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

2. Financial services

 

(1) For the purposes of this Act, the following activities shall be deemed to be financial services:
(a) The exchange of currency (whether effected by the exchange of bank notes or coin, by crediting or debiting accounts, or otherwise);
(b) the issue, payment, collection or transfer of ownership of a cheque or letter of credit;
(c) the issue, allotment, drawing, acceptance, endorsement or transfer of ownership of a debt security;
(d) the issue, allotment or transfer of ownership of an equity security or a participatory security;
(e) [Section 2(1)(e) deleted by Act No. 37 of 1996];
(f) the provision by any person of credit under an agreement by which money or money's worth is provided by that person to another person who agrees to pay in the future a sum or sums exceeding in the aggregate the amount of such money or money's worth;
(g) [Section 2(1)(g) deleted by Act No. 37 of 1996];
(h) [Section 2(1)(h) deleted by Act No. 37 of 1996];
(i) the provision, or transfer of ownership, of a long-term insurance policy, the provision or transfer of ownership of reinsurance in respect of any such policy;

[Words preceding section 2(1)(i) substituted by section 67(1) of the Taxation Laws Amendment Act, 2019 (Act No. 34 of 2019), GG42951, dated 15 January 2020 - effective 1 April 2020 (Section 67(2)]

(j) the provision, or transfer of ownership, of an interest in a superannuation scheme;
(k) the buying or selling of any derivative or the granting of an option:  Provided that where a supply of the underlying goods or services takes place, that supply shall be deemed to be a separate supply of goods or services at the open market value thereof: Provided further that the open market value of those goods or services shall not be deemed to be consideration for a financial service as contemplated in this paragraph;
(l) [Section 2(1)(l) deleted by the Taxation Laws Amendment Act, 2004 (16 of 2004)];
(m) [Section 2(1)(m) deleted];
(n) [Section 2(1)(n) deleted];
(o) the issue, acquisition, collection, buying or selling or transfer of ownership of any cryptocurrency:

[Section 2(1)(o) inserted by section 90(1)(a) of the Taxation Laws Amendment Act, 2018 (Act No. 23 of 2018), Notice No. 19, GG 42172, dated 17 January 2019 - effective 1 April 2019]

Provided that the activities contemplated in paragraphs(a), (b), (c), (d), (f) and (o) shall not be deemed to be financial services to the extent that the consideration payable in respect thereof is any fee, commission, merchant's discount or similar charge, excluding any discounting cost.

[Proviso to section 2(1) substituted by section 90(1)(b) of the Taxation Laws Amendment Act, 2018 (Act No. 23 of 2018), Notice No. 19, GG 42172, dated 17 January 2019 - effective 1 April 2019]

 

(2) For the purposes of subsection (1)—
(i) "cheque" means a bill drawn on a bank payable on demand, a postal order, a money order, a traveller's cheque, or any order or authorisation (whether in writing, by electronic means, or otherwise) to a financial institution to credit or debit any account;
(ii) "currency" means any banknote or other currency of any country, other than when used as a collector's piece, investment article, item of numismatic interest, or otherwise than as a medium of exchange;
(iii) "debt security" means—
(aa) an interest in or right to be paid money; or
(bb) an obligation or liability to pay money

that is, or is to be, owing by any person, but does not include a cheque;

(iiiA) ‘‘derivative’’ means a derivative as defined in International Accounting Standard 39 of the International Accounting Standards issued by the International Accounting Standards Board;
(iv) "equity security" means any interest in or right to a share in the capital of a juristic person or the interest in a close corporation of a member thereof;
(v) "long-term insurance policy" means any policy of insurance issued in the ordinary course of carrying on long-term insurance business as defined in section 1(1) of the Long-term Insurance Act, 1998 (Act No. 52 of 1998);
(vA) "merchant's discount" means a charge made to merchants for accepting a credit or debit card as payment for the supply of goods or services, or a similar charge made by a buying organisation;
(vi) "participatory security" means a participatory interest as defined in section 1 of the Collective Investment Schemes Control Act, 2002 (Act No. 45 of 2002), but does not include an equity security, a debt security, money or a cheque
(vii) "superannuation scheme" means a scheme whereby provision is made for the payment or granting of benefits by a benefit fund, pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund as defined in section 1 of the Income Tax Act.

 

(3) Notwithstanding subsection (2), the terms "debt security", "equity security" and "participatory security" do not include any of the following:
(a) A long-term insurance policy or any other policy of insurance;
(b) any ownership or interest in land, other than an interest as mortgagee;
(c) a share in the share capital of a share block company;
(d) any interest of a member of a close corporation which confers on the member a time-sharing interest as defined in section 1 of the Property Time-sharing Control Act, 1983 (Act No. 75 of 1983), on the terms and conditions contained in the association agreement of such close corporation;
(e) an interest in a superannuation scheme.

 

(4) Notwithstanding anything in this section, the term "financial services " does not include—
(a) the cession, assignment, transfer or other supply of any right to receive payment in relation to any taxable supply where, as a result of any such cession, assignment, transfer, or supply, output tax in relation to that taxable supply would not be or become attributable to any tax period for the purposes of section 16(3); or
(b) [Section 2(4)(b) deleted by the Revenue Laws Amendment Act No. 60 of 2008]
(c) the transfer of any interest in or right to be paid money that is, or is to be, owing by a share block company under its loan obligation, as defined in section 1 of the Share Blocks Control Act, to any person who is or will be a shareholder of such share block company.