Author: admin_kmos

Subsections (1) to (4) of section 12V of the ITA

Posted on by admin_kmos

(1)     There must be allowed to be deducted by a person that is a motor vehicle manufacturer an amount equal to 150 per cent of the cost of any-


(a)     building (including improvements to a building);


(b)     new and unused machinery, plant, implement, utensil or article; or


(c)     improvement to any machinery, plant, implement, utensil or article,


acquired as a purchaser in terms of an agreement contemplated in paragraph (a) of the definition of “instalment credit agreement” in section 1 of the Value-Added Tax Act or owned by the taxpayer and used mainly in the production of battery electric or hydrogen-powered vehicles in the Republic: Provided that where any machinery, plant, implement, utensil, article or improvement qualifying for a deduction under this section is mounted or affixed to any concrete or other foundation or supporting structure and-


(a)     the foundation or supporting structure is designed for such machinery, plant, implement, utensil, article or improvement and constructed in such manner that it is or should be regarded as being integrated with the machinery, plant, implement, utensil, article or improvement; and


(b)     the useful life of the foundation or supporting structure is or will be limited to the useful life of the machinery, plant, implement, utensil, article or improvement mounted thereon or affixed thereto,


the foundation or supporting structure shall be deemed to be part of the machinery, plant, implement, utensil, article or improvement mounted thereon or affixed thereto.


(2)     For the purposes of the deduction under subsection (1), an asset in paragraph (a) or (b) must be brought into use on or after 1 March 2026 and before 1 March 2036.


(3)     For the purposes of this section, the cost to a taxpayer of any asset is deemed to be the lesser of the actual cost to the taxpayer or the cost which a person would, if the person had acquired that asset under a cash transaction concluded at arm’s length on the date on which the transaction for the acquisition was concluded, have incurred in respect of the direct cost of the acquisition of the asset.


(4)     No deduction shall be allowed under this section in respect of any asset the ownership of which is retained by the taxpayer as a seller in terms of an agreement contemplated in paragraph (a) of the definition of “instalment credit agreement” in section 1 of the Value-Added Tax Act.

“FLAC instrument” definition of section 1 of ITA

Posted on by admin_kmos

“FLAC instrument” means an instrument contemplated in the Prudential Standard RA03 regulations issued in terms of section 105(2)(c), read with sections 30(1A) and 42(b)(vi) of the Financial Sector Regulation Act;

[Definition of “FLAC instrument” inserted by section 1(1)(b) of Act 5 of 2026 effective on 1 January 2026]

Section 11G (ITA) – Deduction of expenses incurred in production of interest

Posted on by admin_kmos

11G.  Deduction of expenses incurred in production of interest

 

(1)     For purposes of this section “interest” means interest as defined in section 24J.

 

(2)     Notwithstanding section 23(b), for purposes of determining the taxable income derived by any person, there shall be allowed as a deduction from the income of that person, interest incurred by that person to the extent that the interest-

 

(a)     is incurred in the production of interest that is included in the income of that person; and

 

(b)     is not incurred in carrying on a trade.

[Subsection (2) amended by section 13(1) of Act 5 of 2026 effective on 1 January, 2026 and applicable to years of assessment commencing on or after that date]

 

(3)     The amount allowed to be deducted under this section shall not exceed the amount of interest income referred to in subsection (2)(a), that is received by or accrued to the person, during the year of assessment.

[Section 11G inserted by section 14(1) of Act 17 of 2023 effective on 1 January, 2026 and applicable in respect of years of assessment commencing on or after that date (effective date in section 14(2) of Act 17 of 2023 as substituted by section 67(1) of Act 42 of 2024)]