16.    For the purposes of paragraphs 14, 15 and 20 –

15.

 

(1)     In the determination of the taxable income of any farmer there shall be allowed as a deduction –

 

(a)     any expenditure incurred by such farmer during the year of assessment in respect of the establishment and maintenance of plantations;

 

(b)     any expenditure incurred by such farmer prior to the first day of July, 1948, in respect of the establishment and maintenance of any plantation or the cost of acquisition of any plantation purchased by such farmer whether before or after the first day of July, 1948: Provided that –

  

(i)      any deductions allowed under this item in respect of any plantation shall not in respect of any year of assessment exceed the gross income derived by such farmer in that year from the said plantation;

  

(ii)     the aggregate of the deduction allowed in terms of this item or the corresponding provisions of the Income Tax Act, 1941, or by virtue of any other provisions of the last-mentioned Act or the Income Tax Act, 1925 (Act No. 40 of 1925), in respect of plantations shall not exceed the amount of such expenditure or such cost of acquisition.

 

(2)     For the purpose of calculating the cost of acquisition of any plantation the provisions of subparagraph (2) of paragraph 14 shall apply mutatis mutandis in the case of any plantation acquired by any farmer with the land on which it is growing.

 

(3)     If in any year of assessment the income of any farmer other than a company includes income derived from the disposal of plantations or forest produce and the taxable income derived by him in that year from the disposal of plantations and forest produce (determined as though the income derived by him from that source were his only income) exceeds the annual average taxable income derived by him from that source (as so determined) over the three years of assessment immediately preceding the said year of assessment, the normal tax chargeable in the case of such farmer for the said year of assessment shall, subject to the provisions of section 5 of this Act, be determined in accordance with the provisions of subsection (10) of that section: Provided that –

 

(i)      the provisions of this subparagraph shall not apply unless the disposal of plantations or forest produce forms part of the normal farming operations of the farmer concerned;

 

(ii)     for the purposes of this subparagraph, where the farmer has in respect of any of the aforesaid years of assessment derived any excess plantation farming profits determined under paragraph 20(3)(g) such excess plantation farming profits shall –

 

(aa)    where such excess plantation farming profits have been derived during the first-mentioned year of assessment, be excluded from the farmer’s taxable income derived in that year from the disposal of plantations and forest produce;

 

(bb)   where such excess plantation farming profits have been derived during any of the aforesaid three years of assessment, not be taken into account in the determination of the aforesaid average taxable income derived by the farmer over those years;

 

(iii)    the Commissioner’s determination as to what portion of a farmer’s taxable income is derived from the disposal of plantations and forest produce shall be final;

 

(iv)    nothing in this paragraph contained shall be construed as relieving any farmer from liability for taxation under this Act upon any portion of his taxable income;

 

(v)     the provisions of this subparagraph shall not apply if the normal tax chargeable in the case of such farmer in respect of the first–mentioned year of assessment is required to be determined under the provisions of paragraph 19.

14.

(1)     Any amount received by or accrued to a farmer in respect of the disposal of any  plantation shall, whether such plantation is disposed of separately or with the land on which it is growing, be deemed not to be a receipt or accrual of a capital nature and shall form part of such farmer’s gross income.

(2)     Where any plantation is disposed of by a farmer with the land on which it is growing the amount to be included in such farmer’s gross income in terms of sub–paragraph (1) shall –

(a)     if the amount representing the consideration payable in respect of the disposal of the plantation is agreed to between the parties to the transaction, be the amount so agreed to; or

(b)     failing such agreement, be such portion of the consideration payable in respect of the disposal of the land and the plantation as represents the consideration payable for the plantation.

[Item (b) substituted by section 80 of Act 25 of 2015 effective on 8 January 2015]

13.

(1)     If-

(a)     any farmer-

(i)      has in any year of assessment sold livestock on account of drought, stock disease or damage to grazing by fire or plague; and

(ii)     has within four years after the close of the said year of assessment purchased livestock to replace the livestock so sold; or

(b)     any farmer-

(i)      has in any year of assessment (other than a year of assessment in respect of which the normal tax chargeable in the case of such farmer is required to be determined under paragraph 19) sold livestock by reason of his participation in a livestock reduction scheme organised by the Government; and

(ii)     has within nine years after the close of the said year of assessment purchased livestock to replace the livestock so sold,

the cost of the livestock so purchased shall, notwithstanding anything in this Schedule contained, be allowed, at the option of such farmer, as a deduction in the determination of his taxable income for the year of assessment during which the livestock was so sold, provided the claim for such deduction is made within five years after the close of that year of assessment in the case of a farmer referred to in item (a), or within ten years after the close of that year of assessment in the case of a farmer referred to in item (b).

[Subparagraph (1) amended by section 17 of Act 101 of 1978 and substituted by section 79 of Act 25 of 2015 effective on 8 January 2016]

(2)     The cost of livestock so allowed as a deduction shall not be allowed as a deduction in the year of assessment in which the purchases were made.

(3)     Every farmer who desires to claim a deduction in terms of subparagraph (1), shall for the year of assessment in which he or she sold livestock on account of conditions of drought or stock disease or by reason of his or her participation in a livestock reduction scheme organised by the Government notify the Commissioner accordingly in such form and within such time as may be prescribed and obtain and retain full particulars in regard to the livestock so sold.

[Subparagraph (3) substituted by section 271 of Act 28 of 2011 and section 79 of Act 25 of 2015 effective on 8 January 2016]

(4)     ……….

[Subparagraph (4) deleted by section 25 of 2015 effective on 8 January 2016]

(5)     The provisions of this paragraph shall not apply to the cost of any livestock purchased to replace livestock sold if the proceeds derived from the sale of such last–mentioned livestock have been dealt with under the provisions of paragraph 13A.

(6)     The Commissioner may, notwithstanding the provisions of sections 93, 99(1) and 100 of the Tax Administration Act, raise an assessment for any year of assessment with respect to which a deduction in terms of subparagraph (1) is allowed.

[Subparagraph (6) added by section 5 of Act 21 of 2021 and substituted by section 12 of Act 18 of 2023]

(7)     Where a deduction in terms of subparagraph (1)(a) or (b) may be claimed in respect of a year of assessment, the period prescribed under section 29(3) of the Tax Administration Act after which records, books of account or documents need not be retained shall be extended to six years or eleven years respectively for such year of assessment.

[Subparagraph (7) added by section 5 of Act 21 of 2021]

(8)     Where a deduction in terms of subparagraph (1)(b) may be claimed in a year of assessment, the period prescribed under section 97(4) of the Tax Administration Act after which a record of assessment may be destroyed shall be extended to eleven years for such year of assessment.

[Paragraph 13 substituted by section 21(1) of Act 90 of 1972. Subparagraph (8) added by section 5 of Act 21 of 2021]

12.

(1)     Subject to the provisions of subparagraphs (2) to (6), inclusive, there shall be allowed as deductions in the determination of the taxable income derived by any farmer the expenditure incurred by him during the year of assessment in respect of –

(a)     the eradication of noxious plants and alien invasive vegetation;

(b)     the prevention of soil erosion;

(c)     dipping tanks;

(d)     dams, irrigation schemes, boreholes and pumping plants;

(e)     fences;

(f)      the erection of, or extensions, additions or improvements (other than repairs) to, buildings used in connection with farming operations, other than those used for domestic purposes;

(g)     the planting of trees, shrubs or perennial plants for the production of grapes or other fruit, nuts, tea, coffee, hops, sugar, vegetable oils or fibres, and the establishment of any area used for the planting of such trees, shrubs or plants;

(h)     the building of roads and bridges used in connection with farming operations;

(i)      the carrying of electric power from the main transmission lines to the farm apparatus or under an agreement concluded with the Electricity Supply Commission in terms of which the farmer has undertaken to bear a portion of the cost incurred by the said Commission in connection with the supply of electric power consumed by the farmer wholly or mainly for farming purposes;

(1A)  For purposes of this Schedule, expenditure incurred in respect of any matter contemplated in subparagraph (1)(a), (b), (d) or (e) to conserve and maintain land owned by the taxpayer shall be deemed to be expenditure incurred in the carrying on of pastoral, agricultural or other farming operations if-

 

(a)     conservation and maintenance is carried out in terms of a biodiversity management agreement that has a duration of at least five years; and

(b)     the agreement contemplated in item (a) is entered into by the taxpayer in terms of section 44 of the National Environmental Management: Biodiversity Act, 2004 (Act No. 10 of 2004); and

(c)     land utilised by the taxpayer for purposes of carrying on the pastoral, agricultural or other farming operations consists or includes or is in the immediate proximity of the land that is the subject of the agreement contemplated in item (a).

(1B)

(a)     Where any asset in respect of which any deduction has been allowed to a farmer under the provisions of subparagraph (1) or (1A) (whether in the current or any previous year of assessment) and which is or has become a movable asset, is disposed of by the farmer, there shall be included in his income so much of the amounts received by or accrued to or in favour of the farmer in respect of such disposal as does not exceed the expenditure in respect of such asset allowed under subparagraph (1) or the original cost to him of such asset taken into account under subparagraph (1A), as the case may be, less any amounts which in terms of item (c) of this subparagraph are not allowable as deductions under subparagraph (1A) in respect of such asset in respect of the succeeding year or years of assessment referred to in the said item.

(b)     Where any allowance was granted in respect of such asset under the provisions of section 11(e) of this Act the provisions of section 8(4)(a) of this Act shall not apply in respect of any amount recovered or recouped in respect of such allowance.

(c)     ……….

(1C)   For the purposes of this paragraph, where any asset in respect of which any deduction has been allowed to a farmer under the provisions of subparagraph (1) or (1A) (whether in the current or any previous year of assessment) and which is or has become a movable asset, is disposed of by the farmer to any other person by way of donation or for a consideration which is not an adequate consideration or is not readily capable of valuation, a consideration equal in value to the fair value of such asset shall be deemed to have been received by the farmer in respect of his disposal of the asset and to have been paid by such other person in respect of his acquisition of the asset: Provided that the last–mentioned consideration shall not exceed the cost to the farmer of such asset.

(1D)  If during the current or any previous year of assessment deductions are allowed to the taxpayer in terms of subparagraph (1A) in respect of capital expenditure incurred to conserve or maintain land in terms of an agreement contemplated in that subparagraph and the taxpayer is in breach of that agreement or violates that declaration, an amount equal to the deductions allowed in respect of expenditure incurred within the period of five years preceding the breach of violation must be included in the income of the taxpayer for the current year.

 

(2)     No deduction under section 11(e) or (o) of this Act shall be allowed in respect of any machinery, implements, utensils or articles for which a deduction is allowable under subparagraph (1) or (1A) of this paragraph.

[Sub­paragraph (2) substituted by section 42 of Act 89 of 1969, by section 24(c) of Act 113 of 1977, by section 27(1)(d) of Act 96 of 1981 and by section 47 of Act 34 of 2019]

  

(3)     The amount by which the total expenditure incurred by any farmer during any year of assessment in respect of the matters referred to in items (c) to (i), inclusive, of subparagraph (1) exceeds the taxable income (as calculated before allowing the deduction of such expenditure and before the inclusion as hereinafter provided of the said amount in the farmer’s income) derived by him from farming operations during that year of assessment shall be included in his income from such operations for that year and be carried forward and be deemed for the purposes of subparagraph (1) to be expenditure which has been incurred by him during the next succeeding year of assessment in respect of the matters referred to in the said items.

[Subparagraph (3) substituted by section 42 of Act 89 of 1969, amended by section 24 of Act 113 of 1977 and substituted by section 27 of Act 96 of 1981 and section 64 of Act 23 of 2018 effective on 17 January 2019]

(3A)  For the purposes of subparagraph (3) any amount which has been carried forward from the year of assessment ended 30 June 1961 in terms of the proviso to paragraph 17 (3) of the Third Schedule to the Income Tax Act, 1941, shall be deemed to be an amount which has been so carried forward in terms of the said subparagraph.

(3B)   Where an amount (hereinafter referred to as the recoupment) falls to be included in a farmer’s income for any year of assessment under the provisions of subparagraph (1B) and an amount (hereinafter referred to as the qualifying balance) has in terms of subparagraph (3) been carried forward to the year of assessment in question from the preceding year of assessment the recoupment shall to the extent that it does not exceed the qualifying balance be deducted therefrom, and in such case –

(a)     the recoupment shall, to the extent that it has been deducted from the qualifying balance, not be included in the farmer’s income under subparagraph (1B); and

(b)     only so much of the qualifying balance as remains after the deduction therefrom of the recoupment shall be taken into account for the purposes of subparagraph (3) as expenditure incurred during the year of assessment in question in respect of the matters mentioned in that subparagraph.

(3C)  The amount of any expenditure carried forward and deemed to be incurred by a person in the next succeeding year in terms of subparagraph (3) must be reduced by any amount of expenditure in respect of which an election has been made in terms of paragraph 20A(1) of the Eighth Schedule.

(4)

(a)     For the purposes of this paragraph ‘employees’, in relation to any farmer, means persons employed by that farmer in connection with his or her farming operations, but does not include his or her relatives or, where the farmer is a company, the holders of shares (or the relatives of holders of shares) in that company or in any company which is associated with it by virtue of the holding of shares.

(b)     For the purposes of item (a) ‘holders of shares’ in relation to any company does not include persons who hold all their shares in that company solely because they are employed by that company and who will, in terms of the articles of association of that company, not be entitled to hold those shares after they cease to be so employed.

(5)     ……….

(6)     If in any year of assessment any building in relation to which a deduction has been allowed to any farmer under item (f) of sub–paragraph (1) of this paragraph or item (f) of sub–paragraph (1) of paragraph 17 of the Third Schedule to the Income Tax Act, 1941, whether in the current or in any previous year of assessment, is used for the domestic purposes of any person other than an employee of that farmer, there shall be included in the income of that farmer for the current year of assessment the amount of such deduction less onetenth of the said amount in respect of each completed period of one year, but not exceeding ten years, during which such building was used by the said farmer in connection with his farming operations other than for the domestic purposes of persons who are not his employees.

11.     If during any year of assessment livestock or produce –

 

(a)     has been applied by the farmer for his private or domestic use or consumption;

 

(b)     has, for purposes other than that of the production to the farmer of income from sources within the Republic, been removed by him from the Republic; or

 

(c)

 

(i)      has been donated by the farmer;

 

(ii)     has been disposed of by the farmer, other than in the ordinary course of his farming operations, for a consideration less than the market value thereof;

 

(iii)    where the farmer is a company, has on or after 21 June 1993 been distributed in specie, to a holder of a share of such company; or

 

(iv)    has been applied by the farmer for any other purpose other than the disposal thereof in the ordinary course of his farming operations and under circumstances other than those contemplated in subparagraph (a) or (b) or item (i), (ii) or (iii) of this subparagraph,

 

there shall be included in the income of such farmer for that year of assessment –

 

(A)    where such livestock or produce has been applied in a manner contemplated in subparagraph (a), an amount equal to the cost price to him of such livestock or produce, or where the cost price cannot be readily determined, the market value of such livestock or produce; or

 

(B)     where such livestock or produce has been applied, disposed of or distributed in a manner contemplated in subparagraph (b) or (c), an amount equal to the market value of such livestock or produce:

 

Provided that where –

 

(a)     any livestock or produce so applied, is used or consumed by the farmer in the ordinary course of his farming operations, the amount included in his income under this paragraph shall for the purposes of this Act be deemed to be expenditure incurred in respect of the acquisition by him of such livestock or produce; or

 

(b)     the provisions of subparagraph (c) (ii) are applicable and an amount of consideration as contemplated in such subparagraph has been received by or accrued to the farmer, the amount included in his income in terms of this paragraph shall be reduced by such consideration.

9. The value to be placed upon produce included in any return shall be a fair and reasonable value.

[Paragraph (9) substituted by section 77 of Act 25 of 2015 effective on 8 January 2016]

10.     ……….

8.

 

(1)     Where any farmer has during any year of assessment incurred expenditure in respect of the acquisition of livestock, the deduction which may be allowed to him under section 11(a) of this Act in respect of the cost price of such livestock shall be limited to an amount which, together with the value of livestock held and not disposed of by him at the beginning of such year, does not exceed the income received by or accrued to him from farming during such year and the value of livestock held and not disposed of by him at the end of such year.

 

(2)     Any amount which has been disallowed under the provisions of subparagraph (1) shall be carried forward and be deemed to be expenditure incurred by the farmer in respect of the acquisition of livestock during the succeeding year of assessment.

 

The provisions of this paragraph shall not apply –

 

(a)     in any case where it is shown by the farmer that livestock the cost of which falls to be dealt with under such provisions is no longer held and not disposed of by him; and

 

(b)     to so much of any expenditure (including any amount which has been carried forward under the provisions of subparagraph (2)) which falls to be disallowed under subparagraph (1) as, together with the value of livestock held and not disposed of by him at the beginning of the year of assessment, exceeds such amount as is shown by him to be market value of all livestock held and not disposed of by him at the end of such year.

7. The exercise of an option under subparagraph (1)(c)(ii) or of paragraph 6 shall be binding upon the farmer in respect of all subsequent returns for income tax purposes, and no standard value fixed by any farmer whether under this Act or any previous Income Tax Act may be varied by him in respect of any subsequent year of assessment.

[Paragraph 7 amended by section 23 of Act 113 of 1977, substituted by section 76 of Act 25 of 2015 effective on 8 January 2016]