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1 REPUBLIC OF SOUTH AFRICAINCOME TAX ACTREPUBLIEK VAN SUID-AFRIKAINKOMSTEBELASTING-WETNo , 1997 GENERAL EXPLANATORY NOTE:[]Words in bold type in square brackets indicate omissions fromexisting underlined with a solid line indicate insertions inexisting fix the rates of normal tax payable by persons other than companies in respectof taxable incomes for the years of assessment ending on 28 February 1998 and30 June 1998, and by companies in respect of taxable incomes for years ofassessment ending during the period of 12 months ending on 31 March 1998; toamend the Income Tax Act, 1962; to amend the Income Tax Act, 1996; and toprovide for incidental IT ENACTED by the Parliament of the REPUBLIC of SOUTH AFRICA , asfollows: Rates of normal rates of normal tax to be levied in terms of section 5(2) of the Income Tax Act,1962 (Act No.)

2 58 of 1962) (hereinafter referred to as the principal Act), in respect of (a)the taxable income of any person other than a company for the year ofassessment ending on 28 February 1998 or 30 June 1998; and(b)the taxable income of any company for any year of assessment ending duringthe period of 12 months ending on 31 March 1998,shall be as set forth in the Schedule to this of section 1 of Act 58 of 1962,as amended by section 3 of Act 90 of1962, section 1 of Act 6 of 1963, section 4 of Act 72 of 1963, section 4 of Act 90 of1964, section 5 of Act 88 of 1965, section 5 of Act 55 of 1966, section 5 of Act 95 of1967, section 5 of Act 76 of 1968, section 6 of Act 89 of 1969, section 6 of Act 52 of1970, section 4 of Act 88 of 1971, section 4 of Act 90 of 1972, section 4 of Act 65 of1973.

3 Section 4 of Act 85 of 1974, section 4 of Act 69 of 1975, section 4 of Act 103 of1976, section 4 of Act 113 of 1977, section 3 of Act 101 of 1978, section 3 of Act 104of 1979, section 2 of Act 104 of 1980, section 2 of Act 96 of 1981, section 3 of Act 91of 1982, section 2 of Act 94 of 1983, section 1 of Act 30 of 1984, section 2 of Act 121of 1984, section 2 of Act 96 of 1985, section 2 of Act 65 of 1986, section 1 of Act 108of 1986, section 2 of Act 85 of 1987, section 2 of Act 90 of 1988, section 1 of Act 99of 1988, Government Notice No. of 14 April 1989, section 2 ofAct 70 of 1989,section 2 ofAct 101 of 1990, section 2 ofAct 129 of 1991, section 2 ofAct 141 of 1992,section 2 of Act 113 of 1993, section 2 of Act 21 of 1994, section 2 of Act 21 of 1995and section 2 of Act 36 of 19962.

4 (1) Section 1 of the principal Act is hereby amended (a)by the substitution for the words preceding subparagraph (i) of paragraph(e)of the definition of company of the following words: any unit portfolio comprised in any unit trust scheme in securities other thanproperty shares managed or carried on by any company registered as amanagement company under section 4 of the Unit Trusts Control Act,[1947(Act No. 18 of 1947)]1981 (Act No. 54 of 1981), if ;(b)by the substitution for subparagraph (iv) of paragraph(d)of the definition of connected person of the following subparagraph: (iv) any person, other than a company as defined in section 1 of theCompanies Act, 1973 (Act No.)

5 61 of 1973), who individually or jointlywith any connected person in relation to himself, holds, directly orindirectly, at least 20 per cent of the company s equity share capital[members interest]or voting rights; ;(c)by the deletion in the definition of connected person of the word and atthe end of subparagraph (v) of paragraph(d);(d)by the insertion after subparagraph (v) of paragraph(d)of the definition of connected person of the following paragraph: (vA) any other company if such other company is managed or controlled byany person which is a connected person in relation to such company;and ;(e)by the substitution for item(cc)of subparagraph (vi) of paragraph(d)of thedefinition of connected person of the following item: (cc)any other close corporation or company which is a connected person inrelation to (i)any member contemplated in item(aa);or(ii)the relative or trust contemplated in item(bb).

6 And ;(f)by the substitution for the definition of executor of the following definition: executor means any person to whom letters of administration have beengranted by a Master or an Assistant Master of the[Supreme]High Courtappointed under the Administration of Estates Act,[1913 (Act No. 24 of1913)]1965 (Act No. 66 of 1965), in respect of the estate of a deceased personunder any law relating to the administration of estates, and includes a personacting or authorized to act under letters of administration granted outside theRepublic but signed and sealed by such a Master or Assistant Master for usewithin the REPUBLIC and, in any case where the estate is not required to beadministered under the supervision of such a Master or Assistant Master, theperson administering the estate.

7 (g)by the substitution for the words preceding the proviso to paragraph(e)of thedefinition of gross income of the following words: any amount determined in accordance with the provisions of the SecondSchedule in respect of lump sum benefits received by or accrued to suchperson from 4510152025303540455055(i)any fund[(other than a fund referred to in paragraph(a)or(b)of thedefinition of pension fund )]which has in respect of the current or anyprevious year of assessment been approved by the Commissioner,whether under this Act or any previous Income Tax Act, as a pensionfund, provident fund or retirement annuity fund.

8 Or(ii)a fund referred to in paragraph(a)or(b)of the definition of pensionfund ,if such person was a member of such fund during any such year: ;(h)by the insertion after paragraph(e)of the definition of gross income of thefollowing paragraph: (eA)where, in relation to a member or the dependants or nominees of adeceased member (i) any amount in a fund contemplated in paragraph(a)or(b)of thedefinition of pension fund , the rules of which provide that onretirement of such member a portion of his benefit has to be taken inthe form of an annuity, has been transferred to a fund, the rules ofwhich entitle such member, or the dependants or nominees of adeceased member, to a benefit on retirement in the form of a lumpsum exceeding one-third of the capitalised value of all benefits(including lump sum payments and annuities).

9 Or(ii) a fund contemplated in paragraph(a)or(b)of the definition of pension fund , the rules of which provide that on retirement of suchmember a portion of his benefit has to be taken in the form of anannuity, is wholly or partially converted by way of an amendment toits rules or otherwise, to entitle such member, or the dependants ornominees of a deceased member, to a benefit on retirement in theform of a lump sum exceeding one-third of the capitalised value ofall benefits (including lump sum payments and annuities),an amount equal to two-thirds (aa)of the amount so transferred; or(bb)in the case of a conversion, of the amount representing the amountconverted for the benefit or ultimate benefit of the member or thedependants or nominees of the deceased member:Provided that the Commissioner may, on application by a fund, in particularcircumstances, increase the proportion of one-third contemplated in subpara-graph (i) up to a maximum of one-half on the following conditions.

10 (a)that on 12 March 1997 the proportion of the benefit on retirement in suchfund that could be taken in the form of a lump sum was greater thanone-third, but not greater than one-half, of the total capitalized value ofall benefits;(b)that the rules of such fund are amended so that the maximum proportionof such member s benefit on retirement that can be taken in the form ofa lump sum is one-third of the total capitalized value of all benefits; and(c)such further conditions as the Commissioner may determine from time totime; ;(i)by the insertion after the definition of income of the following definition: insolvent estate means an insolvent estate as defined in section 2 of theInsolvency Act, 1936 (Act No.)