Section 6 (CTA) – Calculation of amount of tax payable

6. Calculation of amount of tax payable

(1)     Subject to subsections (2) and (3), the amount of tax payable by a taxpayer in respect of a tax period must be calculated in accordance with the formula-

X = <{[(E – S) x (1 – C)]-[D x (1-M)]} + {P x (1 – J)} + {F x (1 – K)}> x R

in which formula-

(a)     “X” represents the amount to be determined that must not be less than zero;

(b)     “E” represents the number in respect of the total fuel combustion related greenhouse gas emissions of the taxpayer in respect of that tax period expressed as a carbon dioxide equivalent determined in terms of section 4(1) or (2)(a);

(c)     “S” represent an amount equal to the quantity of renewable electricity (kWh) purchased under a power purchase agreement multiplied by the renewable energy premium determined by the Minister by notice in the Gazette in respect of a tax period, until 31 December 2022; and

[Paragraph (c) substituted by section 63(1)(a) of Act 20 of 2021 deemed effective on 1 January 2021. EDITORS NOTE: Act 20 of 2021 as published states begins paragraph (c) with the words “”B” represent…” – since there is no “B” in the formula, it appears that “S” is the correct reference]

(d)     “C” represents a number equal to the sum of the percentages of allowances determined under sections 7, 10, 11, 12, and 13 in respect of that tax period, subject to section 14;

(e)     “D” represents the number in respect of the petrol and diesel related greenhouse gas emissions of that taxpayer in respect of that tax period expressed as a carbon dioxide equivalent, determined in terms of section 4(1) or (2)(a);

(f)      “M” represents a number equal to the sum of the percentages of the allowances determined under sections 7, 12 and 13 in respect of that tax period, subject to section 14;

(g)     “P” represents the number in respect of the total industrial process related greenhouse gas emissions of the taxpayer in respect of that tax period expressed as a carbon dioxide equivalent determined in terms of section 4(1) or (2)(c);

(h)     “J” represents a number equal to the sum of the percentages of the allowances determined under sections 7, 8, 10, 11, 12 and 13 in respect of that tax period, subject to section 14;

[Paragraph (h) substituted by section 93(1) of Act 34 of 2019 deemed effective on 1 June, 2019]

(i)      “F” represents the number in respect of the total fugitive greenhouse gas emissions of the taxpayer in respect of that tax period expressed as a carbon dioxide equivalent determined in terms of section 4(1) or (2)(b);

(j)      “K” represents the sum of the percentages of the allowances determined in terms of sections 7, 9, 10, 11, 12 and 13 in respect of that tax period, subject to section 14; and

(k)     “R” represents the rate of tax prescribed under section 5:

Provided that where the number in respect of the determination of the expression “(E-S)” in the formula is less than zero, that number must be deemed to be zero.

[Subsection (1) amended by section 77(1)(a) of Act 2 of 2020 deemed effective on 1 January, 2020]

(2)     The amount of tax payable by a taxpayer in respect of the generation of electricity from fossil fuels conducting activities under the IPCC codes 1A1 for energy industries (including heat and electricity recovery from Waste), 1A2 for manufacturing industries and construction (including heat and electricity recovery from Waste) and 1A4 for other sectors (including heat and electricity recovery from Waste) in respect of a tax period must be calculated in accordance with the formula:

X = A – B – C

in which formula-

(a)     “X” represents the amount to be determined that must not be less than zero;

(b)     “A” represents the amount of tax payable in respect of a tax period determined in terms of subsection (1);

(c)     “B” represents an amount equal to the quantity of renewable electricity (kWh) purchased under a power purchase agreement multiplied by the renewable energy premium determined by the Minister by notice in the Gazette in respect of a tax period, until 31 December 2025; and

[Paragraph (c) substituted by section 63(1)(a) of Act 20 of 2021 and by section 39(1)(b) of Act 20 of 2022 effective on 1 January, 2023]

(d)     “C” represents an amount equal to the environmental levy contemplated in respect of electricity generated in the Republic in Section B of Part 3 of Schedule 1 to the Customs and Excise Act, 1964 (Act 91 of 1964), paid in respect of a tax year, until 31 December 2025.

[Subsection (2) amended by section 39(1)(a) of TLA Act of 2022 effective on 1 January, 2023. Paragraph (d) substituted by section 39(1)(c) of Act 20 of 2022 effective on 1 January, 2023]

(3)     The amount of tax payable by a taxpayer that is a petroleum refinery in respect of a tax period must be calculated in accordance with the formula-

X = A – (B x P)

in which formula-

(a)     “X” represents the amount to be determined that must not be less than zero;

(b)     “A” represents the amount of tax payable in respect of a tax period determined in terms of subsection (1);

(c)     “B” represents an amount of 0.66 cents per litre;

[Paragraph (c) substituted by section 8(1) of Act 19 of 2022 and by section 9(1) of Act 19 of 2023 deemed effective on 1 January, 2023]

(d)     “P” represents the total amount of petrol produced expressed in litres.

[Subsection (3) added by section 77(1)(b) of Act 23 of 2020 deemed effective on 1 January, 2020 – amendment probably supposed to be insertion of subsection (4) – subsection (3) already exists]

(4)     For the purposes of this section “sequestrate” means-

(a)     the process of storing a greenhouse gas in forestry plantations and harvested wood products within the operational control of the taxpayer in respect of fuel combustion emissions declared in terms of IPCC codes 1A2d for pulp, paper and print and 1A2j for wood and wood products in terms of section 4(1); or

(b)     the process of storing a greenhouse gas in forestry plantations and harvested wood products within the operational control of the taxpayer in respect of fuel combustion emissions declared in terms of IPCC codes 1A2d for pulp, paper and print and 1A2j for wood and wood products or increasing the carbon content of a carbon reservoir other than the atmosphere in respect of fuel combustion emissions declared in terms of section 4(2)(a).

[Subsection (4) substituted by section 63(1)(b) of Act 20 of 2021 and by section 39(1)(d) of Act 20 of 2022 deemed effective on 1 January, 2022]