20.     Set–off of assessed losses

(1)     For the purpose of determining the taxable income derived by any person from carrying on any trade, there shall, subject to section 20A, be set off against the income so derived by such person-

(a)             

(i)      that is a company, other than a company referred to in subparagraph (ii), any balance of assessed loss incurred by that person in any previous year which has been carried forward from the preceding year of assessment, to the extent that the amount of such set-off does not exceed the higher of R1 million and 80 per cent of the amount of taxable income determined before taking into account the application of this section;

(ii)      that is a company carrying on mining operations as contemplated in section 15, any balance of assessed loss incurred by that person in any previous year which has been carried forward from the preceding year of assessment, to the extent that the amount of such set-off does not exceed the higher of R1 million and 80 per cent of the amount of taxable income determined before taking into account the application of—

(A)   this section; and

B)    the provisions of section 36(7C); or

(iii)     that is not a company, any balance of assessed loss incurred by that person in any previous year which has been carried forward from the preceding year of assessment: Provided that no person whose estate has been voluntarily or compulsorily sequestrated shall be entitled to carry forward any assessed loss incurred prior to the date of sequestration, unless the order of sequestration has been set aside, in which case the amount to be carried forward shall be reduced by an amount which was allowed to be set off against the income of the insolvent estate of such person from the carrying on of any trade.

[Paragraph (a) amended by section 19(a) of Act 101 of 1990, by section 17 of Act 21 of 1995, by section 15 of Act 28 of 1997, by section 19(a) of Act 8 of 2007, by section 32(a) of Act 35 of 2007, by section 37(1) of Act 22 of 2012 and by section 31(1) of Act 43 of 2014 and substituted by section 39(a) of Act 15 of 2016 and by section 18(1) of Act 20 of 2021 (as substituted by section 42(1) of Act 20 of 2022) effective on 31 March, 2023 and applicable in respect of years of assessment ending on or after that date (effective date in section 18(2) of Act 20 of 2021 as substituted by section 9 of Act 19 of 2022)]

(b)     any assessed loss incurred by a person during the same year of assessment in carrying on any other trade either alone or in partnership with others, otherwise than as a member of a company the capital whereof is divided into shares:

[Words preceding proviso substituted by section 39 of Act 15 of 2016 effective on 19 January 2017]

Provided that there shall not be set off against any amount –

(a)     ……….

(b)     derived by any person from a source within the Republic, any—

(i)      assessed loss incurred by such person during such year; or

(ii)     any balance of assessed loss incurred in any previous year of assessment,

in carrying on any trade outside the Republic; or

[Paragraph (b) substituted by section 35(1)(b) of Act 45 of 2003, amended by section 19(c) of Act 8 of 2007, substituted by section 15(1) of Act 3 of 2008 and amended by section 54(1)(a) of Act 31 of 2013 effective on 1 January, 2014 and applicable in respect of years of assessment commencing on or after that date]

(c)     that is a retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit or severance benefit included in taxable income, any-

(i)      balance of assessed loss;

(ii)     ‘assessed loss’ as defined in subsection (2) incurred in such year before taking into account that retirement fund lump sum benefit or retirement fund lump sum withdrawal benefit.