Category: Section 23D (ITA) – Limitation of allowances granted in respect of certain assets

Section 23D

 

  1. Subsection (1) amended by section 20of Act 21 of 1995, section 29 of Act 31 of 2005 and section 21 of Act 8 of 2007 and deleted by section 34 of Act 35 of 2007.

 

  1. Subsection (2) substituted by section 10 of Act 140 of 1993 and section 20 of Act 21 of 1995, amended by section 29 of Act 31 of 2005 and section 21 of Act 8 of 2007 and substituted by section 34 of Act 35 of 2007 and section 18 of Act 3 of 2008.

 

  1. Subsection (2A) inserted by section 34 of Act 35 of 2007 and substituted by section 18 of Act 3 of 2008 and section 44 of Act 22 of 2012 effective on 1 January 2009.

 

  1. Subsection (3) added by section 20 of Act 21 of 1995 and deleted by section 34 of Act 35 of 2007.

 

  1. Section 23D inserted by section 19 of Act 113 of 1993.

Section 23D (ITA) – Limitation of allowances granted in respect of certain assets

Posted on by admin_kmos

23D.    Limitation of allowances granted in respect of certain assets

 

(1)     ……….

 

(2)     Where any depreciable asset which is let or licensed by a taxpayer to a lessee or licensee was held within a period of two years preceding the commencement of the lease or licence-

 

(a)     by the lessee or licensee, or by any sublessee or sublicensee in relation to the asset; or


(b)     by a person who was at any time during that period a connected person in relation to the lessee, licensee, sublessee or sublicense,


the cost or value of the depreciable asset for the purpose of this section and any deduction or allowance claimed by the taxpayer in respect of the asset shall not exceed the amount determined in accordance with subsection (2A).

 

(2A)  The amount to be determined for purposes of subsection (2) is the sum of-

 

(a)     the cost of the asset to the most recent lessee, licensee, sublessee, sublicensee or connected person contemplated in subsection (2) that previously held that asset, less the sum of-


(i)      all deductions which have been allowed to the lessee, licensee, sublessee, sublicensee or connected person in respect of the asset; and


(ii)     all deductions that are deemed to have been allowed to the lessee, licensee, sublessee, sublicensee or connected person in respect of the asset in terms of section 11(e)(ix), 12B(4B), 12C(4A), 12D(3A), 12DA(4), 12F(3A), 13(1A), 13bis(3A), 13ter(6A), 13quin(3) or 37B(4);


(b)     any amount contemplated in paragraph (n) of the definition of ‘gross income’ in section 1 that is required to be included in the income of the lessee, licensee, sublessee, sublicensee or connected person that arises as a result of the disposal of the asset; and

 

(c)     the applicable percentage in paragraph 10 of the Eighth Schedule, of the capital gain of the lessee, licensee, sublessee, sublicensee or connected person that arises as a result of the disposal.