Author: admin_kmos

“Operating lease” definition of section 23A of ITA

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“operating lease” means a lease of movable property concluded by a lessor in the ordinary course of a business (not being a banking, financial services or insurance business) of letting such property, if –

(a)     such property may be hired by members of the general public directly from that lessor in terms of such a lease, for a period of less than one month;

(b)     the cost of maintaining such property and of carrying out repairs thereto required in consequence of normal wear and tear, is borne by the lessor; and

(c)     subject to any claim that the lessor may have against the lessee by reason of the lessee’s failure to take proper care of the property, the risk of destruction or loss of or other disadvantage to such property is not assumed by the lessee;

“Affected asset” definition of section 23A of ITA

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(1)     For the purposes of this section –

“affected asset” means any machinery, plant, implement, utensil, article, aircraft or ship which has been let and in respect of which the lessor is or was entitled to an allowance under section 11(e), 12B, 12BA, 12C, 12DA or 37B(2)(a), whether in the current or a previous year of assessment, but excluding any such asset let by the lessor under an operating lease or any such asset which was during the year of assessment mainly used by the taxpayer in the course of any trade carried on by the taxpayer, other than the letting of any such asset;

[Definition of “affected asset” amended by section 22(1)(a) of Act 101 of 1990, by section 34 of Act 30 of 1998, by section 32(1)(a) of Act 60 of 2001 and by section 33 of Act 35 of 2007 and substituted by section 25(a) of Act 23 of 2020 and by section 24(1)(a) of Act 17 of 2023 effective on 1 March, 2023 and applicable in respect of assets brought into use on or after that date]

Subsections 2, 3, 4 and 5 of section 24G of ITA

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(2)     Subject to the provisions of subsection (5), there shall be deducted in the determination of the taxable income derived by the taxpayer during any year of assessment –

 

(a)     the sum of any annual allowances determined under subsection (3) in relation to expenditure incurred during the current or any previous year of assessment in respect of any permanent work, road pavement, major rehabilitation of the road pavement or erection or construction of ancillary services in relation to a toll road;

 

(b)     any expenditure incurred during the year of assessment in respect of the repair or maintenance of a toll road or any ancillary service in relation to such toll road, other than expenditure incurred on major rehabilitation of the road pavement;

 

(c)     any interest (other than interest which is deductible under section 11(a) incurred by the taxpayer during the year of assessment in respect of any loan utilized for the purpose of financing any expenditure contemplated in paragraph (a) or (b); and

 

(d)     any amount which has been disallowed in the preceding year of assessment under the provisions of subsection (5):

 

Provided that the aggregate of the allowances which may be granted under paragraph (a) shall not exceed the total expenditure incurred by the taxpayer on such permanent work, road pavement, major rehabilitation of road pavement or erection or construction of ancillary services.

 

(3)     For the purposes of subsection (2), an annual allowance shall be calculated in respect of expenditure incurred by the taxpayer on permanent works, road pavements, major rehabilitation of road pavements or the erection, construction, installation or provision of ancillary services during any year of assessment, such allowance to be equal to the expenditure so incurred during the year divided by the lesser of the number of years reckoned from the commencement of that year until the end of the tolling period (for which purpose a portion of a year shall be regarded as a year) and –

 

(a)     in the case of expenditure incurred on permanent works or the erection or construction of ancillary services, 25 years; and

 

(b)     in the case of such expenditure incurred on road pavements or major rehabilitation of road pavements, 8 years.

 

(4)     No deduction or allowance shall be granted under this Act in respect of expenditure contemplated in subsection (2) otherwise than as provided in that subsection.

 

(5)     The allowances which may be granted under subsection (2) (a), (b) and (d) in any year of assessment in respect of any single toll road shall not in the aggregate exceed the taxable income (as determined before the deduction of the said allowances) derived by the taxpayer during such year from –

 

(a)     the exploitation of such toll road or any ancillary service in relation to such toll road; and

 

(b)     any interest derived in the ordinary course of such exploitation and the financing of any expenditure contemplated in subsection (3) which relates to such toll road.

“Tolling period” definition of section 24G of ITA

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“tolling period”, in relation to a toll road, means the initial period during which the South African National Roads Agency Limited has granted to the taxpayer or any other person the right to operate such toll road, including any period in respect of which such right was so granted in terms of an interim agreement concluded by the South African National Roads Agency Limited, but excluding any extension of such first-mentioned period in respect of which a right of renewal may be exercised;

“Single toll road” definition of section 24G of ITA

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“single toll road” means –

 

(a)     a single continuous toll road or portion thereof, or two or more toll roads or portions thereof which are not contiguous but which the Minister of Transport Affairs, after consultation with the Minister of Finance, considers should be regarded as a single toll road; or

 

(b)     two or more toll roads or portions thereof in respect of which a single agreement has been concluded with the South African National Roads Agency Limited;

“Road pavement” definition of section 24G of ITA

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“road pavement” means the road surface, road shoulders, sub base, base course, wearing courses, road signage, road markings, lighting, guard rails, tolling equipment, emergency telephone systems, emergency telephone repeater stations, access roads to emergency telephone repeater station sites and other parts and road furniture of a toll road, excluding any permanent work or ancillary service;