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Income Tax Act, 1962 (Act No. 58 of 1962)

Notices

2026 Notices

Setting the Requirements and Conditions that must be met by a Company for purposes of paragraph (b) of the Definition of "Reit" in Section 1(1) of the Income Tax Act, 1962 (Act No. 58 of 1962)

2. Requirements and conditions

 

A company meets the requirements and conditions to qualify as a REIT if—

 

(a) the company is a "wholly-owned subsidiary";

 

(b) as at the end of the year of assessment or at the end of the immediately preceding year of assessment 80 per cent or more of the value of its assets, reflected in the annual financial statements prepared in accordance with IFRS or the Companies Act for the current or previous year of assessment, is directly attributable to immovable property or a property company as defined in section 25BB(1) of the Act;

 

(c) at least 75 per cent of its revenue, reflected in the statement of comprehensive income of the company in its audited or reviewed annual financial statements prepared in accordance with IFRS or the Companies Act for the current or immediately preceding year of assessment, is derived from rental income;

 

(d) total liabilities or consolidated liabilities of the company is not more than 60 per cent of the total assets or consolidated assets as reflected in its audited or reviewed annual financial statements prepared in accordance with IFRS or the Companies Act for the current or immediately preceding year of assessment;

 

(e) the company has gross assets of at least R300 million as reflected in its audited or reviewed annual financial statements prepared in accordance with IFRS or the Companies Actfor the current or immediately preceding year of assessment;

 

(f) the company distributes at least 75 per cent of its total distributable profits, reflected in its audited or reviewed annual financial statements prepared in accordance with IFRS or the Companies Act for a year of assessment, to the holders of its equity shares by no later than six months after the end of that year of assessment subject to the relevant solvency and liquidity test as defined in and applied in section 46 of the Companies Act; and

 

(g) the audit committee or a separate risk committee of the board of the company is responsible for—
(i) adopting and implementing an appropriate risk management policy, which policy must as a minimum:
(aa) be in accordance with industry practice; and
(bb) specifically prohibit the company from entering into any derivative transactions that are not in the normal course of the property company's business; and
(ii) reporting in the annual report each year that they have monitored compliance with the policy and that the company has, in all material respects, complied with the policy during the year concerned.