We just want a confirmation whether the Preference shares (issued in terms of the S8EA) is a reportable transaction or not?
Important:
This answer is based on tax law year ending 28 February 2019.
Answer:
The public notice doesn’t specifically refer to section 8EA of the Income Tax Act. According to notice 140, issued on 3 February 2016, the “following arrangements have been identified to be reportable arrangements:
2.1. An arrangement that would have qualified as a “hybrid equity instrument” in terms of section 8E of the Income Tax Act, 1962, if the prescribed period in that section had been 10 years, but does not include any instrument listed on an exchange regulated in terms of the Financial Markets Act, 2012 …”
For the purposes of section 8E, of the Income Tax Act, “hybrid equity instrument” means—
“(a) any share, other than an equity share, if—
(i) the issuer of that share is obliged to redeem that share in whole or in part; or
(ii) that share may at the option of the holder be redeemed in whole or in part,
within a period of three years from the date of issue of that share; …”
Section 8EA doesn’t deal with hybrid equity instruments.