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Income Tax Act, 1962 (Act 58 of 1962)

Schedules

Seventh Schedule

Benefits or Advantages Derived by reason of Employment or the Holding of any Office

5. Acquisition of an Asset at less than Actual Value

 

1) where an asset has been acquired by an employee as contemplated in paragraph 2(a), the cash equivalent of the value of the taxable benefit shall be so much of the value of such asset (as determined under subparagraph (2) of this paragraph) as exceeds the value of any consideration given by the employee for such asset.

 

2) The value to be placed on such asset shall be the market value thereof at the time the asset is acquired by the employee: Provided that where the asset in question is movable property (other than marketable securities or an asset which the employer had the use of prior to acquiring ownership thereof) and was acquired by the employer in order to dispose of it to the employee or the asset in question (other than marketable securities) was held by the employer as trading stock, the value to be placed thereon shall be the cost thereof to the employer or where such asset was held as trading stock and the market value thereof was less than such cost, such market value: Provided further that where—
a) any asset is presented by an employer to an employee as an award for bravery, such value to be placed thereon shall be reduced by the lesser of the cost to the employer of all such assets so awarded to the employee during the year of assessment and R5 000; or
b) any asset is given by an employer to an employee for long service, such value to be placed thereon shall be reduced by the lesser of the cost to the employer of all such assets so given to the employee during the year of assessment and R5 000.

 

3) No value shall be placed under this paragraph on fuel or lubricants supplied by an employer to his employee for use in a motor vehicle where the value of the private use of such vehicle has been determined under paragraph 7.

 

3A) No value shall be placed under this paragraph on any immovable property acquired by an employee as contemplated in paragraph 2(a): Provided that this subparagraph must not apply if—
a) the remuneration proxy of the employee exceeds R250 000 in relation to the year of assessment during which the immovable property is so acquired;
b) the market value of the immovable property on the date of that acquisition exceeds R450 000; or

[Paragraph (b) amended by section 74 of Act No. 43 of 2014]

c) the employee is a connected person in relation to the employer.

[Subsection 3A inserted by section 119 of Act No. 31 of 2013]

 

4) For the purposes of this paragraph, "long service" means an initial unbroken period of service of not less than 15 years or any subsequent unbroken period of service of not less than 10 years.