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Income Tax Act, 1962 (Act 58 of 1962)

Schedules

Eighth Schedule

Determination of Taxable Capital Gains and Assessed Capital Losses

Part IV - Limitation of Losses

 

15.         Personal-use aircraft, boats and certain rights and interests

A capital loss in respect of the following assets of a person must be disregarded in determining the aggregate capital gain or aggregate capital loss of a person, to the extent that the assets are used for purposes other than the carrying on of a trade:

(a) An aircraft with an empty mass exceeding 450 kg;
(b) a boat exceeding ten metres in length;
(c) any fiduciary, usufructuary or other similar interest, the value of which decreases over time;
(d) any lease of immovable property;
(e) any—
(i) time-sharing interest as defined in section 1 of the Property Time-sharing Control Act, 1983 (Act. No. 75 of 1983); or
(ii) share in a share block company, as defined in section 1 of the Share Blocks Control Act,

[Item (ii) amended by section 83 of Act No. 43 of 2014]

with a fixed life, the value of which decreases over time; or

(f)        any right or interest of whatever nature to or in an asset contemplated in items (a), (b), (c), (d) or (e).

 

16.        Intangible assets acquired prior to valuation date

(1) A person must, in determining the aggregate capital gain or aggregate capital loss of that person, disregard any capital loss determined in respect of the disposal of an intangible asset acquired prior to valuation date—

(a)        from a connected person in relation to that person; or

(b)        which was associated with a business taken over by that person or any connected person in relation to that person.

 

(2)        For the purposes of subparagraph (1), ‘intangible asset’ means—

(a) goodwill;
(b) 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 rights recognised under the Plant Breeders’ Rights Act, 1976 (Act No. 15 of 1976), or any model, pattern, plan, formula or process or any other property or right of a similar nature;

[Paragraph (b) amended by section 129 of Act No. 31 of 2013]

(c) any intellectual property right or property or right of a similar nature in respect of which a proprietary interest may be established in terms of the common law of the Republic of South Africa; or
(d) any other intangible property except any financial instrument.

 

17.        Forfeited deposits

(1)        Where—

(a) a person has made a deposit for the purpose of acquiring an asset which is not intended for use wholly and exclusively for business purposes; and
(b) that deposit has been forfeited,

the capital loss determined in respect of that forfeiture must be disregarded when determining that person’s aggregate capital gain or aggregate capital loss.

 

(2)        Subparagraph (1) does not apply in respect of—

(a) a coin made mainly from gold or platinum, of which the market value is mainly attributable to the material from which it is minted or cast;
(b) immovable property, other than immovable property intended to be the primary residence of that person;
(c) a financial instrument; or
(d) any right or interest in any asset contemplated in items (a), (b) or (c).

 

18.        Disposal of options

(1)        Where a person who is entitled to exercise an option—

(a)        to acquire an asset not intended for use wholly and exclusively for business purposes; or

(b)        to dispose of an asset not used wholly and exclusively for business purposes,

has abandoned that option, allowed that option to expire, or in any other manner disposed of that option other than by way of the exercise thereof, any capital loss of that person determined in respect of that expiry shall be disregarded.

 

(2)        Subparagraph (1) does not apply in respect of an option to acquire or dispose of-

(a) a coin made mainly from gold or platinum, of which the market value is mainly attributable to the material from which it is minted or cast;
(b) immovable property, other than immovable property—
(i) in the case of subparagraph (1)(a), which is intended to be the primary residence of the person entitled to exercise the option; or
(ii) in the case of subparagraph (1)(b), is the primary residence of the person entitled to exercise the option;

(c)        a financial instrument; or

(d)        any right or interest in those assets contemplated in items (a), (b) and (c).

 

19.        Losses on the disposal of certain shares

(1)        Where a person disposes of a share in a company-

(a) as a result of the acquisition by the company from that person of that share or as part of the liquidation, winding-up or deregistration of that company, that person must disregard so much of any capital loss resulting from the disposal as does not exceed any exempt dividends, or
(b) in circumstances other than those contemplated in item (a), that person must disregard so much of any capital loss resulting from the disposal (other than a disposal deemed to have taken place in terms of section 29B) as does not exceed any extraordinary exempt dividends,

received by or accrued to that person in respect of that share within a period of 18 months prior to or as part of the disposal.

 

(2)        [deleted by the Revenue Laws Amendment Act, 2007 (Act No. 35 of 2007)].

 

(3)        For the purposes of this paragraph—

(a) the period of 18 months does not include any days during which the person disposing of a share—
(i) has an option to sell, is under a contractual obligation to sell, or has made (and not closed) a short sale of, substantially similar financial instruments;
(ii) is the grantor of an option to buy substantially similar financial instruments; or
(iii) has otherwise diminished risk of loss with respect to that share by holding one or more contrary positions with respect to substantially similar financial instruments;

(b)        ‘exempt dividend’ means any dividend or foreign dividend to the extent that the dividend or foreign dividend is-

(i) not subject to any tax under Part VIII of Chapter II; and
(ii) exempt from normal tax in terms of section 10(1)(k)(i) or section 10B(2)(a) or (b);
(c) ‘extraordinary exempt dividends’ means so much of the amount of the aggregate of any exempt dividends received or accrued within the period of 18 months contemplated in subparagraph (1) as exceeds 15 per cent of the proceeds received or accrued from the disposal contemplated in that subparagraph.

(d)        [Deleted].