Category: CHAPTER II – The Taxes (ITA)

“Qualifying company” definition of section 12R of ITA

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‘qualifying company’ means a company-

(a)

(i)      incorporated by or under any law in force in the Republic or in any part thereof; or

(ii)     that has its place of effective management in the Republic;

(b)     that carries on a trade in a special economic zone designated by the Minister of Trade and Industry in terms of the Special Economic Zones Act and approved by the Minister of Finance after consultation with the Minister of Trade and Industry for the purposes of this section by notice in the Gazette;

[Paragraph (b) substituted by section 26 of Act 43 of 2014 effective on the date on which the Special Economic Zones Act comes into operation, 9 February 2016 and by section 30 of Act 17 of 2017 effective on 9 February 2016]

(c)     if the trade contemplated in paragraph (b) is carried on from a fixed place of business situated within a special economic zone;

[Paragraph (c) substituted by section 30(1)(a) of Act 17 of 2017 and amended by section 20(1) of Act 34 of 2019 deemed effective on 1 January, 2019 and applicable in respect of years of assessment ending on or after that date]

(d)     if not less than 90 per cent of the income of that company is derived from the carrying on of a trade within one or more special economic zones; and

[Paragraph (d) substituted by section 26(1)(c) of Act 43 of 2014 and by section 30(1)(a) of Act 17 of 2017 and amended by section 20(1) of Act 34 of 2019 deemed effective on 1 January, 2019 and applicable in respect of years of assessment ending on or after that date]

(e)      that—

(i)      was carrying on any trade before 1 January 2013 in a location that is subsequently approved for the purpose of this section as a zone in terms of subsection (3);

(ii)     commenced, on or after 1 January 2013 the carrying on, in a location that is approved or subsequently approved for the purpose of this section as a zone in terms of subsection (3), of any trade not previously carried on by that company or any connected person in relation to that company in the Republic; or

(iii)    commenced, on or after 1 January 2013 the carrying on, in a location that is approved or subsequently approved for the purpose of this section as a zone in terms of subsection (3), of any trade and that trade-

(aa)   comprises of the production of goods not previously produced by that company or any connected person in relation to that company in the Republic;

(bb)   utilises the use of new technology in that company’s production processes; or

(cc)   represents an increase in the production capacity of that company in the Republic.

[Paragraph (e) added by section 20(1) of Act 34 of 2019 deemed effective on 1 January, 2019 and applicable in respect of years of assessment ending on or after that date]

Section 12NA (ITA) – Deductions in respect of improvements on property in respect of which government holds a right of use or occupation

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12NA. Deductions in respect of improvements on property in respect of which government holds a right of use or occupation

(1)     There shall be allowed to be deducted from the income of a person, expenditure actually incurred by that person to effect an improvement to land or to a building in terms of an obligation to effect those improvements to that land or to that building in terms of a Public Private Partnership if the government of the Republic in the national, provincial or local sphere holds the right of use or occupation of that land or building.

(2)     The amount allowed to be deducted in terms of this section in respect of any year of assessment shall be equal to the amount of expenditure contemplated in subsection (1) that has not been allowed to be deducted in terms of this section, divided by the number of years (including that year of assessment) for which the taxpayer will derive income in respect of the Public Private Partnership in terms of the agreement or 25 years, whichever is the lesser.

(3)     Where any amount as contemplated in section (10)(1)(zI) is received by or accrues to a person from the government of the Republic in the national, provincial or local sphere for the purpose of effecting an improvement to land or a building or in respect of the defraying of the cost of any improvements in terms of the Public Private Partnership contemplated in subsection (1), the expenditure to be deducted in terms of this section shall be reduced in an amount equal to an amount that is exempt in terms of that section.

(4)     This section shall not apply if the person effecting an improvement to land or to a building is a person carrying on any banking, financial services or insurance business.

[Section 12NA inserted by section 25 of Act 43 of 2014 effective on 1 January 2013]

“Compliance period” definition of section 12I of ITA

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‘compliance period’ means the period-

(a)     commencing at the beginning of the year of assessment following the year of assessment in which assets are first brought into use; and

(b)     ending at the end of the year of assessment three years after the year of assessment in which assets are first brought into use;

[Definition of ‘compliance period’ inserted by section 22 of Act 25 of 2015 effective on 8 January 2009]

Section 10(1)(y) of ITA

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(y)     any government grant or government scrapping payment received or accrued in terms of any programme or scheme which has been approved in terms of the national annual budget process and has been identified by the Minister by notice in the Gazette with effect from a date specified by the Minister in that notice (including any date that precedes the date of such notice) for purposes of this paragraph, having regard to-

(i)      whether the programme or scheme meets government policy priorities and objectives with respect to-

(aa)    the encouragement of economic growth and investment;

(bb)   the promotion of employment creation;

(cc)    the development of public infrastructure and transport;

(dd)   the promotion of public health;

(ee)    the development of innovation and technology;

(ff)    the provision of housing and basic services; or

(gg)   the provision of relief in the case of natural disasters;

(ii)     the extent to which the programme or scheme will support the policy priorities and objectives contemplated in subparagraph (i);

(iii)    the financial implications for government should government grants or government scrapping payments in terms of that programme or scheme be exempt from tax; and

(iv)    whether the tax implications were taken into account in determining the appropriation or payment in respect of that programme or scheme;

[Paragraph (y) added by section 8 of Act 76 of 1968, deleted by section 10 of Act 101 of 1990, inserted by section 16 of Act 31 of 2005, amended by section 10 of Act 20 of 2006, deleted by section 19 of Act 22 of 2012 and added by section 16 of Act 25 of 2015 effective on 1 January 2013]