30. Time-apportionment base cost
(1) Subject to subparagraph (3), the time-apportionment base cost of a pre-valuation date asset is determined in accordance with the formula-
Y = B + [(P – B) x N]
T + N
where-
(a) “Y” represents the amount to be determined;
(b) “B” represents the amount of expenditure incurred prior to the valuation date in respect of that asset that is allowable before, on or after the valuation date in terms of paragraph 20;
(c) “P” represents the proceeds as determined in terms of paragraph 35, in respect of the disposal of that asset, or where subparagraph (2) applies, the amount of proceeds attributable to the expenditure in “B” as determined in accordance with subparagraph (2);
(d) “N” represents the number of years determine from the date that the asset was acquired to the day before valuation date, which number of years may not exceed 20 in the case where the expenditure allowable in terms of paragraph 20 in respect of that asset was incurred in more than one year of assessment prior to the valuation date;
(e) “T” represents the number of years determined from valuation date until the date the asset was disposed of after valuation date.
Provided that for purposes of items (d) and (e) a part of a year must be treated as a full year.
(2) Where a portion of the expenditure allowable in terms of paragraph 20 in respect of a pre-valuation date asset was incurred on or after the valuation date, the proceeds to be used in the determination of the time apportionment base cost of the asset must be determined in accordance with the formula-
P = R x B
(A + B)
where-
(a) “P” represents the proceeds attributable to B;
(b) “R” represents the total amount of proceeds as determined in terms of paragraph 35 in consequence of the disposal of the pre-valuation date asset;
(c) “A” represents the amount of expenditure allowable in terms of paragraph 20 in respect of the asset that is incurred on or after valuation date;
(d) “B” represents the amount of expenditure incurred prior to the valuation date in respect of that asset that is allowable before, on or after the valuation date in terms of paragraph 20;
(3) A person must determine the time-apportionment base cost of a pre-valuation date asset in terms of subparagraph (4) where –
(a) that person has incurred expenditure contemplated in paragraph 20(1)(a), (c) or (e) on or after the valuation date;
(b) any part of the expenditure contemplated in paragraph 20(1)(a), (c) or (e) incurred before, on or after the valuation date is or was allowable as a deduction in determining the taxable income of that person before the inclusion of any taxable capital gain; and
(c) the proceeds in respect of the disposal of that asset exceed the expenditure allowable in terms of paragraph 20 incurred before, on and after the valuation date in respect of that asset
(4) The time-apportionment base cost of a pre-valuation date asset referred to in subparagraph (3) is determined in accordance with the formulae-
Y = B + [(P1 – B1 x N]
T + N
and
P1 = R1 x B1
(A1 + B1)
where –
(a) “Y” represents the time apportionment base cost of the asset;
(b) “P1” represents the proceeds attributable to the expenditure in B1;
(c) “A1” represents the sum of the expenditure allowable in terms of paragraph 20 in respect of the asset that is incurred on or after valuation date and any amount of that expenditure that has been recovered or recouped as contemplated in paragraph 35(3)(a);
(d) ‘B1’ represents the sum of the expenditure allowable in terms of paragraph 20 in respect of the asset that is incurred before valuation date, and any amount of that expenditure that has been recovered or recouped as contemplated in paragraph 35(3)(a).
(e) “B”, “N” and “T” bear the same meanings ascribed to those symbols in subparagraph (1); and
(f) ‘R1’ represents the sum of the proceeds and any amount contemplated in paragraph 35(3)(a) in respect of that asset.
(5) For purposes of this paragraph –
(a) any selling expenses incurred on or after the valuation date must be deducted from the following amounts –
(i) in the case where subparagraph (2) or (3) applies, the amounts represented by the symbols ‘R’ and ‘R1’, respectively; and
(ii) in any other case, the amount represented by the symbol ‘P’;
(b) except for subparagraph (3)(c) any reference to expenditure allowable in terms of paragraph 20 must exclude selling expenses; and
(c) ‘selling expenses’ means expenditure –
(i) contemplated in paragraph 20(1)(c)(i) to (iv) incurred directly for the purposes of disposing of that asset; and
(ii) which would, but for the provisions of item (b), have constituted expenditure allowable in terms of paragraph 20.