Individuals Flashcards
To What does S 7(11) apply?
S 7(11) applies to all Maintenance Orders in terms of the Maintenance Act. Therefore any amount deducted from a person’s minimum individual reserve as **a maintenance order **(and the related EE tax - see below) paid to the other spouse will be deemed to be income received by that person, even though it has been received/accrued to the ex-spouse, however, in terms of S 7! The deduction from the reserve is not included in terms of the 2nd schedule. Having said that, the amount will be taxed in terms of the Fourth Schedule in terms of para (f) of the definition of remuneration.
What is the purpose of S 8B?
S 8B was introduced to lighten the tax burden when companies offered Broad-Based Employee share schemes to employees. This is because in the absence of S 8B, the employees will be taxed on teh cash value of the shares as a fringe benefit. This often made it less appealing.
Why does S 8B override S 9C?
S 9C applies to the disposal of “qualifying equity” shares. These are shares that have been held for a continuous period of 3 years - they are treated as having been disposed of in terms of the 8th schedule, i.e. Capital in Nature. S 8B must therefore override S 9C for if an employee (in terms of S 8B) disposes of his shares before the 5 year period, but after the 3 year period of S 9C (so in year 4), S 9C would deem that disposal to be capital in nature, while S 8B would include the gain made it in Income, the taxpayer will then be taxed twice on the disposal (or allowed two deductions).
