Author: admin_kmos

Section 11(n) of ITA

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(n)     ……….

[Paragraph (n) amended by section 8 of Act 72 of 1963, substituted by section 12 of Act 55 of 1966 and section 9 of Act 76 of 1968, amended by section 9 of Act 65 of 1973 and section 9 of Act 69 of 1975, substituted by section 9 of Act 113 of 1977, amended by section 5 of Act 101 of 1978, section 8 of Act 104 of 1979, section 7 of Act 91 of 1982, section 10 of Act 94 of 1983, section 11 of Act 121 of 1984, section 8 of Act 90 of 1988, section 8 of Act 70 of 1989, section 11 of Act 101 of 1990, section 11 of Act 141 of 1992, section 9 of Act 113 of 1993, section 12 of Act 21 of 1995, section 20 of Act 53 of 1999, section 2 and section 11 of Act 8 of 2007, section 1 and section 10 of Act 3 of 2008, section 18 of Act 60 of 2008 and substituted by section 14 of Act 17 of 2009, amended by section 30 of Act 24 of 2011, deleted by section 27(1)(m) of Act 31 of 2013 effective on 1 March 2016, operation date specified in section 27(1)(m) of Act 31 of 2013 as substituted by section 122(1)(b) of Act 43 of 2014]

Section 11(m) of ITA

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(m)    any amount paid by way of annuity during the year of assessment by any taxpayer –

 

(i)      to a former employee who has retired from the taxpayer’s employ on grounds of old age, ill health or infirmity; or

  

(ii)     to a person who was for a period of at least five years a partner in an undertaking carried on by the taxpayer and who retired from the partnership in respect of that undertaking on grounds of old age, ill health or infirmity, provided that the amount so paid to such person is reasonable, having regard to the services rendered by such person as a partner in such undertaking prior to his retirement and the profits made in such undertaking, and that the said amount does not represent consideration payable to such person in respect of his interest in the partnership; or

 

(iii)    to any person who is dependent for his maintenance upon a former employee or a former partner in an undertaking carried on by the taxpayer or (where such former employee or former partner is deceased) was so dependent immediately prior to his death;

Subsections 2, 3, 4, 5 and 6 of section 12P of ITA

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(2)     There must be exempt from normal tax any amount received by or accrued to a person as a beneficiary of a government grant if that government grant-

(a)     is listed in the Eleventh Schedule; or

(b)     is identified by the Minister by notice in the Gazette for the purpose of exempting that government grant with effect from a date specified by the Minister in that notice (including any date that precedes the date of that notice), after having regard to-

(i)      the implications of the exemption for the National Revenue Fund; and

(ii)     whether the tax implications were taken into account in allocating that grant.

(2A)  Notwithstanding subsection (2), there must be exempt from normal tax any amount received by or accrued to or in favour of any person from the Government in the national, provincial or local sphere, where-

(a)    that amount is granted for the performance by that person of its obligations pursuant to a Public Private Partnership; and

(b)     that person is required in terms of that Public Private Partnership to expend an amount at least equal to that amount in respect of any improvements on land or to buildings owned by any sphere of government or over which any sphere of government holds a servitude.

[Paragraph (b) substituted by section 33 of Act 15 of 2016 effective on 1 March 2016, applies in respect of grants received or expenditure incurred on or after that date]

(3)     Where during any year of assessment any amount is received by or accrues to a person by way of a government grant as contemplated in subsection (2) or (2A), other than a government grant in kind, for the acquisition, creation or improvement, or as a reimbursement for expenditure incurred in respect of the acquisition, creation or improvement of-

[Words preceding paragraph (a) substituted by section 26 of Act 25 of 2015 effective on 1 January 2016]

(a)     trading stock-

(i)      any expenditure incurred in respect of that trading stock allowed as a deduction in terms of section 11(a) ;or

(ii)     any amount taken into account in respect of the value of trading stock as contemplated in section 22(1) or (2); or

(b)     an allowance asset, the base cost of that allowance asset, must be reduced to the extent that the amount of that government grant is applied for that purpose.

(4)     Where any amount is received by or accrues to a person by way of a government grant as contemplated in subsection (2) or (2A) for the acquisition, creation or improvement of an allowance asset or as a reimbursement for expenditure incurred in respect of that acquisition, creation or improve ment, the aggregate amount of the deductions or allowances allowable to that person in respect of that allowance asset may not exceed an amount equal to the aggregate of the expenditure incurred in the acquisition, creation or improvement of that allowance asset, reduced by an amount equal to the sum of-

 [Words preceding paragraph (a) substituted by section 26 of Act 25 of 2015 effective on 1 January 2016]

(a)     the amount of the government grant; and

(b)     the aggregate amount of all deductions and allowances previously allowed to that person in respect of that allowance asset.

Provided that where a person referred to in this subsection qualifies for a deduction under section 12BA in respect of an allowance asset, the aggregate amount of the deductions or allowances allowable to that person in respect of that allowance asset may not exceed an amount equal to 125 per cent of the aggregate amount otherwise determined in terms of this subsection

[Subsection (4) amended by section 26(1)(c) of Act 25 of 2015 and by section 19(1) of Act 17 of 2023 effective on 1 March, 2023 and applicable in respect of assets brought into use on or after that date]

(5)     Where during any year of assessment any amount is received by or accrues to a person by way of a government grant as contemplated in subsection (2) or (2A), other than a government grant in kind-

[Words preceding paragraph (a) substituted by section 26 of Act 25 of 2015 effective on 1 January 2016]

(a)     for the purpose of the acquisition, creation or improvement of an asset other than an asset contemplated in subsection (3) or (4); or

(b)     as a reimbursement for expenditure incurred for the acquisition, creation or improvement of an asset other than an asset contemplated in subsection (3) or (4),

the base cost of that asset must be reduced to the extent that the amount of the government grant is applied for that acquisition, creation or improvement.

(6)

(a)     Where during any year of assessment-

(i)      any amount is received by or accrues to a person by way of a government grant as contemplated in subsection (2) or (2A), other than a government grant in kind; and

[Subparagraph (i) substituted by section 26 of Act 25 of 2015 effective on 1 January 2016]

(ii)     subsection (3), (4) or (5) does not apply to that amount, any amount allowed to be deducted from that person’s income in terms of section 11 for that year of assessment must be reduced to the extent of the amount of that government grant.

(b)     To the extent that the amount received or accrued by way of a government grant exceeds the amount allowed to be deducted as contemplated in paragraph (a), that excess is deemed to be an amount received or accrued in respect of that government grant during the following year of assessment for the purposes of paragraph (a).

“Government grant” definition of section 12P of ITA

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‘government grant’ means a grant-in-aid, subsidy or contribution by the government of the Republic in the national, provincial or local sphere.

[Definition of “government grant” substituted by section 33 of Act 15 of 2016 effective on 1 March 2016, applies in respect of grants received or expenditure incurred on or after that date]

“Allowance asset” definition of section 12P of ITA

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(1)     For the purposes of this section-

 

‘allowance asset’ means an asset as defined in paragraph 1 of the Eighth Schedule, other than trading stock, in respect of which a deduction or allowance is allowable in terms of this Act for purposes other than the determination of any capital gain or capital loss;