Draft Tax Exemption Guide for Companies Wholly Owned by Institutions, Boards or Bodies

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Draft Tax Exemption Guide for Companies

Section 10(1)(cA)(ii) of the Income Tax Act provides for an absolute exemption from income tax of the receipts and accruals of any company all the shares of which are held by any institution, board or body provided the operations of such company are ancillary or complementary to the object of the institution, board or body. The draft guide discusses the requirements for the exemption to apply.

This draft guide provides general guidance on the exemption from income tax of qualifying wholly owned associations, corporations or companies of institutions, boards or bodies under section 10(1)(cA)(ii). These wholly owned associations, corporations or companies of institutions, boards or bodies enjoy preferential tax treatment only after the Commissioner has granted them approval and if they continue to comply with the relevant requirements and conditions as set out in the Act and discussed in the guide. The guide deals with the following taxes that may affect wholly owned associations, corporations or companies of institutions, boards or bodies:

  • Capital gains tax
  • Dividends tax
  • Donations tax
  • Employees’ tax
  • Income tax
  • Skills development levy
  • Unemployment insurance contributions

The due date for public comment on the draft guide is 8 October 2021.

Find a copy of the draft guide here.

13/08/2021

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