(zL) any amount received or accrued previously prohibited as a deduction during any year of assessment under section 23(o)(iii) that is recovered in any subsequent year of assessment.
[Paragraph (zL) added by section 22 of Act 23 of 2018 effective on 1 April 2019 and applies in respect of years of assessment commencing on or after that date]
10C. Exemption of nondeductible element of qualifying annuities
(gD) where that trade constitutes the provision of telecommunication services, the exploration, production or distribution of petroleum or the provision of gambling facilities, any expenditure (other than in respect of infrastructure) incurred to acquire a licence from the government of the Republic in the national, provincial or local sphere, contemplated in section 10(1)(a) or (b), or an institution or entity contemplated in Schedule 1 or Part A or C of Schedule 3 to the Public Finance Management Act where that expenditure is incurred in terms of the licence and the licence is required to carry on that trade, which deduction must not exceed for any one year such portion of the expenditure as is equal to the amount of the expenditure divided by the number of years for which the taxpayer has the right to the licence after the date on which the expenditure was incurred, or 30, whichever is the lesser;
(zE) any amount received by or accrued to the Small Business Development Corporation Limited, by way of any subsidy or assistance payable by the State;
(1) For the purposes of this section-
“qualifying annuity” means the amount of the retirement interest of a person payable in the form of an annuity (including a living annuity)-
(a) as contemplated in paragraph (ii)(dd) of the proviso to paragraph (c) of the definition of “pension fund”;
(b) as contemplated in paragraph (e) of the proviso to the definition of “pension preservation fund”;
(c) as contemplated in paragraph (b)(ii) of the proviso to the definition of “retirement annuity fund”;
[Paragraph (c) amended by section 12(1)(a) of Act 23 of 2020 effective on 1 March, 2021]
(d) as contemplated in paragraph (ii)(dd) of the proviso to the definition of “provident fund” in section 1(1);
[Paragraph (d) substituted by section 12(1)(b) of Act 23 of 2020, by section 7(1) of Act 20 of 2022 effective on 1 March, 2021 and by section 2(1)(a) of Act 12 of 2024 effective on 1 September, 2024 and applicable in respect of years of assessment commencing on or after that date]
(e) as contemplated in paragraph (e) of the definition of “provident preservation fund” in section 1(1); or
[Paragraph (e) added by section 12(1)(c) of Act 23 of 2020 and substituted by section 2(1)(b) of Act 12 of 2024 effective on 1 September, 2024 and applicable in respect of years of assessment commencing on or after that date]
(f) as contemplated in paragraph (ii) of the further proviso to the definition of “pension fund” in section 1(1);
[Paragraph (f) added by section 2(1)(c) of Act 12 of 2024 effective on 1 September, 2024 and applicable in respect of years of assessment commencing on or after that date]
(g) as contemplated in paragraph (d) of the definition of “retirement component” in section 1(1); or
[Paragraph (g) added by section 2(1)(c) of Act 12 of 2024 effective on 1 September, 2024 and applicable in respect of years of assessment commencing on or after that date]
(h) as contemplated in paragraph (ii) of the further proviso to the definition of “provident fund” in section 1(1).
[Paragraph (h) added by section 2(1)(c) of Act 12 of 2024 effective on 1 September, 2024 and applicable in respect of years of assessment commencing on or after that date]
[Definition of “qualifying annuity”, previously definition of “compulsory annuity” amended by section 16(1) of Act 43 of 2014 and substituted by section 14(1)(b) of Act 34 of 2019 effective on 1 March, 2020 and applicable in respect of any contributions made to a provident or provident preservation fund in determining the taxable annuity received during any year of assessment from such fund in relation to annuities received on or after 1 March, 2020]
(gC) an allowance in respect of any expenditure actually incurred by the taxpayer during any year of assessment commencing on or after 1 January 2004 to acquire (otherwise than by way of devising, developing or creating) any-
(i) invention or patent as defined in the Patents Act;
(ii) design as defined in the Designs Act;
(iii) copyright as defined in the Copyright Act;
(iv) other property which is of a similar nature (other than Trade Marks as defined in the Trade Marks Act); or
(v) knowledge essential to the use of such patent, design, copyright or other property or the right to have such knowledge imparted,
which shall be allowed during the year of assessment in which that invention, patent, design, copyright, other property or knowledge is brought into use for the first time by the taxpayer for the purposes of the taxpayer’s trade, if that invention, patent, design, copyright, other property or knowledge, as the case may be, is used by the taxpayer in the production of his or her income: Provided that-
(aa) where that expenditure actually incurred by the taxpayer exceeds R5 000, that allowance shall not exceed in any year of assessment-
(A) five per cent of the amount of the expenditure in respect of any invention, patent, copyright or other property of a similar nature or any knowledge essential to the use of such invention, patent, copyright or other property or the right to have such knowledge imparted; or
(B) 10 per cent of the amount of the expenditure in respect of any design or other property of a similar nature or any knowledge essential to the use of such design or other property or the right to have such knowledge imparted;
(yA) any amount received by or accrued to any person in respect of goods or services provided to beneficiaries in terms of an official development assistance agreement that is binding in terms of section 231(3) of the Constitution of the Republic of South Africa, 1996, to the extent –
(aa) that amount is received or accrued in relation to projects that are approved by the Minister; and
[Subparagraph (aa) substituted by section 16 of Act 17 of 2017 and section 22 of Act 23 of 2018 effective on 17 January 2019]
(bb) where that agreement was concluded on or after 1 January 2007, that that agreement provides that those receipts and accruals of that person must be exempt;
[Subparagraph (bb) substituted by section 22(1)(d) of Act 23 of 2018 and by section 10(1)(e) of Act 23 of 2020 deemed to have come into operation 1 January, 2007 and applicable in respect of years of assessment commencing on or after that date]
(cc) ……….
[Subparagraph (cc) deleted by section 16 of Act 17 of 2017 effective on 18 December 2017]
(gB) expenditure (other than expenditure which has qualified in whole or in part for deduction or allowance under any of the other provisions of this section) actually incurred by the taxpayer during the year of assessment in obtaining the grant of any patent or the restoration of any patent, or the extension of the term of any patent under the Patents Act or the registration of any design, or the extension of the registration period of any design under the Designs Act or the registration of any trade mark, or the renewal of the registration of any trade mark under the Trade Marks Act or under similar laws of any other country, if such patent, design, or trade mark is used by the taxpayer in the production of his or her income;
(u) any amount received by or accrued to any person-
(i) from or on behalf of such person’s spouse or former spouse by way of alimony or allowance or maintenance of such person under an order of judicial separation or divorce granted in consequence of proceedings instituted after the twenty-first day of March, 1962, or under any agreement of separation entered into after that date.
(gA) an allowance in respect of any expenditure (other than expenditure which has qualified in whole or part for deduction or allowance under any of the other provisions of this section or the corresponding provisions of any previous Income Tax Act) actually incurred by the taxpayer –
(i) in devising or developing any invention as defined in the Patents Act or in creating or producing any design as defined in the Designs Act or any trade mark as defined in the Trade Marks Act or any copyright as defined in the Copyright Act or any other property which is of a similar nature;
(ii) in obtaining any patent or the restoration of any patent under the Patents Act or the registration of any design under the Designs Act or the registration of any trade mark under the Trade Marks Act or under similar laws of any other country; or
(iii) in acquiring by assignment from any other person any such patent, design, trade mark or copyright or in acquiring any other property of a similar nature or any knowledge essential to the use of such patent, design, trade mark, copyright or other property or the right to have such knowledge imparted,
if such invention, patent, design, trade mark, copyright, other property or knowledge, as the case may be, is used by the taxpayer in the production of his income: Provided that –
(aa) where such expenditure exceeds R5 000, and was incurred –
(A) before 29 October 1999, the allowance shall not exceed for any one year such portion of the amount of the expenditure as is equal to such amount divided by the number of years, which represents the probable duration of use of the invention, patent, design, trade mark, copyright, other property or knowledge, or four per cent of the said amount, whichever is the greater;
[Subitem (A) substituted by section 18 of Act 25 of 2015 effective on 8 January 2016]
(B) on or after 29 October 1999, the allowance shall not for any one year exceed an amount equal to –
(AA) five per cent of the amount of the expenditure in the case of any invention, patent, trade mark, copyright or other property of a similar nature or any knowledge essential to the use of such invention, patent, trade mark, copyright or other property or the right to have such knowledge imparted; or
(BB) 10 per cent of the amount of the expenditure in the case of any design or other property of a similar nature or any knowledge essential to the use of such design or other property or the right to have such knowledge imparted;
(bb) where such expenditure was incurred before the commencement of the year of assessment in question the allowance shall be calculated on the amount of such expenditure, less an amount equivalent to the sum of the allowances to which the taxpayer was entitled under this paragraph and the allowances to which the taxpayer would have been entitled under this paragraph if this paragraph had been applicable, in respect of such expenditure in respect of previous years of assessment, including any year of assessment under any previous Income Tax Act;
[Item (bb) substituted by section 10 of Act 94 of 1983 and section 18 of Act 25 of 2015 effective on 8 January 2016]
(cc) no allowance shall be made in respect of any such invention, patent, design, trade mark, copyright or other property or knowledge so acquired or obtained by the taxpayer on or after 24 June 1988, but prior to 1 July 1993 from any other person who is a resident of the Republic or who is ordinarily resident in a neighbouring country (or, in the case of a company, is incorporated or has its place of effective management in a neighbouring country), if –
(A) the taxpayer or such other person is a company and such other person or the taxpayer, as the case may be, is interested in more than 50 per cent of any class of shares issued by such company, whether directly as a holder of shares in that company or indirectly as a holder of shares in any other company; or
(B) both the taxpayer and such other person are companies and any third person is interested in more than 50 per cent of any class of shares issued by one of those companies and in more than 50 per cent of any class of shares issued by the other company, whether directly as a holder of shares in the company by which the shares in question were issued or indirectly as a holder of shares in any other company;
(dd) where any such invention, patent, design, trade mark, copyright or other property or knowledge was so acquired or obtained by the taxpayer on or after 1 July 1993 from any other person who is a resident of the Republic or who is ordinarily resient in a neighbouring country (or, in the case of a company, is incorporated or has its place of effective management in a neighbouring country), and who is a connected person in relation to the taxpayer, the allowance under this paragraph shall be calculated on an amount not exceeding the lesser of the cost of such invention, patent, design, trade mark, copyright or other property or knowledge to such connected person or the market value thereof as determined on the date upon which such invention, patent, design, trade mark, copyright or other property or knowledge was acquired or obtained by the taxpayer;
(ee) no allowance shall be made in respect of any expenditure incurred by such taxpayer on or after 29 October 1999, in respect of the acquisition from any other person of any trade mark or other property of a similar nature or any knowledge essential to the use of such trade mark or the right to have such knowledge imparted;
(ff) no deduction shall be allowed under this paragraph in respect of any expenditure incurred by the taxpayer during any year of assessment commencing on or after 1 January 2004;