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Reportable arrangements - proposed changes to the Tax Administration Act

South Africa

The Tax Administration Act (TAA) currently provides that an arrangement will be reportable if it is listed as such by the Commissioner. The Commissioner may determine an arrangement to be an excluded arrangement if satisfied that the arrangement is not likely to lead to an undue tax benefit. Taxand South Africa provides an overview of the proposed amendments. 

Current exclusions
The Commissioner issued a notice in terms of the reportable arrangement rules previously contained in the Income Tax Act No. 58 of 1962 (the Act), in terms of which an arrangement will be an excluded arrangement if the tax benefit - which is or will be derived - is not the main or one of the main benefits of the arrangement (which notice should remain in force for purposes of section 36(4) of the TAA, in terms of section 269(1) of the TAA).

Current inclusions
The Notice further includes as a reportable arrangement an arrangement which is or would have constituted a hybrid debt instrument. A hybrid debt instrument is defined as, “an instrument that is convertible into or exchangeable for a share in the issuer thereof at the option of the holder thereof within three years from the date of issue of that instrument.”

Discover more: Proposed replacement of the existing notices of the Tax Administration Act 

Your Taxand contact for further queries is:
Robert Gad
T. +27 21 410 2500

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Taxand's Take

A draft notice on reportable transactions for the TAA was released for comment on 12 June 2014, and is set to replace all previous notices for purposes of sections 35(2) and 36(4) of the TAA. Various specific transactions are listed as reportable, to the extent that same take place after the date of publication of the draft notice. 

Taxand's Take Author

Robert Gad
South Africa

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