“expenditure” means net expenditure after taking into account any rebates or returns from expenditure, regardless of when such last-mentioned expenditure was incurred;
[Definition of “expenditure” subsitututed by section 21(d) of Act 65 of 1973 and amended by section 52(1)(b) of Act 15 of 2016 effective on 1 April, 2017 and applicable in respect of expenditure incurred during years of assessment commencing on or after that date]
“expenditure on shaft sinking” includes the expenditure on sumps, pump–chambers, stations and ore bins accessory to a shaft;
“capital expenditure incurred”, for the purpose of determining the amount of capital expenditure incurred during any period in respect of any mine, means the amount (if any) by which the expenditure that is incurred during such period in respect of such mine and is capital expenditure, exceeds the sum of the amounts received or accrued during the said period from disposals of assets the cost of which has in whole or in part been included in capital expenditure taken into account (whether under this Act or any previous Income Tax Act) for the purposes of any deduction in respect of such mine under section 15(a) of this Act or the corresponding provisions of any previous Income Tax Act;
36. Calculation of redemption allowance and unredeemed balance of capital expenditure in connection with mining operations
(1) ……….
(2) ……….
(3) ……….
(4) ……….
(5) ……….
(6) ……….
(7) ……….
(7A) ………..
(7B) ……….
(7C) Subject to the provisions of subsections (7E), (7F) and (7G), the amounts to be deducted under section 15(a) from income derived from the working of any producing mine shall be the amount of capital expenditure incurred.
(7D) ………..
(7E) The aggregate of the amounts of capital expenditure determined under subsection (7C) in respect of any year of assessment in relation to any mine or mines shall not exceed the taxable income (as determined before the deduction of any amount allowable under section 15(a), but after the set–off of any balance of assessed loss incurred by the taxpayer in relation to such mine or mines in any previous year which has been carried forward from the preceding year of assessment) derived by the taxpayer from mining, and any amount by which the said aggregate would, but for the provisions of this subsection, have exceeded such taxable income as so determined, shall be carried forward and be deemed to be an amount of capital expenditure incurred during the next succeeding year of assessment in respect of the mine or mines to which such capital expenditure relates.
(7EA) Subject to paragraph 12A(6)(a) to (d) and (f) of the Eighth Schedule, where a debt benefit, as defined in section 19, arises in respect of a debt that is owed by a person and that debt was used directly or indirectly to fund any amount of capital expenditure incurred, the debt benefit in respect of that debt must be applied to reduce any amount of capital expenditure incurred in the year of assessment that the debt benefit arises: Provided that any amount of the debt benefit that exceeds the capital expenditure incurred in the year of assessment that the debt benefit arises, must be treated as an amount received by or accrued to that person carrying on mining operations during that year of assessment in respect of a disposal of assets the cost of which has been included in capital expenditure incurred in respect of the mine to which that capital expenditure relates.
[Subsection (7EA) inserted by section 48 of Act 17 of 2017 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]
(7F) The aggregate of the amounts of capital expenditure determined under subsection (7C) in respect of any year of assessment in relation to any one mine shall, unless the Minister, after consultation with the Cabinet member responsible for mineral resources and having regard to any relevant fiscal, financial or technical implications, otherwise directs, not exceed the taxable income (as determined before the deduction of any amount allowable under section 15(a), but after the set-off of any balance of assessed loss incurred by the taxpayer in relation to that mine in any previous year which has been carried forward from the preceding year of assessment) derived by the taxpayer from mining on that mine, and any amount by which the said aggregate would, but for the provisions of this subsection, have exceeded such taxable income as so determined, shall be carried forward and be deemed to be an amount of capital expenditure incurred during the next succeeding year of assessment in respect of that mine: Provided that where the taxpayer was on 5 December 1984 carrying on mining operations on two or more mines, the said mines shall for the purposes of this subsection be deemed to be one mine.
(7G)
(a) Where in the case of any mine in respect of which mining operations or any related operations were or are commenced by the taxpayer after 14 March 1990 (in this subsection referred to as a new mine) an amount of capital expenditure falls to be disallowed under the provisions of subsection (7F), there shall, notwithstanding the provisions of that subsection, be deducted from the total taxable income derived by the taxpayer from mining (as determined after the deduction of any capital expenditure which does not fall to be disallowed under the said provisions and after the set–off of any assessed loss incurred by him from mining operations in a previous year of assessment which has been carried forward) so much of the total amount of capital expenditure which has been so disallowed in relation to all producing new mines owned by the taxpayer as does not exceed 25 per cent of such taxable income.
(b) The provisions of paragraph (a) shall not apply to capital expenditure incurred in respect of any new mine –
(i) which has been disposed of by the taxpayer in the current or any previous year of assessment; or
(ii) if the taxpayer is a company and its acquisition of the right to mine or the mineral rights in respect of such mine was financed wholly or partly by the issue of any share in respect of which any dividend or foreign divident is to be calculated by reference to that portion of the company’s profits which is attributable to the operation of such mine.
(8) ……….
(9) ……….
(10) Where separate and distinct mining operations are carried on in mines that are not contiguous, the allowance for redemption of capital expenditure shall be computed separately.
35A. Withholding of amounts from payments to non-resident sellers of immovable property
(1) Any person (hereinafter referred to as ‘the purchaser’) who must pay any amount to any other person who is not a resident (hereinafter referred to as ‘the seller’), or to any other person for or on behalf of that seller, in respect of the disposal by that seller of any immovable property in the Republic must, subject to subsection (2), withhold from the amount which that person must so pay, an amount equal to-
(a) 7,5 per cent of the amount so payable, in the case where the seller is a natural person;
[Paragraph (a) substituted by section 10 of Act 14 of 2017 effective on 22 February 2017, applies in respect of any disposal on or after that date]
(b) 10 per cent of the amount so payable, in the case where the seller is a company;
[Paragraph (b) substituted by section 10 of Act 14 of 2017 effective on 22 February 2017, applies in respect of any disposal on or after that date and amended by section 47 of Act 17 of 2017 effective on 18 December 2017]
(c) 15 per cent of the amount so payable, in the case where the seller is a trust; and
[Paragraph (c) substituted by section 10 of Act 14 of 2017 effective on 22 February 2017, applies in respect of any disposal on or after that date and amended by section 47 of Act 17 of 2017 effective on 18 December 2017]
(d) a percentage of the amount so payable as the Minister may announce in the national annual budget contemplated in section 27(1) of the Public Finance Management Act, with effect from a date mentioned in that Announcement.
[Paragraph (d) added by section 47 of Act 17 of 2017 effective on 18 December 2017]
(1A) If the Minister makes an announcement contemplated in subsection (1)(d), that rate comes into effect on the date determined by the Minister in that announcement and continues to apply for a period of 12 months from that date subject to Parliament passing legislation giving effect to that announcement within that period of 12 months.
[Subsection (1A) inserted by section 47 of Act 17 of 2017 effective on 18 December 2017]
(2) The seller may apply to the Commissioner, in the form and at the place as the Commissioner may determine, for a directive that no amount or a reduced amount be withheld by the purchaser in terms of subsection (1) solely having regard to-
(a) any security furnished for the payment of any tax due on the disposal of the immovable property by the seller;
(b) the extent of the assets of the seller in the Republic;
(c) whether that seller is subject to tax in respect of the disposal of the immovable property; and
(d) whether the actual liability of that seller for tax in respect of the disposal of the immovable property is less than the amount contemplated in subsection (1).
(3)
(a) The amount withheld from any payment to the seller in terms of subsection (1) is an advance in respect of that seller’s liability for normal tax for the year of assessment during which that property is disposed of by that seller.
[Subsection renumbered as paragraph (a) by section 2 of Act 23 of 2015 effective on 8 January 2016]
(b) If the seller does not submit a return in respect of that year of assessment within 12 months after the end of that year of assessment, the payment of the amount in terms of subsection (4) is a sufficient basis for an assessment in terms of section 95 of the Tax Administration Act.
[Paragraph (b) added by section 2 of Act 23 of 2015 and substituted by section 2 of Act 16 of 2016]
(4) The amount withheld by a purchaser in terms of subsection (1), must be paid to the Commissioner-
(a) where that purchaser is a resident, within 14 days after the date on which that amount was so withheld; or
(b) where that purchaser is not a resident, within 28 days after the date on which that amount was so withheld.
(5) If an amount has been withheld in terms of subsection (1) from any amount payable in a foreign currency, that amount so withheld must be translated to the currency of the Republic at the spot rate on the date that the amount is paid to the Commissioner.
(6) The purchaser must, together with the payment contemplated in subsection (4), submit to the Commissioner a return.
(7) A purchaser is person ally liable under the circumstances contemplated in section 157 of the Tax Administration Act, for the amount that must be withheld under subsection (1) only if the purchaser knows or should reasonably have known that the seller is not a resident and must pay that amount to the Commissioner not later than the date on which payment should have been made if the amount had in fact been withheld.
(8) Subsection (7) does not apply if a property practitioner or conveyancer assists in the disposal of the immovable property and that property practitioner or conveyancer fails to notify the purchaser as contemplated in subsection (11).
[Subsection (8) substituted by section 33(a) by Act 17 of 2023]
(9) If a purchaser fails to pay any amount contemplated in subsection (1) to the Commissioner within the period allowed for payment in terms of subsection (4), that purchaser must pay a penalty equal to ten per cent of the amount, in addition to any other penalty or charge for which he or she may be liable under this Act.
[Subsection (9) substituted by section 271 read with paragraph 43(c) of Schedule 1 of Act 28 of 2011 effective on 1 October, 2012 except to the extent that it relates to interest under this Act: Proclamation No. 51 in Government Gazette 35687 of 14 September, 2012]
[Subsection (9) substitution by section 271 read with paragraph 43(c) of Schedule 1 of Act 28 of 2011 has only partially commenced to the extent that the amendment relates to the penalty and not to the extent it relates to interest]
(9) If a purchaser fails to pay any amount contemplated in subsection (1) to the Commissioner within the period allowed for payment in terms of subsection (4), that purchaser-
(a) is liable for interest at the prescribed rate on any amount outstanding calculated from the day following the last date for payment to the date that the amount is received by the Commissioner; and
(b) must pay a penalty equal to ten per cent of that amount, in addition to any other penalty or charge for which he or she may be liable under this Act.
(10) ……….
(11) Any property practitioner and any conveyancer who is entitled to any remuneration or other payment in respect of services rendered in connection with the disposal of the immovable property by the seller or the registration of transfer, as the case may be, must before any payment is made to the seller each notify the purchaser in writing of the fact that the seller is not a resident and that the provisions of this section may apply.
[Subsection (11) substituted by section 33(b) by Act 17 of 2023]
(12) If a property practitioner or conveyancer knows or should reasonably have known that the seller is not a resident and fails to comply with subsection (11), that failing Property practitioner or conveyancer is jointly and severally liable for the payment of the amount which the purchaser is required to withhold and pay to the Commissioner in terms of this section, but limited to the amount of remuneration or other payment in respect of the services rendered in connection with the disposal of the immovable property by the seller or the registration of transfer, as the case may be.
[Subsection (12) substituted by section 33(c) by Act 17 of 2023]
(13) The property practitioner or conveyancer who paid an amount in terms of subsection (12) is deemed to be a withholding agent for purposes of the Tax Administration Act.
[Subsection (13) substituted by section 271 read with paragraph 43(e) of Schedule 1 of Act 28 of 2011 and by section 33(d) by Act 17 of 2023]
(14) This section does not apply-
(a) if the amounts payable by the purchaser to the seller and to any other person for or on behalf of the seller, in respect of the acquisition by that purchaser of the immovable property, in aggregate do not exceed R2 million; or
(b) in respect of any deposit paid by a purchaser for purposes of securing the disposal of the immovable property by the seller to that purchaser, until the agreement for that disposal has become unconditional, in which case any amount which would have been required to be withheld from the amount of that deposit, must be withheld from the first following payments made by that purchaser in respect of that disposal.
[Paragraph (b) substituted by section 57 of Act 25 of 2015 effective on 8 January 2016]
(15) For purposes of this section-
‘conveyancer’ means a ‘conveyancer’ as defined in section 102 of the Deeds Registries Act, 1937 (Act No. 47 of 1937);
“estate agent” . . . . . .
[Definition of “estate agent” deleted by section 33(e) of Act 17 of 2023]
‘foreign currency’ means any currency other than the currency of the Republic;
“immovable property” means immovable property contemplated in paragraph 2(1)(b)(i) and (2) of the Eighth Schedule; and
[Definition of “immovable property” substituted by section 33(f) of Act 17 of 2023]
“property practitioner” means a property practitioner as defined in section 1 of the Property Practitioners Act, 2019 (Act 22 of 2019).
[Definition of “property practitioner” added by section 33(g) of Act 17 of 2023]
33. Assessment of owners or charterers of ships or aircraft who are not residents of the Republic
(1) Any person other than a resident who embarks passengers or loads livestock, mails or goods in the Republic, as an owner or charterer of any ship or aircraft, shall be deemed to have derived therefrom (apart from any taxable income derived by him from other sources) a taxable income of 10 per cent of the amount payable to him or to any agent on his behalf, whether the amount be payable in or outside the Republic, in respect of passengers, livestock, mails and goods so embarked or loaded, but the provisions of this section shall not apply to any such person who renders accounts which satisfactorily disclose the taxable income derived by him from the embarking of passengers or the loading of livestock, mails and goods as aforesaid.
(2) Where the person so embarking passengers or loading livestock, mails or goods has no recognized agent in the Republic other than the master of the ship or the pilot of the aircraft in connection with which any such amounts are payable, or where the agent fails to make returns of any such amounts payable in respect of any ship or aircraft –
(a) the Commissioner may make the assessment from such information as may be available to him;
(b) the tax thereon shall be payable to the Commissioner prior to the clearance of the ship or aircraft;
(c) the principal officer of customs at the port or airport where such ship or aircraft is being cleared shall have power to detain the clearance until such payment is made; and
(d) upon such payment the master, pilot or agent (as the case may be) shall be entitled to a certificate from such officer of customs that the amount so paid has been paid under the provisions of this Act, and such certificate shall be sufficient warrant to such master, pilot or agent of the amount so paid.
(2) Where-
(a) any transaction, operation, scheme, agreement or understanding constitutes an affected transaction; and
(b) any term or condition of that transaction, operation, scheme, agreement or understanding-
(i) is a term or condition contemplated in paragraph (b) of the definition of ‘affected transaction’; and
(ii) results or will result in any tax benefit being derived by a person that is a party to that transaction, operation, scheme, agreement or understanding or by any resident in relation to a controlled foreign company contemplated in subparagraph (iv) of the definition of “affected transaction”,
[Subparagraph (ii) substituted by section 31(1) of Act 23 of 2020 effective on 1 January, 2021 and applicable in respect of years of assessment commencing on or after that date]
the taxable income or tax payable by any person contemplated in paragraph (b) (ii) that derives a tax benefit contemplated in that paragraph must be calculated as if that transaction, operation, scheme, agreement or understanding had been entered into on the terms and conditions that would have existed had those persons been independent persons dealing at arm’s length.
(3) To the extent that there is a difference between-
(a) any amount that is, after taking subsection (2) into account, applied in the calculation of the taxable income of any resident that is a party to an affected transaction; and
(b) any amount that would, but for subsection (2), have been applied in the calculation of the taxable income of the resident contemplated in paragraph (a),
the amount of that difference must, if that person is a resident and the other person to the affected transaction is a person as contemplated in paragraph (a)(i)(bb) or (a)(iii)(bb) of the definition of ‘affected transaction’-
(i) if that resident is a company, be deemed to be a dividend consisting of a distribution of an asset in specie declared and paid by that resident to that other person; or
(ii) if that resident is a person other than a company, be deemed, for purposes of Part V, to be a donation made by that resident to that other person,
[Subparagraph (ii) substituted by section 56 of Act 25 of 2015 effective on 8 January 2016]
on the last day of the period of six months following the end of the year of assessment in respect of which that adjustment is made: Provided that where the amount of that difference was prior to 1 January 2015 deemed to be a loan that constitutes an affected transaction, so much of that loan as has not been repaid before 1 January 2015 must-
(a) if that resident is a company, be deemed to be a dividend consisting of a distribution of an asset in specie that was declared and paid by that resident to that other person; or
(b) if that resident is a person other than a company, be deemed, for purposes of Part V, to be a donation made by that resident to that other person, on 1 January 2015.
[Words following paragraph (b) substituted by section 50 of Act 43 of 2014 effective on 1 January 2015]
(4) For the purposes of subsection (2), where any transaction, operation, scheme, agreement or understanding has been directly or indirectly entered into or effected as contemplated in that subsection in respect of-
(a) the granting of any financial assistance; or
(b) intellectual property as contemplated in the definition of ‘intellectual property ‘ in section 23I(1) or knowledge,
‘connected person’ means a connected person as defined in section 1: Provided that the expression ‘and no holder of shares holds the majority voting rights in the company’ in paragraph (d)(v) of that definition must be disregarded.
(5) Where any transaction, operation, scheme, agreement or understanding has been entered into between a headquarter company and-
(a) any other person that is not a resident and that transaction, operation, scheme, agreement or understanding is in respect of the granting of financial assistance by that other person to that headquarter company, this section does not apply to so much of that financial assistance that is directly applied as financial assistance to any foreign company in which the headquarter company directly or indirectly (whether alone or together with any other company forming part of the same group of companies as that headquarter company) holds at least 10 per cent of the equity shares and voting rights;
(b) any foreign company in which the headquarter company directly or indirectly (whether alone or together with any other company forming part of the same group of companies as that headquarter company) holds at least 10 per cent of the equity shares and voting rights and that transaction, operation, scheme, agreement or understanding comprises the granting of financial assistance by that headquarter company to that foreign company, this section does not apply to that financial assistance;
(c) any other person that is not a resident and that transaction, operation, scheme, agreement or understanding is in respect of the granting of the use, right of use or permission to use any intellectual property as defined in section 23I(1) by that other person to that headquarter company, this section does not apply to the extent that the headquarter company-
(i) grants that use, right of use or permission to use that intellectual property to any foreign company in which the headquarter company directly or indirectly (whether alone or together with any other company forming part of the same group of companies as that headquarter company) holds at least 10 per cent of the equity shares and voting rights; and
(ii) does not make use of that intellectual property otherwise than as contemplated in subparagraph (i); or
(d) any foreign company in which the headquarter company directly or indirectly (whether alone or together with any other company forming part of the same group of companies as that headquarter company) holds at least 10 per cent of the equity shares and voting rights and that transaction, operation, scheme, agreement or understanding comprises the granting of the use, right of use or permission to use any intellectual property as defined in section 23I(1) by that headquarter company to that foreign company, this section does not apply to that granting to that foreign company.
(6) Where any transaction, operation, scheme, agreement or understanding that comprises the granting of-
(a) financial assistance; or
(b) the use, right of use or permission to use any intellectual property as defined in section 23I,
by a person that is a resident (other than a headquarter company) to a controlled foreign company in relation to that resident or in relation to a company that forms part of the same group of companies as that resident, this section must not be applied in calculating the taxable income or tax payable by that resident in respect of any amount received by or accrued to that resident in terms of that transaction, operation, scheme, agreement or understanding if-
(i) ……….
(ii) that controlled foreign company has a foreign business establishment as defined in section 9D(1); and
(iii) the aggregate amount of tax payable to all spheres of government of any country other than the Republic by that controlled foreign company in respect of any foreign tax year of that controlled foreign company during which that transaction, operation, scheme, agreement or understanding exists is at least 67,5 per cent of the amount of normal tax that would have been payable in respect of any taxable income of that controlled foreign company had that controlled foreign company been a resident for that foreign tax year: Provided that the aggregate amount of tax so payable must be determined-
(aa) after taking into account any applicable agreement for the prevention of double taxation and any credit, rebate or other right of recovery of tax from any sphere of government of any country other than the Republic; and
(bb) after disregarding any loss in respect of a year other than that foreign tax year or from a company other than that controlled foreign company.
Paragraph (iii) amended by section 37(1)(c) of Act 34 of 2019 effective on 1 January, 2020 and applicable in respect of years of assessment ending on or after that date]
(7) Where-
(a) any transaction, operation, scheme, agreement or understanding has been entered into between a company that is a resident (for purposes of this subsection referred to as resident company’) or any company that forms part of the same group of companies as that resident company and any foreign company in which that resident company (whether alone or together with any other company that forms part of the same group of companies as that resident company) directly or indirectly holds in aggregate at least 10 per cent of the equity shares and voting rights and that transaction, operation, scheme, agreement or understanding comprises the granting of financial assistance that constitutes a debt owed by that foreign company to that resident company or any company that forms part of the same group of companies as that resident company;
(b) that foreign company is not obliged to redeem that debt in full within 30 years from the date the debt is incurred;
[Paragraph (b) amended by section 50 of Act 43 of 2014 effective on 20 January 2015]
(c) the redemption of the debt in full by the foreign company is conditional upon the market value of the assets of the foreign company not being less than the market value of the liabilities of the foreign company, and
[Paragraph (c) amended by section 50 of Act 43 of 2014 effective on 20 January 2015]
(d) no interest accrued in respect of the debt during the year of assessment,
[Paragraph (d) added by section 50 of Act 43 of 2014 effective on 20 January 2015]
this section must not apply to that debt.
‘financial assistance’ includes any-
(a) debt; or
(b) security or guarantee.
(1) For the purposes of this section-
‘affected transaction’ means any transaction, operation, scheme, agreement or understanding where-
(a) that transaction, operation, scheme, agreement or understanding has been directly or indirectly entered into or effected between or for the benefit of either or both-
(i)
(aa) a person that is a resident; and
(bb) any other person that is not a resident;
(ii)
(aa) a person that is not a resident; and
(bb) any other person that is not a resident that has a permanent establishment in the Republic to which the transaction, operation, scheme, agreement or understanding relates;
(iii)
(aa) a person that is a resident; and
(bb) any other person that is a resident that has a permanent establishment outside the Republic to which the transaction, operation, scheme, agreement or understanding relates; or
(iv)
(aa) a person that is not a resident; and
(bb) any other person that is a controlled foreign company in relation to any resident,
and those persons are connected persons or associated enterprises in relation to one another; and
[Subparagraph (iv) amended by section 37(1)(a) of Act 34 of 2019 effective on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date (effective date in section 37(2) of Act 34 of 2019 as substituted by section 78(1) of Act 23 of 2020 and by section 66(1) of Act 20 of 2021)]
(b) any term or condition of that transaction, operation, scheme, agreement or understanding is different from any term or condition that would have existed had those persons been independent persons dealing at arm’s length;
31. Tax payable in respect of international transactions to be based on arm’s length principle