Category: CHAPTER II – The Taxes (ITA)

“Motor vehicle manufacturer” definition of section 12V of ITA

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(5)     For the purpose of this section-


“motor vehicle manufacturer” means the manufacturer-


(a)     as determined by applying the criteria in paragraph (i) of the definition of “final manufacturer”, as defined in the regulations issued in terms of section 59 of the International Trade Administration Act, 2002 (Act 71 of 2002), contained in Government Notice No. R.80, as published in Government Gazette No. 44144 of 11 February 2021; or


(b)     of a “heavy motor vehicle”, as referred to in item 317.07 in Part I of Schedule No. 3 to the Customs and Excise Act, 1964 (Act 91 of 1964), to the extent of assembly provided for in Note 5 to Chapter 98 of Part 1 of Schedule No. 1 to that Act.

[Section 12V inserted by section 12(1) of Act 42 of 2024 effective on 1 March, 2026 and applicable in respect of assets brought into use on or after that date. Subsection (5) added by section 16(1) of Act 5 of 2026 effective on 1 March, 2026 and applicable in respect of assets brought into use on or after that date]

Subsections (1) to (4) of section 12V of the ITA

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(1)     There must be allowed to be deducted by a person that is a motor vehicle manufacturer an amount equal to 150 per cent of the cost of any-


(a)     building (including improvements to a building);


(b)     new and unused machinery, plant, implement, utensil or article; or


(c)     improvement to any machinery, plant, implement, utensil or article,


acquired as a purchaser in terms of an agreement contemplated in paragraph (a) of the definition of “instalment credit agreement” in section 1 of the Value-Added Tax Act or owned by the taxpayer and used mainly in the production of battery electric or hydrogen-powered vehicles in the Republic: Provided that where any machinery, plant, implement, utensil, article or improvement qualifying for a deduction under this section is mounted or affixed to any concrete or other foundation or supporting structure and-


(a)     the foundation or supporting structure is designed for such machinery, plant, implement, utensil, article or improvement and constructed in such manner that it is or should be regarded as being integrated with the machinery, plant, implement, utensil, article or improvement; and


(b)     the useful life of the foundation or supporting structure is or will be limited to the useful life of the machinery, plant, implement, utensil, article or improvement mounted thereon or affixed thereto,


the foundation or supporting structure shall be deemed to be part of the machinery, plant, implement, utensil, article or improvement mounted thereon or affixed thereto.


(2)     For the purposes of the deduction under subsection (1), an asset in paragraph (a) or (b) must be brought into use on or after 1 March 2026 and before 1 March 2036.


(3)     For the purposes of this section, the cost to a taxpayer of any asset is deemed to be the lesser of the actual cost to the taxpayer or the cost which a person would, if the person had acquired that asset under a cash transaction concluded at arm’s length on the date on which the transaction for the acquisition was concluded, have incurred in respect of the direct cost of the acquisition of the asset.


(4)     No deduction shall be allowed under this section in respect of any asset the ownership of which is retained by the taxpayer as a seller in terms of an agreement contemplated in paragraph (a) of the definition of “instalment credit agreement” in section 1 of the Value-Added Tax Act.

Section 11G (ITA) – Deduction of expenses incurred in production of interest

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11G.  Deduction of expenses incurred in production of interest

 

(1)     For purposes of this section “interest” means interest as defined in section 24J.

 

(2)     Notwithstanding section 23(b), for purposes of determining the taxable income derived by any person, there shall be allowed as a deduction from the income of that person, interest incurred by that person to the extent that the interest-

 

(a)     is incurred in the production of interest that is included in the income of that person; and

 

(b)     is not incurred in carrying on a trade.

[Subsection (2) amended by section 13(1) of Act 5 of 2026 effective on 1 January, 2026 and applicable to years of assessment commencing on or after that date]

 

(3)     The amount allowed to be deducted under this section shall not exceed the amount of interest income referred to in subsection (2)(a), that is received by or accrued to the person, during the year of assessment.

[Section 11G inserted by section 14(1) of Act 17 of 2023 effective on 1 January, 2026 and applicable in respect of years of assessment commencing on or after that date (effective date in section 14(2) of Act 17 of 2023 as substituted by section 67(1) of Act 42 of 2024)]

Section 25E (ITA) – Determination of contributed tax capital in foreign currency

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25E   Determination of contributed tax capital in foreign currency

Where the functional currency of a company is-

(a)     the currency of the Republic and any amount referred to in paragraphs (a)(i), (ii) or (iii) or (b)(i), (ii) or (iii) of the definition of “contributed tax capital” is denominated in any currency other than the currency of the Republic; or

(b)     any currency other than the currency of the Republic and any amount referred to in paragraphs (a)(aa), (bb) or (cc) or (b)(aa), (bb) or (cc) of the definition of “contributed tax capital” is denominated in any currency other than the currency of the Republic,

that amount must be translated to the currency of the Republic by applying the spot rate on the date on which that amount must be taken into account for purposes of the determination of contributed tax capital.

[Section 25E inserted by section 30(1) of Act 17 of 2023 and substituted by section 23(1) of Act 42 of 2024 effective on 1 January, 2025]

“Creditor” definition of section 23M of ITA

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“creditor” means a person to whom a “debtor” owes a “debt”;

[Definition of “creditor” added by section 26(1)(e) of Act 17 of 2023 with effect from 1 January, 2024 and applicable in respect of years of assessment commencing on or after that date]

Section 6C (ITA) – Solar energy tax credit

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6C     Solar energy tax credit

(1)     In determining the normal tax payable by any natural person, there must, subject to subsection (4), be deducted an amount to be known as the solar energy tax credit, equal to the amount of the rebate determined under subsection (2).

(2)

(a)     The solar energy tax credit applies in respect of the cost actually incurred by the natural person-

(i)      for the acquisition of any new and unused solar photovoltaic panels, the generation capacity of each being not less than 275W; and

(ii)      if the solar photovoltaic panels referred to in subparagraph (i) are brought into use for the first time, by that person on or after 1 March 2023 and before 1 March 2024.

(b)     The amount of the solar energy tax credit allowed to the natural person referred to in paragraph (a) must-

(i)      be 25 per cent of the actual cost of the solar photovoltaic panels described in paragraph (a); and

(ii)     in aggregate be limited to an amount not exceeding R15 000.

(3)     A solar energy tax credit will be allowed under subsection (1) only if-

(a)     the solar panels are installed and mounted on or affixed to a residence mainly used for domestic purposes by the natural person referred to in subsection (2)(a);

(b)     the installation is connected to the distribution board of such residence; and

(c)     an electrical certificate of compliance contemplated in the Electrical Installation Regulations, 2009, is issued in respect of the installation referred to in paragraph (a).

(4)     No deduction shall be allowed under this section on any asset in respect of which a deduction has been allowed to the taxpayer under section 12B or 12BA.

[Section 6C inserted by section 2(1) of Act 17 of 2023 effective on 1 March, 2023 and applicable in respect of years of assessment commencing on or after that date]

Section 12BA (ITA) – Enhanced deduction in respect of certain machinery, plant, implements, utensils and articles used in production of renewable energy

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12BA Enhanced deduction in respect of certain machinery, plant, implements, utensils and articles used in production of renewable energy

(1)     In respect of any new and unused machinery, plant, implement, utensil, or article owned by the taxpayer or acquired by the taxpayer as purchaser in terms of an agreement contemplated in paragraph (a) of the definition of “instalment credit agreement” in section 1 of the Value-Added Tax Act and which was or is brought into use for the first time by that taxpayer for the purpose of that taxpayer’s trade on or after 1 March 2023 and before 1 March 2025, to be used by that taxpayer or the lessee of that taxpayer, in the generation of electricity in the Republic from-

(a)     wind power;

(b)     photovoltaic solar energy;

(c)     concentrated solar energy;

(d)     hydropower; or

(e)     biomass comprising organic wastes, landfill gas or plant material,

a deduction calculated in terms of subsection (2) shall be allowed in respect of the year of assessment during which the abovementioned assets are brought into use: Provided that where any machinery, plant, implement, utensil or article for which a deduction is allowed under this subsection is mounted on or affixed to any concrete or other foundation or supporting structure and-

(i)      the foundation or supporting structure is designed for such machinery, plant, implement, utensil or article and constructed in such manner that it is or should be regarded as being integrated with the machinery, plant, implement, utensil or article; and

(ii)     the useful life of the foundation or supporting structure is or will be limited to the useful life of the machinery, plant, implement, utensil or article mounted thereon or affixed thereto,

the foundation or supporting structure shall be deemed to be part of the machinery, plant, implement, utensil or article mounted thereon or affixed thereto.

(2)     The deduction contemplated in subsection (1) is equal to an amount of 125 per cent of the cost incurred by the taxpayer for the acquisition of the asset.

(3)     For the purposes of this section, the cost to a taxpayer of any asset acquired by that taxpayer shall be deemed to be the lesser of the actual cost to the taxpayer or the cost which a person would, if that person had acquired the asset under a cash transaction concluded at arm’s length on the date which the transaction for the acquisition of the asset was in fact concluded, have incurred in respect of the direct cost of acquisition of the asset, including the direct cost of the installation or erection thereof.

(4)     No deduction shall be allowed under this section in respect of-

(a)     any asset the ownership of which is retained by the taxpayer as a seller in terms of an agreement contemplated in paragraph (a) of the definition of “instalment credit agreement” in section 1 of the Value-Added Tax Act; or

(b)     any asset brought into use after 28 February 2025.

[Section 12BA inserted by section 16(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]

“Associated enterprise” definition of section 31 of ITA

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“associated enterprise” means an associated enterprise as contemplated in Article 9 of the Model Tax Convention on Income and on Capital of the Organisation for Economic Co-operation and Development;

[Definition of “associated enterprise” inserted by section 37(1)(b) 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)]