(r) any deduction in respect of any premium paid by a person in terms of an insurance policy if that insurance policy covers that person against illness, injury, disability, unemployment or death of that person.
[Paragraph (r) added by section 56 of Act 31 of 2013 effective on 1 March 2015 and substituted by section 33 of Act 43 of 2014 effective on 1 March 2015]
(2) There shall be exempt from normal tax any amount received by or accrued to a natural person or deceased estate or insolvent estate of that person in respect of a tax free investment.
[Subsection (2) substituted by section 29 of Act 25 of 2015 effective on 1 March 2015]
(3) In determining the aggregate capital gain or aggregate capital loss of a person in respect of any year of assessment, any capital gain or capital loss in respect of the disposal of a tax free investment shall be disregarded.
(4) Contributions in respect of tax free investments shall be-
(a) limited to an amount of R36 000 in aggregate for any year or years of assessment during the period of 12 months commencing in March and ending at the end of February of the immediately following calendar year;
[Paragraph (a) substituted by section 9(1)(a) of Act 14 of 2017, by section 7(1)(a) of Act 22 of 2020 and by section 20(1)(a) of Act 17 of 2023 with effect from 1 March, 2024 and applicable in respect of years of assessment commencing on or after that date]
(b) an amount in cash; and
(c) limited to an amount of R500 000 in aggregate.
(5) Any amount contemplated in subsection (2) shall not be taken into account in determining whether a person contributed in excess in respect of the amounts contemplated in subsections (4)(a) and (c).
(6) Any-
(a) transfer of an amount in respect of a tax free investment of a person to another tax free investment of that person; or
(b) amount received by or accrued in respect of a tax free investment,
shall not be taken into account in determining whether that person contributed in excess of the amounts contemplated in subsections (4)(a) and (c) as a contribution in respect of that other tax free investment.
(7)
(a) If during any year or years of assessment contemplated in subsection (4)(a) any person contributes in excess of the amount of R36 000 in respect of tax free investments, an amount equal to 40 per cent of that excess is deemed to be an amount of normal tax payable by the person contemplated in subsection (1)(b) in respect of that year of assessment or the last year of assessment when there is more than one year of assessment during the period of 12 months.
[Paragraph (a) substituted by section 29(1)(b) of Act 25 of 2015, by section 9(1)(b) of Act 14 of 2017, by section 7(1)(b) of Act 22 of 2020 and by section 20(1)(b) of Act 17 of 2023 with effect from 1 March, 2024 and applicable in respect of years of assessment commencing on or after that date]
(b) If any person contributes in excess of R500 000 in aggregate in respect of tax free investments, an amount equal to 40 per cent of so much of that excess as has not previously been taken into account in terms of this subsection shall be deemed to be an amount of normal tax payable by the person contemplated in subsection 1(b) in respect of the year of assessment in which the excess is contributed.
[Paragraph (b) substituted by section 29 of Act 25 of 2015 effective on 1 March 2015]
(8) The Minister shall make regulations prescribing the requirements-
(a) to which any financial instrument or policy as defined in section 29A shall conform for the purposes of constituting a tax free investment;
(b) that must be complied with when a tax free investment is transferred; and
(c) in respect of disclosure by any person contemplated in paragraph (a) of the definition of ‘tax free investment’ in subsection (1) in respect of a tax free investment.
(9)
(a) The Financial Sector Conduct Authority shall be responsible for supervising and enforcing of compliance with any regulations made by the Minister in terms of subsection (8).
(b) The supervising and enforcing compliance contemplated in paragraph (a) shall form part of the legislative mandate of the Financial Sector Conduct Authority.
(c) The Financial Sector Conduct Authority, acting through the Registrar, as defined in section 1 of the Financial Institutions (Protection of Funds) Act, 2001 (Act No. 28 of 2001), in supervising and enforcing compliance as contemplated in paragraph (a), shall exercise any power afforded to the Registrar as defined in section 1 of that Act and in any of the Acts contemplated in the definition of ‘law’ in section 1 of that Act.
[Subsection (9) substituted by section 32 of Act 23 of 2018 effective on 1 April 2018 and applies in respect of years of assessment commencing on or after that date]
‘tax free investment’ means any financial instrument or policy as defined in section 29A–
(a) administered by a person or entity designated by notice by the Minister in the Gazette;
(b) owned by-
(i) a natural person; or
(ii) the deceased estate or insolvent estate of a natural person that is deemed to be one and the same person as that natural person in respect of the contributions made by that person; and
(c) that complies with the requirements of the Regulations contemplated in subsection (8).
12T. Exemption of amounts received or accrued in respect of tax free investments
(1) For the purposes of this section-
(2) ……….
[Subsection (2) substituted by section 26 of Act 43 of 2014 effective on the date on which the Special Economic Zones Act is operational, 9 February 2016, deleted by section 34 of Act 15 of 2016 effective on 19 January 2017]
(3) The Minister of Finance must approve a special economic zone for purposes of this section after taking into account the financial implications for the State should a special economic zone be approved under this section.
(4) Notwithstanding a qualifying company being located in a special economic zone-
(a) a company is not a qualifying company if that company conducts any of the following activities classified under ‘Section C: Manufacturing’ in the SIC Code:
[Words preceding subparagraph (i) substituted by section 26 of Act 43 of 2014 effective on the date on which the Special Economic Zones Act is operational, 9 February 2016, substituted by section 34 of Act 15 of 2016 effective on 19 January 2017]
(i) Distilling, rectifying and blending of spirits (SIC Code 1101);
[Subparagraph (i) substituted by section 26 of Act 43 of 2014 effective on the date on which the Special Economic Zones Act is operational, 9 February 2016]
(ii) Manufacture of wines (SIC Code 1102);
[Subparagraph (ii) substituted by sectoin 26 of Act 43 of 2014 effective on the date on which the Special Economic Zones Act is operational, 9 February 2016]
(iii) Manufacture of malt liquors and malt (SIC Code 103);
[Subparagraph (iii) substituted by section 26 of Act 43 of 2014 effective on the date on which the Special Economic Zones Act operational on, 9 February 2016]
(iv) Manufacture of tobacco products (SIC Code 12);
[Subparagraph (iv) substituted by section 26 of Act 43 of 2014 effective on the date on which the Special Economic Zones Act is operational, 9 February 2016]
(v) Manufacture of weapons and ammunition (SIC Code 252);
[Subparagraph (v) substituted by section 26 of Act 43 of 2014 effective on the date on which the Special Economic Zones Act is operational, 9 February 2016]
(vi) Manufacture of bio-fuels if that manufacture negatively impacts on food security in the Republic;
[Subparagraph (vi) added by section 26 of Act 43 of 2014 and amended by section 28 of Act 25 of 2015 effective on the date on which the Special Economic Zones Act is operational, 9 February 2016]
(b) a company that conducts any activity classified in the SIC Code, which the Minister of Finance may designate by notice in the Gazette is not a qualifying company; or
[Paragraph (b) substituted by section 26 of Act 43 of 2014 and amended by section 28 of Act 25 of 2015 effective on the date on which the Special Economic Zones Act is operational, 9 February 2016, substituted by section 34 of Act 15 of 2016 effective on 19 January 2017]
(c) a company is not a qualifying company if-
[Words preceding subparagraph (i) substituted by section 34 of Act 15 of 2016 effective on 19 January 2017]
(i) more than 20 per cent of expenditure that is deductible under this Act is incurred; or
(ii) more than 20 per cent of the income of that company is received or accrued,
in respect of transactions with any connected person in relation to that company if that connected person-
(aa) is a resident; or
(bb) is not a resident and those transactions are attributable to a permanent establishment of that connected person in the Republic.
[Paragraph (c) added by section 28 of Act 25 of 2015 effective on the date on which the Special Economic Zones Act is operataional, 9 February 2016]
(5) This provision ceases to apply in respect of any year of assessment commencing on or after 1 January 2031.
[Subsection (5) substituted by section 26(1)(i) of Act 43 of 2014, amended by section 30(1)(b) of Act 17 of 2017 and substituted by section 18(1) of Act 23 of 2020 deemed effective on 9 February, 2016][Section 12R inserted by section 43 of Act 31 of 2013 and amended by section 26 of Act 43 of 2014 and section 28 of Act 25 of 2015 effective on the date on which the Special Economic Zones Act is operational, 9 February 2016]
‘Special Economic Zones Act’ means the Special Economic Zones Act, 2014 (Act No 16 of 2014).
[Definition of ‘Special Economic Zones Act’ substituted by section 26 of Act 43 of 2014 effective on the date on which the Special Economic Zones Act is operational, 9 February 2016]
‘special economic zone’ means a special economic zone as defined in the Special Economic Zones Act that is approved for the purposes of this section by the Minister of Finance under subsection (3);
‘SIC Code’ means version 7 of the Standard Industrial Classification Code issued by Statistics South Africa;
[Definition of ‘SIC Code’ inserted by section 26 of Act 43 of 2014 effective on the date on which the Special Economic Zones Act is operational, 9 February 2016]
‘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]
12R. Special economic zones
(1) For the purposes of this section-