust or foreign partnership in respect of any financial instrument must not be ascribed to that qualifying investor;

 

"person"

includes—

a) an insolvent estate;
b) the estate of a deceased person;
c) any trust; and
d) any portfolio of a collective investment scheme,

but does not include a foreign partnership.

 

"portfolio of a collective investment scheme"

means any—

a) portfolio of a collective investment scheme in participation bonds;
b) portfolio of a collective investment scheme in property;
c) portfolio of a collective investment scheme in securities; or
d) portfolio of a declared collective investment scheme;

 

"portfolio of a collective investment scheme in participation bonds"

means any portfolio comprised in any collective investment scheme in participation bonds contemplated in Part VI of the Collective Investment Schemes Control Act managed or carried on by any company registered as a manager under and for the purposes of that Part;

 

"portfolio of a collective investment scheme in property"

means any portfolio comprised in any collective investment scheme in property contemplated in Part V of the Collective Investment Schemes Control Act managed or carried on by any company registered as a manager under section 51 of that Act for the purposes of that Part;

 

"portfolio of a collective investment scheme in securities"

means any portfolio comprised in any collective investment scheme in securities contemplated in Part IV of the Collective Investment Schemes Control Act managed or carried on by any company registered as a manager under section 42 of that Act for the purposes of that Part;

 

"portfolio of a declared collective investment scheme"

means any portfolio comprised in any declared collective investment scheme contemplated in Part VII of the Collective Investment Schemes Control Act managed or carried on by any company registered as a manager under section 64 of that Act for the purposes of that Part;

 

"portfolio of a hedge fund collective investment scheme"

means any portfolio held by any hedge fund business that qualifies as a declared collective investment scheme in terms of section 63 of the Collective Investment Schemes Control Act;

 

"post-1973 gold mine"

means an independent workable proposition in respect of which the State President or the Minister of Mines has, after 1 January, 1974, on the recommendation of the Mining Leases Board signified in writing his decision to grant a lease of the right to mine for gold, and includes any other gold mine which, in the opinion of the Government Mining Engineer, is an independent workable proposition which was established as such after the said date;

 

"post-1990 gold mine"

means a gold mine—

(a) which, in the opinion of the Director-General: Mineral and Energy Affairs, is an independent workable proposition and in respect of which a mining authorization for gold mining was issued for the first time after 14 March 1990 in terms of the Minerals Act, 1991 (Act No. 50 of 1991); or
(b) for which a mining permit or mining right for gold mining (other than a mining permit or mining right issued on conversion of an old order mining right as defined in paragraph 1 of Schedule II to the Mineral and Petroleum Resources Development Act) was issued for the first time on or after 1 May 2004 in terms of that Act;

[Definition amended by section 1(1)(m) of Act No. 43 of 2014]

 

"prescribed"

means prescribed or deemed to be prescribed by or under this Act;

 

"prescribed rate"

means the rate contemplated in section 189(3) of the Tax Administration Act;

 

"provident fund"

means—

(a) any fund (other than a pension fund, pension preservation fund, provident preservation fund, benefit fund or retirement annuity fund) which is approved by the Commissioner in respect of the year of assessment in question and, in the case of any such fund established on or after 1 July 1986, is registered under the provisions of the Pension Funds Act ;
(b) any provident fund established for the benefit of the employees of any municipality or of any local authority (as defined in the definition of ‘‘local authority’’ in this section prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006 (Act No. 20 of 2006), that was established prior to the date that section so came into operation); or
(c) any fund contemplated in subparagraph (b), which includes as members employees of any municipal entity created in accordance with the provisions of the Municipal Systems Act, 2000 (Act No. 32 of 2000), over which one or more municipalities or local authorities (as defined in section 1 prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006, and that was established prior to the date that section so came into operation) exercise ownership control as contemplated by that Act, where such fund was established—
(aa) on or before 14 November 2000, and such employees were employees of a local authority (as defined in section 1 prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006, and that was established prior to the date that section so came into operation) immediately prior to becoming employees of such municipal entity; or
(bb) after 14 November 2000, and such fund has been approved by the Commissioner subject to such limitations, conditions and requirements as contemplated in paragraph (c) of the definition of ‘pension fund’;

Provided that the Commissioner may approve a fund subject to such limitations or conditions as he may determine, and shall not approve a fund in respect of any year of assessment unless he is in respect of that year of assessment satisfied—

a) that the fund is a permanent fund bona fide established solely for the purpose of providing benefits for employees on retirement from employment or solely for the purpose of providing benefits for the dependants or nominees of deceased employees or deceased former employees or solely for a combination of such purposes, or mainly for the said purpose and also for the purpose of providing any benefit contemplated in paragraph 2C of the Second Schedule or section 15A or 15E of the Pension Funds Act; and

[Paragraph (a) amended by section 143(1)(a) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

b) the rules of the fund provide—

(i)        that all annual contributions of a recurrent nature to the fund shall be in accordance with specified scales;

(ii) that membership of the fund throughout the period of employment shall be a condition of the employment by the employer of all persons of the class or classes specified therein who enter his employment on or after the date upon which—

(aa)        the fund comes into operation; or

(bb)        the employer becomes a participant in that fund;

(iii) that persons who immediately prior to the said date were employed by the employer and who on the said date fall within the said class or classes may, on application made within a period of not more than 12 months as from the said date, be permitted to become members of the fund on such conditions as may be specified in the rules;
(iv) that not more than one-third of the total value of the retirement interest may be commuted for a single payment, and that the remainder must be paid in the form of an annuity (including a living annuity) except where two-thirds of the total value does not exceed R165 000 or where the employee is deceased: Provided that in determining the value of the retirement interest an amount calculated as follows must not be taken into account—
(a) in the case of a person who is a member of a provident fund and who is 55 years of age or older on 1 March 2016—
(i) any amount contributed to a provident fund of which that person is a member on 1 March 2016;
(ii) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2016; and
(iii) any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subitem (A) or amounts credited contemplated in subitem (B); or
(b) in any other case of a person who is a member of a provident fund—
(i) any amount contributed to a provident fund prior to 1 March 2016;
(ii) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2016; and
(iii) any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subitem (A) or amounts credited contemplated in subitem (B),

reduced by any amounts permitted in terms of any law to be deducted from the member's individual account of the provident fund;

(v) that a partner is regarded as an employee of the partnership;
(vi) that the rules of the fund have been complied with;

[Paragraph (b) amended by section 3(1)(v) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

c) that the rules of the fund have been complied with:

Provided further that a fund contemplated in paragraph (i) of the further proviso to the definition of ‘provident preservation fund’ which is deemed to be approved or which is approved in terms of that definition or which fails to submit its rules as required by that paragraph is deemed with effect from the earlier of the date of the deemed approval or 30 September 2010 to be a fund which is not approved in terms of this definition.

[Definition amended by section 3(1)(u) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

 

"provident preservation fund"

means a pension fund organization which is registered under the Pension Funds Act and which is approved by the Commissioner in respect of the year of assessment in question: Provided that the Commissioner may approve a fund subject to such limitations and conditions as the Commissioner may determine, and shall not approve a fund in respect of any year of assessment unless the Commissioner is satisfied in respect of that year of assessment that the rules of the fund provide that—

a) membership of the fund consists of—
i) former members of any other pension fund, pension preservation fund, provident fund or provident preservation fund whose membership of that fund has terminated due to—
aa) resignation, retrenchment or dismissal from employment and who elected to have any lump sum benefit that is payable as a result of the termination transferred to that fund;
bb) the winding up or partial winding up of that fund, if the members elected or are required in terms of the rules to transfer to this fund; or
cc) a transfer of business from one employer to another in terms of section 197 of the Labour Relations Act, 1995 (Act No. 66 of 1995), and the employment of the employee with the transferor employer is transferred to the transferee employer, if the members elected or are required in terms of the rules to transfer to this fund;

[Subparagraph (i) amended by section 3(1)(w) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

ii) former members of any other pension fund, pension preservation fund, provident fund or provident preservation fund—
aa) if that fund was wound up or partially wound up; or
bb) if the member elected to have any benefit contemplated in paragraph 2(1)(b)(ii) of the Second Schedule transferred to that fund and who made this election while they were members of that other fund;

[Subparagraph (ii) amended by section 3(1)(x) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

iii) former members of a provident fund or nominees or dependants of that former member in respect of whom an ‘unclaimed benefit’ as defined in the Pension Funds Act is due or payable by that fund; or
iv) a person who has elected to transfer an amount awarded to that person in terms of a court order contemplated in section 7(8) of the Divorce Act, 1979 (Act No. 70 of 1979), from a provident fund or provident preservation fund for the benefit of that person;
b) payments or transfers to the fund in respect of a member are limited to any amount contemplated in paragraph 2(1)(b) of the Second Schedule or any unclaimed benefit as defined in the Pension Funds Act that is paid or transferred to the fund by—
i) a pension fund, pension preservation fund, provident fund or provident preservation fund of which that member was previously a member; or

[Subparagraph (i) amended by section 3(1)(y) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

ii) a provident fund or provident preservation fund of which such member’s former spouse is or was previously a member and such payment or transfer was made pursuant to an election by such member in terms of section 37D(4)(b)(ii) of the Pension Funds Act;
c) with the exception of amounts transferred to any pension fund, pension preservation fund, other provident fund, provident preservation fund or retirement annuity fund, not more than one amount contemplated in paragraph 2 (1) (b) (ii) of the Second Schedule is allowed to be paid to the member during the period of membership of the fund or any other provident preservation fund: Provided that this paragraph applies separately to each payment or transfer to the fund contemplated in paragraph (b); and
d) a member, other than a member contemplated in paragraph (a)(iii) of this proviso, will become entitled to a benefit on his or her retirement date:
e) not more than one-third of the total value of the retirement interest may be commuted for a single payment, and that the remainder must be paid in the form of an annuity (including a living annuity) except where two-thirds of the total value does not exceed R165 000 or where the employee is deceased: Provided that in determining the value of the retirement interest an amount calculated as follows must not be taken into account:
(a) in the case of a person who is a member of a provident fund and who is 55 years of age or older on 1 March 2016—
(i) any amount contributed to a provident fund of which that person is a member on 1 March 2016;
(ii) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2016; and
(iii) any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subparagraph (i) or amounts credited contemplated in subparagraph (ii); or
(b) in any other case of a person who is a member of a provident fund —
(i) any amount contributed to a provident fund prior to 1 March 2016;
(ii) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2016; and
(iii) any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subparagraph (i) or amounts credited contemplated in subparagraph (ii),

reduced by any amounts permitted in terms of any law to be deducted from the member’s individual account of the provident fund;

[Paragraph (e) amended by section 3(1)(z) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

Provided further that—

i) the rules of a provident fund that is doing the business of a preservation fund as prescribed by the Commissioner from time to time must be submitted to the Commissioner for approval in terms of the provisions of this definition before 30 September 2010; and
ii) the rules of the provident fund contemplated in paragraph (i) that are submitted before 30 September 2010 are deemed to have been approved under this definition with effect from the date that the rules are submitted until the date that the Commissioner notifies the fund of its status under this definition;

 

"Public Finance Management Act"

means the Public Finance Management Act, 1999 (Act No. 1 of 1999);

 

"Public Private Partnership"

means a Public Private Partnership as defined in—

(a) Regulation 16 of the Treasury Regulations issued in terms of section 76 of the Public Finance Management Act; or
(b) the Municipal Public-Private Partnership Regulations made in terms of section 168 of the Local Government : Municipal Finance Management Act, 2003 (Act No. 56 of 2003);

[Definition amended by section 1(1)(n) of Act No. 43 of 2014]

 
"qualifying investor"

means a member of a partnership or foreign partnership or a beneficiary of a trust if the liability of the member or beneficiary to any creditor of the partnership, trust or foreign partnership is limited to the amount that the member or beneficiary has contributed or undertaken to contribute to the partnership, trust or foreign partnership, unless that member or beneficiary—

a) participates in the effective management of the trade or business of the partnership, trust or foreign partnership;
b) has the authority to act on behalf of—
i) the partnership or foreign partnership;
ii) the members of the partnership or foreign partnership; or
iii) the trust; or
c) renders any services to or on behalf of the partnership, trust or foreign partnership;

 

"regional electricity distributor"

[Definition deleted by section 1(1)(o) of Act No. 43 of 2014]

 

"regulation"

means a regulation in force under this Act;

 

"REIT"

means a company—

a) that is a resident; and
b) the shares of which are listed—
i) on an exchange (as defined in section 1 of the Financial Markets Act, and licensed under section 9 of that Act); and
ii) as shares in a REIT as defined in the JSE Limited Listings Requirements;

 

"relative"

in relation to any person, means the spouse of such person or anybody related to him or his spouse within the third degree of consanguinity, or any spouse of anybody so related, and for the purpose of determining the relationship between any child referred to in the definition of "child" in this section and any other person, such child shall be deemed to be related to its adoptive parent within the first degree of consanguinity;

 

"remuneration proxy"

in relation to a year of assessment, means the remuneration, as defined in paragraph 1 of the Fourth Schedule, derived by an employee from an employer during the year of assessment immediately preceding that year of assessment, other than the cash equivalent of the value of a taxable benefit derived from the occupation of residential accommodation as contemplated in subparagraph (3) of paragraph 9 of the Seventh Schedule in the application of that sub: Provided that—

[Words preceding proviso substituted by section 5(1)(h) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]

(a) where during a portion of such preceding year the employee was not in the employment of the employer or of any associated institution in relation to the employer, the remuneration proxy as respects that employee must be deemed to be an amount which bears to the amount of the employee’s remuneration for the portion of such preceding year during which the employee was in such employment the same ratio as the period of 365 days bears to the number of days in such last-mentioned portion;
(b) where during the whole of such preceding year, the employee was not in the employment of the employer or of any associated institution in relation to the employer, the remuneration proxy as respects that employee must be deemed to be an amount which bears to the employee’s remuneration during the first month during which the employee was in the employment of the employer the same ratio as 365 days bears to the number of days during which the employee was in such employment;

[Definition amended by section 3(1)(zA) of the Taxation Laws Amendment Act, (Act No. 25 of 2015]

 

"representative taxpayer"

means a natural person who resides in the Republic and—

a) in respect of the income of a company, the public officer thereof, or in the event of such company being placed under business rescue in terms of Chapter 6 of the Companies Act, the business rescue practitioner;

[Paragraph (a) substituted  by section 1 of the Taxation Administration Laws Amendment Act, 2014 (Act No. 44 of 2014)]

b) in respect of the income under his or her management, disposition or control, the agent of any person;
c) in respect of income which is the subject of any trust or in respect of the income of any minor or mentally disordered or defective person or any other person under legal disability, the trustee, guardian, curator or other person entitled to the receipt, management, disposal or control of such income or remitting or paying to or receiving moneys on behalf of such person under disability;

[Paragraph (c) amended by section 4 of Act No. 21 of 2012]

d) in respect of income paid under the decree or order of any court or judge to any receiver or other person, such receiver or person, whoever may be entitled to the benefit of such income, and whether or not it accrues to any person on a contingency or an uncertain event;
e) in respect of the income received by or accrued to any deceased person during his lifetime and the income received by or accrued to the estate of any deceased person, the executor or administrator of the estate of such deceased person;
f) in respect of the income received by or accrued to an insolvent estate, the trustee or administrator of such insolvent estate:

Provided that for the purposes of this definition income includes any amount received or accrued or deemed to have been received or accrued in consequence of the disposal of any asset envisaged in the Eighth Schedule;

 

"Republic"

means the Republic of South Africa and, when used in a geographical sense, includes the territorial sea thereof as well as any area outside the territorial sea which has been or may be designated, under international law and the laws of South Africa, as areas within which South Africa may exercise sovereign rights or jurisdiction with regard to the exploration or exploitation of natural resources;

 

"resident"

means any—

a) natural person who is—
i) ordinarily resident in the Republic: or
ii) not at any time during the relevant year of assessment ordinarily resident in the Republic, if that person was physically present in the Republic—
aa) for a period or periods exceeding 91 days in aggregate during the relevant year of assessment, as well as for a period or periods exceeding 91 days in aggregate during each of the five years of assessment preceding such year of assessment; and
bb) for a period or periods exceeding 915 days in aggregate during those five preceding years of assessment,

in which case that person will be a resident with effect from the first day of that relevant year of assessment: Provided that—

A) a day shall include a part of a day, but shall not include any day that a person is in transit through the Republic between two places outside the Republic and that person does not formally enter the Republic through a ‘port of entry’ as contemplated in section 9(1) of the Immigration Act, 2002 (Act No. 13 of 2002), or at any other place as may be permitted by the Director General of the Department of Home Affairs or the Minister of Home Affairs in terms of that Act; and
B) where a person who is a resident in terms of this sub paragraph is physically outside the Republic for a continuous period of at least 330 full days immediately after the day on which such person ceases to be physically present in the Republic, such person shall be deemed not to have been a resident from the day on which such person so ceased to be physically present in the Republic; or
(b) person (other than a natural person) which is incorporated, established or formed in the Republic or which has its place of effective management in the Republic,

but does not include any person who is deemed to be exclusively a resident of another country for purposes of the application of any agreement entered into between the governments of the Republic and that other country for the avoidance of double taxation: Provided that where any person that is a resident ceases to be a  resident during a year of assessment, that person must be regarded as not being a resident from the day on which that person ceases to be a resident: Provided further that in determining whether a person that is a foreign investment entity has its place of effective management in the Republic, no regard must be had to any activity that—

a) constitutes—
i) a financial service as defined in section 1 of the Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002); or
ii) any service that is incidental to a financial service contemplated in sub paragraph (i) where the incidental service is in respect of a financial product that is exempted from the provisions of that Act, as contemplated in section 1(2) of that Act; and
b) is carried on by a financial service provider as defined in section 1 of the Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002), in terms of a licence issued to that financial service provider under section 8 of that Act

 

"residential unit"

means a building or self-contained apartment mainly used for residential accommodation, unless the building or apartment is used by a person in carrying on a trade as an hotel keeper;

 

"retirement annuity fund"

means any fund (other than a pension fund, provident fund or benefit fund) which is approved by the Commissioner in respect of the year of assessment in question and, in the case of any such fund established on or after 1 July 1986, is registered under the provisions of the Pension Funds Act: Provided that the Commissioner may approve a fund subject to such limitations or conditions as he may determine, and shall not approve any fund in respect of any year of assessment unless he is in respect of that year of assessment satisfied—

a) that the fund is a permanent fund bona fide established for the sole purpose of providing life annuities for the members of the fund or annuities for the dependants or nominees of deceased members; and
b) that the rules of the fund provide—
i) for contributions by the members, including contributions made by way of transfer of members' interests in approved pension funds, pension preservation funds, provident funds, provident preservation funds or other retirement annuity funds;
ii) that not more than one-third of the total value of the retirement interest may be commuted for a single payment, and that the remainder must be paid in the form of an annuity (including a living annuity) except where two-thirds of the total value does not exceed R165 000 or where the employee is deceased: Provided that in determining the value of the retirement interest an amount calculated as follows must not be taken into account:
(a) in the case of a person who is a member of a provident fund and who is 55 years of age or older on 1 March 2016—
(i) any amount contributed to a provident fund of which that person is a member on 1 March 2016;
(ii) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2016; and
(iii) any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subparagraph (i) or amounts credited contemplated in subparagraph (ii); or
(b) in any other case of a person who is a member of a provident fund—
(i) any amount contributed to a provident fund prior to 1 March 2016;
(ii) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2016; and
(iii) any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subparagraph (i) or amounts credited contemplated in subparagraph (ii),

reduced by any amounts permitted in terms of any law to be deducted from the member's individual account of the provident fund;

[Paragraph (ii) amended by section 3(1)(zB) and (zC) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

[Subparagraph (ii) to be commenced: 1 March 2015]

iii) [Subparagraph deleted by the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)];
iv) [Subparagraph deleted by the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)];
v) that no member shall become entitled to the payment of any annuity or lump sum benefit contemplated in paragraph 2(1)(a) of the Second Schedule prior to reaching normal retirement age;
vi) [Subparagraph deleted by the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)];
vii) [Subparagraph deleted by the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)] ;
viii) [Subparagraph deleted by section 4 of Act 103 of 1976];
ix) [Subparagraph deleted by section 4 of Act 103 of 1976];
x) that a member who discontinues his or her contributions prior to his or her retirement date shall be entitled to—
aa) an annuity or a lump sum benefit contemplated in paragraph 2(1)(a) of the Second Schedule payable on that date;
bb) be reinstated as a full member under conditions prescribed in the rules of the fund;
cc) the payment of a lump sum benefit contemplated in paragraph 2(1)(b)(ii) of the Second Schedule where that member’s interest in the fund is less than an amount determined by the Minister by notice in the Gazette; or
dd) the payment of a lump sum benefit contemplated in paragraph 2(1)(b)(ii) of the Second Schedule where that member—
(A) is a person who is or was a resident who emigrated from the Republic and that emigration is recognised by the South African Reserve Bank for purposes of exchange control; or
(B) departed from the Republic at the expiry of a visa obtained for the purposes of—
(AA) working as contemplated in paragraph (i) of the definition of 'visa' in section 1 of the Immigration Act, 2002 (Act No. 13 of 2002); or
(BB) a visit as contemplated in paragraph (b) of the definition of 'visa' in section 1 of the Immigration Act, 2002 (Act No. 13 of 2002), issued in terms of paragraph (b) of the proviso to section 11 of that Act by the Director-General, as defined in section 1 of that Act;

and is not regarded as a resident by the South African Reserve Bank for purposes of exchange control;

[Paragraph (dd) substituted by section  5(1)(i) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]

xi) that upon the winding up of the fund a member’s withdrawal interest therein must—
aa) where the member received an annuity from the fund on the date upon which the fund is wound up, be used to purchase an annuity (including a living annuity) from any other fund; or
bb) in any other case, be paid for the member’s benefit into any other retirement annuity fund;
xii) that save—
aa) as is contemplated in sub-paragraph (ii);
bb) for the transfer of any member's total interest in any approved retirement annuity fund into another approved retirement annuity fund ,
cc) for the benefit contemplated in subparagraph (x)(cc); or
dd) as is contemplated in Part V of the Policyholder Protection Rules promulgated in terms of section 62 of the Long-term Insurance Act; or
ee) for any deduction contemplated in paragraph 2(1)(b) of the Second Schedule.

no member's rights to benefits shall be capable of surrender, commutation or assignment or of being pledged as security for any loan;

xiii) that the Commissioner shall be notified of all amendments of the rules; and
c) that the rules of the fund have been complied with.

 

"retirement date"

means the date on which—

a) a member of a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund, elects to retire and in terms of the rules of that fund, becomes entitled to an annuity or a lump sum benefit contemplated in paragraph 2(1)(a)(i) of the Second Schedule on or subsequent to attaining normal retirement age; or

[Paragraph a amended by section 1(1)(p) of Act No. 43 of 2014]

b) a nominee or dependant of a deceased member of a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund, in terms of the rules of that fund, becomes entitled to an annuity or a lump sum benefit contemplated in paragraph 2(1)(a)(i) of the Second Schedule on the death of the member;

 

"retirement-funding employment"

means—

(a) in relation to any employee or the holder of an office (including a member of a body of persons whether or not established by or in terms of any law), who—
(i) in the case of such employee, derives in respect of his employment any income constituting remuneration as defined in paragraph 1 of the Fourth Schedule (but leaving out of account the provisions of paragraphs (c) and (cA) of that definition and including the amount of any allowance or advance in respect of transport expenses contemplated in section 8 (1) (b), but not an allowance or advance contemplated in section 8 (1) (b) (iii) which is based on the actual distance travelled by the recipient, and which is calculated at a rate per kilometre which does not exceed the appropriate rate per kilometre fixed by the Minister of Finance under the said section 8 (1) (b) (iii), and excluding any retirement fund lump sum benefit and any retirement fund lump sum withdrawal benefit) and is a member of or, as an employee, contributes to a pension fund or provident fund established for the benefit of employees of the employer from whom such income is derived; or
(ii) in the case of such holder of an office, derives in respect of his office any income (other than any retirement fund lump sum benefit) by way of salary, emoluments, fees or other remuneration and is, as respects such office, a member of or contributes to a pension fund or provident fund established—
(aa) by law or for the benefit of holders of offices; or
(bb) for the benefit of employees of the person from whom such income is derived,

the employment of such employee or the holding of such office, as the case may be, as respects that part of his said income as is taken into account in the determination of the contributions made by him or on his behalf to such pension fund or provident fund; or

(b)        

(i) in relation to a partner in a partnership who was an employee of the partnership and who on becoming a partner retained membership of the pension fund of the partnership as if he or she had not ceased to be an employee, as respects the part of the partner’s income from the partnership in the form of the partner’s share of profits as does not exceed an amount equal to the partner’s pensionable emoluments during the 12 months which ended on the day on which the partner ceased to be an employee; or
(ii) in relation to a partner in a partnership (other than a partner contemplated in subparagraph (i)) the part of the partner’s income from the partnership in the form of the partner’s share of profits;

 

"retirement fund lump sum benefit"

means an amount determined in terms of paragraph 2(1)(a) of the Second Schedule;

 

"retirement fund lump sum withdrawal benefit"

means an amount determined in terms of paragraph 2(1)(b) of the Second Schedule;

 

"retirement interest"

means a member’s share of the value of a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund as determined in terms of the rules of the fund on the date on which he or she elects to retire;

[Definition amended by section 1(1)(q) of Act No. 43 of 2014]

 

"return"

means a return as defined in section 1 of the Tax Administration Act;

 

"return of capital"

means any amount transferred by a company that is a resident for the benefit or on behalf of any person in respect of any share in that company to the extent that that transfer results in a reduction of contributed tax capital of the company, whether that amount is transferred—

a) by way of a distribution made by; or
b) as consideration for the acquisition of any share in,

that company, but does not include any amount so transferred to the extent that the amount so transferred constitutes—

i) shares in the company; or
ii) an acquisition by the company of its own securities by way of a general repurchase of securities as contemplated in subparagraph (b) of paragraph 5.67(B) of section 5 of the JSE Limited Listings Requirements, where that acquisition complies with any applicable requirements prescribed by paragraphs 5.68 and 5.72 to 5.84 of section 5 of the JSE Limited Listings Requirements;

 

"securities lending arrangement"

means a ‘lending arrangement’ as defined in the Securities Transfer Tax Act, 2007 (Act No. 25 of 2007);

 

"severance benefit"

means any amount (other than a lump sum benefit or an amount contemplated in paragraph (d)(ii) or (iii) of the definition of ‘gross income’) received by or accrued to a person by way of a lump sum from or by arrangement with the person’s employer or an associated institution in relation to that employer in respect of the relinquishment, termination, loss, repudiation, cancellation or variation of the person’s office or employment or of the person’s appointment (or right or claim to be appointed) to any office or employment, if—

a) such person has attained the age of 55 years;
b) such relinquishment, termination, loss, repudiation, cancellation or variation is due to the person becoming permanently incapable of holding the person’s office or employment due to sickness, accident, injury or incapacity through infirmity of mind or body; or
c) such termination or loss is due to—
i) the person’s employer having ceased to carry on or intending to cease carrying on the trade in respect of which the person was employed or appointed; or
ii) the person having become redundant in consequence of a general reduction in personnel or a reduction in personnel of a particular class by the person’s employer,

unless, where the person’s employer is a company, the person at any time held more than five per cent of the issued shares or members’ interest in the company:

Provided that any such amount which becomes payable in consequence of or following upon the death of a person must be deemed to be an amount which accrued to such person immediately prior to his or her death;

 

"share"

means, in relation to any company, any unit into which the proprietary interest in that company is divided;

 

"Share Blocks Control Act"

means the Share Blocks Control Act, 1980 (Act No. 59 of 1980);

[Definition inserted by section 1(1)(r) of Act No. 43 of 2014]

 

"Short-term Insurance Act"

means the Short-term Insurance Act, 1998 (Act No. 53 of 1998);

 

"small business funding entity"

means any entity, approved by the Commissioner in terms of section 30C;

[Definition inserted by section 1(1)(s) of Act No. 43 of 2014]

 

"small, medium or micro-sized enterprise"

means any—

(a) person that qualifies as a micro business as defined in paragraph 1 of the Sixth Schedule; or
(b) any person that is a small business corporation as defined in section 12E(4);

[Definition inserted by section 1(1)(s) of Act No. 43 of 2014]

 

"shareholder"

[Definition deleted by Act No. 24 of 2011 of the Taxation Laws Amendment Act]

 

"Short-term Insurance Act"

means the central bank of the Republic regulated in terms of the South African Reserve Bank Act, 1989 (Act No. 90 of 1989);

 

"special trust"

means a trust created—

a) solely for the benefit of one or more persons who is or are persons with a disability as defined in section 6B1 where such disability incapacitates such person or persons from earning sufficient income for their maintenance, or from managing their own financial affairs: Provided that—
aa) such trust shall be deemed not to be a special trust in respect of years of assessment ending on or after the date on which all such persons are deceased; and
bb) where such trust is created for the benefit of more than one person, all persons for whose benefit the trust is created must be relatives in relation to each other; or
b) by or in terms of the will of a deceased person, solely for the benefit of beneficiaries who are relatives in relation to that deceased person and who are alive on the date of death of that deceased person (including any beneficiary who has been conceived but not yet born on that date), where the youngest of those beneficiaries is on the last day of the year of assessment of that trust under the age of 18 years; and

 

"South African Reserve Bank"

means the central bank of the Republic regulated in terms of the South African Reserve Bank Act, 1989 (Act No. 90 of 1989);

 

"South African Revenue Service"

means the South African Revenue Service established by section 2 of the South African Revenue Service Act, 1997;

 

"specified date"

in relation to any company, means—

a) in respect of the year of assessment ending the thirtieth day of June, 1962, that date or, if such company's return is under the proviso to sub-section (13) of section sixty-six accepted in respect of a period ending upon some other date, such other date; or
b) in respect of any other year of assessment, the last day of such other year of assessment;

 

"specified period"

in relation to a year of assessment of any company commencing on or after 1 April 1977, means—

a) where such year of assessment is the first financial year of such company, the period commencing on the first day of such year and ending six months after the specified date in respect of such year; and
b) where such year of assessment is a subsequent financial year of such company, the period commencing the day after the end of the specified period in respect of the immediately preceding year of assessment and ending six months after the specified date in respect of the year of assessment in question:

Provided that where by reason of the amalgamation under section 94 of the Co-operative Societies Act, 1939 (Act No. 29 of 1939), of two or more agricultural co-operatives (as defined in section 27(9) of this Act), the assets and liabilities of such co-operatives have vested in a new agricultural co-operative (as so defined), the Commissioner may, having regard to the circumstances of the case, direct that the specified period of each of the co-operatives which have so amalgamated, as applicable in relation to the final year of assessment of the co-operative in question be extended so as to end on such day as the Commissioner may determine;

 

"Spot rate"

Means the appropriate quoted exchange rate at a specific time by any authorised dealer in foreign exchange for the delivery of currency.

 

"spouse"

in relation to any person, means a person who is the partner of such person—

a) in a marriage or customary union recognised in terms of the laws of the Republic;
b) in a union recognised as a marriage in accordance with the tenets of any religion; or
c) in a same sex or heterosexual union which is intended to be permanent,

and ‘married’, ‘husband’ or ‘wife’ shall be construed accordingly: Provided that a marriage or union contemplated in paragraph (b) or (c) shall, in the absence of proof to the contrary, be deemed to be a marriage or union out of community of property;

[Definition amended by section 3(1)(zE) of the Taxation Laws Amendment Act, (Act No. 25 of 2015]

 

"tax"

means tax or a penalty imposed in terms of this Act;

 

"Tax Administration Act"

means the Tax Administration Act, 2011 (Act No. 28 of 2011);

 

"taxable capital gain"

means an amount determined in terms of paragraph 10 of the Eighth Schedule;

 

"taxable income"

means the aggregate of—

a) the amount remaining after deducting from the income of any person all the amounts allowed under Part I of Chapter II to be deducted from or set off against such income; and
b) all amounts to be included or deemed to be included in the taxable income of any person in terms of this Act;

 

"tax benefit"

includes any avoidance, postponement or reduction of any liability for tax;

 

"taxpayer"

means any person chargeable with any tax leviable under this Act;

 

"this Act"

includes the regulations;

 

"trade"

includes every profession, trade, business, employment, calling, occupation or venture, including the letting of any property and the use of or the grant of permission to use any patent as defined in the Patents Act or any design as defined in the Designs Act or any trade mark as defined in the Trade Marks Act or any copyright as defined in the Copyright Act or any other property which is of a similar nature;

 

"Trade Marks Act"

means the Trade Marks Act, 1993 (Act No. 194 of 1993);

 

"trading stock"
a) includes—
i) anything produced, manufactured, constructed, assembled, purchased or in any other manner acquired by a taxpayer for the purposes of manufacture, sale or exchange by the taxpayer or on behalf of the taxpayer;
ii) anything the proceeds from the disposal of which forms or will form part of the taxpayer’s gross income, otherwise than—
aa) in terms of paragraph (j) or (m) of the definition of ‘gross income’;
bb) in terms of paragraph 14(1) of the First Schedule; or
cc) as a recovery or recoupment contemplated in section 8(4) which is included in gross income in terms of paragraph (n) of the definition of ‘gross income’; or; or
iii) any consumable stores and spare parts acquired by the taxpayer to be used or consumed in the course of the taxpayer’s trade;
b) but does not include—
i) a foreign currency option contract; or
ii) a forward exchange contract,

as defined in section 24I(1);

 

"trust"

means any trust fund consisting of cash or other assets which are administered and controlled by a person acting in a fiduciary capacity, where such person is appointed under a deed of trust or by agreement or under the will of a deceased person;

 

"trustee"

in addition to every person appointed or constituted as such by act of parties, by will, by order or declaration of court or by operation of law, includes an executor or administrator, tutor or curator, and any person having the administration or control of any property subject to a trust, usufruct, fideicommissum or other limited interest or acting in any fiduciary capacity or having, either in a private or in an official capacity, the possession, direction, control or management of any property of any person under legal disability;

 

"Value-Added Tax Act"

means the Value-Added Tax Act, 1991 (Act No. 89 of 1991);

 

"water services provider"

means a person who provides water supply services and sanitation services and who is—

(a) a public entity regulated under the Public Finance Management Act;
(b) a wholly owned subsidiary or entity of a public entity contemplated in paragraph (a) if the operations of the subsidiary or entity are ancillary or complementary to the operations of that public entity;
(c) a company as contemplated in paragraph (a) of the definition of ‘company’, which is wholly owned by one or more municipalities; or
(d) a board or institution which has powers similar to a water board established in terms of the Water Services Act, 1997 (Act No. 108 of 1997), and would have fallen within the ambit of the definition of ‘local authority’ prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006;

 

"withdrawal interest"

means the value of the member’s share of the pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund value, as determined in terms of the rules of the fund, immediately prior to the date on which the member becomes entitled to a benefit from that fund because of an event other than the member attaining normal retirement age, as determined by the rules of the fund;

 

"year of assessment"

means any year or other period in respect of which any tax or duty leviable under this Act is chargeable, and any reference in this Act to any year of assessment ending on the last or the twenty-eighth or the twenty-ninth day of February shall, unless the context otherwise indicates, in the case of a company or a portfolio of a collective investment scheme in securities, be construed as a reference to any financial year of that company or portfolio ending during the calendar year in question.

 

2) Unless the context indicates otherwise, a word or expression to which a meaning has been assigned in the Tax Administration Act bears that meaning for purposes of this Act.