Author: admin_kmos

Subsections 2 and 3 of section 7A of ITA

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(2)     Where any antedated salary or pension has been received by or has accrued to any person during any year or period of assessment and the period in respect of which such antedated salary or pension has become payable (hereinafter referred to as the accrual period) commenced before the commencement of the said year or period of assessment, such antedated salary or pension shall at the option of the taxpayer be deemed-


(a)     if the accrual period commenced not more than two years before the commencement of the said year or period of assessment, to have been received by or to have accrued to the said person in part during each of the years or periods of assessment in which any portion of the accrual period falls (the part of the said amount relating to any such year or period of assessment being determined on the basis of a reasonable apportionment of the whole of the said amount between all the said years or periods of assessment); or

(b)     if the accrual period commenced more than two years before the commencement of the first–mentioned year or period of assessment, to have been received by or to have accrued to the said person in three equal annual instalments (the first and second instalments two years and one year respectively before the date on which the said amount accrued to the said person and the third instalment on the said date).

(3)     Where any member of the citizen force or of the commandos has bound himself to serve in such force or the commandos for a continuous period of service of at least eighteen months as contemplated in section 22 (6A) or 44 (5A) of the Defence Act, 1957 (Act No. 44 of 1957), the provisions of subsection (2) shall mutatis mutandis apply in respect of any gratuity which has become payable to him by the State upon and by reason of the completion of such period of service, as though such gratuity were antedated salary or pension granted permanently and with retrospective effect, in respect of the said period of service.

“Antedated salary or pension” definition of section 7A of ITA

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(1)     For the purposes of this section –

 

“antedated salary or pension” means an amount of salary or pension which has become payable to any person under a permanent grant, made with retrospective effect, of a salary or pension or of an increase in a salary or pension, and which in terms of such grant is payable in respect of a period ending on or before the date on which the grant has become effective;

“Alternative method” definition of section 24J of ITA

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“alternative method” means a method of calculating interest in relation to any class of instruments which-

(a)     is in accordance with IFRS;

(b)     is consistently applied in respect of all such instruments for all financial reporting purposes; and

(c)     method achieves a result in so far as the timing of the accrual and incurral of interest is concerned which produces substantially the same result achieved by the application of the provisions of subsections (2)(a) and (3)(a);

[Definition of “alternative method” substituted by section 43 of Act 17 of 2017 effective on 18 December 2017]

“Accrual amount” definition of section 24J of ITA

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(1)     For the purposes of this section, unless the context otherwise indicates –

 

“accrual amount”, in relation to an accrual period, means an amount determined in accordance with the following formula:

 

A = B x C

 

in which formula –

 

(a)     “A” represents the amount to be determined;

 

(b)     “B” represents the yield to maturity; and

 

(c)     “C” represents the adjusted initial amount:

 

Provided that –

 

(i)      where the commencement or end of any year of assessment falls within an accrual period, the amount so determined shall be apportioned on a day to day basis over the term of such accrual period in order to determine the relevant portion of such amount relating to that part of such accrual period falling within the year of assessment so commencing or ending, as the case may be;

 

(ii)     where an instrument is transferred on a date other than at the end of an accrual period, the amount so determined shall be apportioned on a day to day basis over the term of such accrual period in order to determine the relevant portion of such amount relating to the relevant transferor or transferee, as the case may be, in relation to such instrument; and

 

(iii)    the amount so determined shall be appropriately adjusted by taking into account amounts received or payments made other than at the end of an accrual period;

Section 20 (ITA) – Set off of assessed losses

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20.     Set–off of assessed losses

(1)     For the purpose of determining the taxable income derived by any person from carrying on any trade, there shall, subject to section 20A, be set off against the income so derived by such person-

(a)             

(i)      that is a company, other than a company referred to in subparagraph (ii), any balance of assessed loss incurred by that person in any previous year which has been carried forward from the preceding year of assessment, to the extent that the amount of such set-off does not exceed the higher of R1 million and 80 per cent of the amount of taxable income determined before taking into account the application of this section;

(ii)      that is a company carrying on mining operations as contemplated in section 15, any balance of assessed loss incurred by that person in any previous year which has been carried forward from the preceding year of assessment, to the extent that the amount of such set-off does not exceed the higher of R1 million and 80 per cent of the amount of taxable income determined before taking into account the application of—

(A)   this section; and

B)    the provisions of section 36(7C); or

(iii)    that is not a company, any balance of assessed loss incurred by that person in any previous year which has been carried forward from the preceding year of assessment: Provided that no person whose estate has been voluntarily or compulsorily sequestrated shall be entitled to carry forward any assessed loss incurred prior to the date of sequestration, unless the order of sequestration has been set aside, in which case the amount to be carried forward shall be reduced by an amount which was allowed to be set off against the income of the insolvent estate of such person from the carrying on of any trade:

[Subparagraph (iii) substituted by section 16(1)(a) of Act 42 of 2024 effective on 31 December, 2024 and applicable in respect of years of assessment ending on or after that date]

Provided that where a company has taken steps to liquidate, wind up or deregister as contemplated in section 41(4) and has not at any stage withdrawn any of those steps or done anything to invalidate any step so taken, with the result that the company will not be liquidated, wound up or deregistered, the amount of the balance of assessed loss that may be set off under subparagraph (i) or (ii) in relation to that company must not be limited to the higher of R1 million and 80 per cent of the amount of taxable income described in that subparagraph; or

[Paragraph (a) amended by section 19(a) of Act 101 of 1990, by section 17 of Act 21 of 1995, by section 15 of Act 28 of 1997, by section 19(a) of Act 8 of 2007, by section 32(a) of Act 35 of 2007, by section 37(1) of Act 22 of 2012 and by section 31(1) of Act 43 of 2014, substituted by section 39(a) of Act 15 of 2016 and by section 18(1) of Act 20 of 2021 (as substituted by section 42(1) of Act 20 of 2022 and effective date in section 18(2) of Act 20 of 2021 as substituted by section 9 of Act 19 of 2022) and amended by section 16(1)(b) of Act 42 of 2024 effective on 31 December, 2024 and applicable in respect of years of assessment ending on or after that date]

(b)     any assessed loss incurred by a person during the same year of assessment in carrying on any other trade either alone or in partnership with others, otherwise than as a member of a company the capital whereof is divided into shares:

[Words preceding proviso substituted by section 39 of Act 15 of 2016 effective on 19 January 2017]

Provided that there shall not be set off against any amount –

(a)     ……….

(b)     derived by any person from a source within the Republic, any—

(i)      assessed loss incurred by such person during such year; or

(ii)     any balance of assessed loss incurred in any previous year of assessment,

in carrying on any trade outside the Republic; or

[Paragraph (b) substituted by section 35(1)(b) of Act 45 of 2003, amended by section 19(c) of Act 8 of 2007, substituted by section 15(1) of Act 3 of 2008 and amended by section 54(1)(a) of Act 31 of 2013 effective on 1 January, 2014 and applicable in respect of years of assessment commencing on or after that date]

(c)     that is a retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit or severance benefit included in taxable income, any-

(i)      balance of assessed loss;

(ii)     ‘assessed loss’ as defined in subsection (2) incurred in such year before taking into account that retirement fund lump sum benefit or retirement fund lump sum withdrawal benefit.