Intellectual Property Rights from Publicly Financed Research and
R 385
"contributed tax capital"
in relation to a class of shares in a company, means—
[Words preceding paragraph (a) substituted by section 1(1)(b) 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— |
[Words preceding paragraph (a)(ii) substituted by section 1(1)(c) of the Taxation Laws Amendment Act, 2014 Act No. 43 of 2014)]
| (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; |
[Paragraph (a)(i) substituted by section 1(1)(d) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014)]
Provided that the market value must be reduced by an amount equal to the difference between—
| (aa) | the market value of the shares held by that foreign company in; and |
| (bb) | an amount equal to the percentage of shares held by that foreign company in a resident company, of the aggregate contributed tax capital in respect of each class of shares of, |
each resident company in which that foreign company directly holds at least 50 per cent of the equity shares or voting rights immediately before the date on which that foreign company becomes a resident;
[Paragraph (a)(i) proviso inserted by section 1(a) of the Taxation Laws Amendment Act, 2023 (Act No. 17 of 2023), Notice No. 4226, GG49894, dated 22 December 2023 - comes into operation on 1 January 2024 and applies in respect of any company that becomes a resident on or after that date (section (1)(2))]
| (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 |
[Paragraph (a)(ii) substituted by section 1(1)(d) of the Taxation Laws Amendment Act, 2014 (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, |
[Paragraph (a)(iii) inserted by section 1(1)(d) of the Taxation Laws Amendment Act, 2014 (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; |
[Paragraph (a)(aa) substituted by section 1(1)(e) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014)]
| (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 |
[Paragraph (a)(bb) substituted by section 1(1)(e) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014)]
| (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 |
[Paragraph (a)(cc) substituted by section 1(1)(e) of the Taxation Laws Amendment Act, 2014 (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— |
[Words preceding paragraph (b)(i) substituted by section 1(1)(f) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014)]
| (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; |
[Paragraph (b)(i) substituted by section 1(1)(g) of the Taxation Laws Amendment Act, 2014 (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 |
[Paragraph (b)(ii) substituted by section 1(1)(g) of the Taxation Laws Amendment Act, 2014 (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, |
[Paragraph (b)(iii) inserted by section 1(1)(g) of the Taxation Laws Amendment Act, 2014 (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; |
[Paragraph (b)(aa) substituted by section 1(1)(h) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014)]
| (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 |
[Paragraph (b)(bb) substituted by section 1(1)(h) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014)]
| (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; |
[Paragraph (b)(cc) inserted by section 1(1)(h) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014)]
[Paragraph (b) amended by section 1(1)(f) of the Taxation Laws Amendment Act, 2014 (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;
Provided further—
| (i) | that an amount transferred by a company as contemplated in paragraph (a) or (b) must not comprise a transfer of contributed tax capital unless all holders of shares in that class participate in the transfer in the same manner and are actually allocated an amount of contributed tax capital based on their proportional shareholding within that class of shares; and |
| (ii) | that no regard must be had to paragraph (i) of this further proviso if the amount transferred constitutes an acquisition by the company of its own securities by way of 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 5.81 of section 5 of the JSE Limited Listings Requirements or a general repurchase of securities as contemplated in the listings requirements of any other exchange licensed under the Financial Markets Act, which requirements are substantially the same as the requirements prescribed by the JSE Limited Listings Requirements, where that acquisition complies with the applicable requirements of that exchange; |
[Further proviso inserted by section 4(1)(c) of the Taxation Laws Amendment Act, 2021 (Act No. 20 of 2021), Notice No. 770, GG45787, dated 19 January 2022 - effective 1 January 2023 (section 4(2))]
Provided further that an amount transferred by a company as contemplated in paragraph (a) or (b) must comprise a transfer of contributed tax capital only where—
| (i) | the shares in a class of shares, in respect of which— |
| (aa) | a distribution is made; or |
| (bb) | consideration for the acquisition, cancellation or redemption is paid or payable by that company, |
are each transferred an equal amount of contributed tax capital in respect of that class of shares; and
| (ii) | the amount of that transfer per share does not exceed the total amount of contributed tax capital in respect of that class of shares divided by the total number of issued shares within that class of shares;’ |
[Further proviso inserted by section 41(1) of the Taxation Laws Amendment Act, 2022 (Act No. 20 of 2022), Notice No. 1541, GG47826, dated 5 January 2023 - deemed to have come into operation on 19 January 2022 (section 41(2))]
