Category: CHAPTER II – The Taxes (ITA)

Section 10(1)(t) of ITA

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(t)    the receipts and accruals –

(i)      of the Council for Scientific and Industrial Research;

(ii)     of the South African Inventions Development Corporation;

(iii)    of the South African National Roads Agency Limited incorporated in terms of section 3 of the South African National Roads Agency Limited and National Roads Act, 1998 (Act No. 7 of 1998);

(iv)    ……….

(v)     of the Armaments Corporation of South Africa Limited, contemplated in section 2(1) of the Armaments Corporation of South Africa, Limited Act, 2003 (Act No. 51 of 2003);

(vi)    of any company during any period during which all the issued shares of such company are held by the Corporation referred to in subparagraph (v), if the operations of such company are conducted in pursuance of, or are ancillary or complementary to, the objects of the said Corporation;

(vii)   of any traditional council or traditional community established or recognised or deemed to have been established or recognised in terms of the Traditional Leadership and Governance Framework Act, 2003 (Act No. 41 of 2003), or any tribe as defined in section 1 of that Act: Provided that the Minister may by notice in the Gazette determine that those receipts and accruals shall not be exempt with effect from any year of assessment commencing on or after a date to be determined by the Minister in such notice;

(viii)  of any regional electricity distributor that is wholly owned by any person that is exempt from normal tax during any year of assessment commencing before 1 January 2014, or before a later date that may be determined by the Minister by notice in the Gazette;

(ix)    of any water services provider;

(x)     of the Development Bank of Southern Africa established on 23 June 1983;

(xi)    ……….

(xii)   ……….

(xiii)  ……….

(xiv)  ……….

(xv)   ……….

(xvi)  of-

(aa)   the compensation fund established by section 15 of the Compensation for Occupational Injuries and Diseases Act, 1993 (Act No. 130 of 1993);

(bb)   the reserve fund established by section 19 of the Compensation for Occupational Injuries and Diseases Act, 1993 (Act No. 130 of 1993); and

(cc)   a mutual association licensed in terms of section 30 of the Compensation for Occupational Injuries and Diseases Act, 1993 (Act No. 130 of 1993), to carry on the business of insurance of employers against their liabilities to employees, if the compensation paid by the mutual association is identical to compensation that would have been payable in similar circumstances in terms of that Act;

[Subparagraph (xvi) inserted by section 28 of Act 24 of 2011 and amended by section 23 of Act 15 of 2016 effective on 1 April 2016, applies in respect of receipts and accruals on or after that date]

(xvii)  of the National Housing Finance Corporation established in 1996 by the National Department of Human Settlements;

[Subparagraph (xvii) added by section 23(1)(h) of Act 15 of 2016 and substituted by section 9(1)(b) of Act 17 of 2023 with effect from 1 April, 2024 and applicable in respect of years of assessment ending on or after that date]

(xviii) of the Corporation for Deposit Insurance established in terms of section 166AE of the Financial Sector Regulation Act:

[Subparagraph (xviii) inserted by section 9(1)(c) of Act 17 of 2023 with effect from 1 April, 2024 and applicable in respect of years of assessment ending on or after that date]

: Provided that any entity contemplated in this paragraph must comply with such reporting requirements as the Commissioner may determine;

Subsections 2, 3, 4, 5, 6, 7, 8, 10 and 11 of section 10A of ITA

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(2)     There shall be exempt from normal tax so much of any annuity amount payable to a purchaser or his spouse or surviving spouse (as contemplated in paragraph (a) of the definition of “annuity contract” in subsection (1)), or to the deceased or insolvent estate of such spouse or surviving spouse as is determined in accordance with subsection (3) to represent the capital element of such amount.

(3)     The capital element of an annuity amount shall be –

(a)     a sum determined in accordance with the formula

             Y   =      A      x   C

                          B

in which formula –

(i)      “Y” represents the sum to be determined;

(ii)     “A” represents the amount of the total cash consideration given by the purchaser under the annuity contract in question as contemplated in paragraph (b) of the definition of “annuity contract” in subsection (1);

  

(iii)    “B” represents the total expected returns of all the annuities provided for in the annuity contract in question; and

(iv)    “C” represents the aforesaid annuity amount; or

(b)     where, by reason of any unpredictable contingency (other than the death or survival of any person), any amount payable by way of any annuity under the annuity contract in question is uncertain at the date on which the first payment by way of an annuity becomes due under that contract, such sum as may on the basis of a fair and reasonable calculation be taken to be the capital element of the aforesaid annuity amount: Provided that the said sum shall be determined in such manner that the capital element of all the annuity amounts becoming due during any year of assessment in respect of all the annuities under the said contract does not in total exceed an amount determined in accordance with the formula

Z   =      1      x   A

             N

in which formula –

(i)      “Z” represents the amount to be determined;

(ii)     “N” represents the probable number of years during which annuity amounts will be payable under the said annuity contract from the date on which the first of such amounts becomes due, due regard being had to the manner in which and the frequency with which such amounts are payable; and

  

 (iii)    “A” represents the amount of the total cash consideration given by the purchaser under the said annuity contract as contemplated in paragraph (b) of the definition of “annuity contract” in subsection (1); or


(c)     where such annuity amount is payable in consequence of the commutation or termination of the annuity contract concerned, an amount determined in accordance with the formula

X   =   A – D

in which formula –

(i)      “X” represents the amount to be determined;

(ii)     “A” represents the amount of the total cash consideration given by the purchaser under the annuity contract concerned as contemplated in paragraph (b) of the definition of “annuity contract” in subsection (1); and

(iii)    “D” represents the sum of the amounts determined in accordance with paragraphs (a) and (b) as representing the capital element of all annuity amounts payable under the annuity contract prior to the commutation or termination thereof.

  

(4)     The statutory actuary of an insurer who is a party to an annuity contract shall, before payment of the first annuity amount is made under such contract, or within such period as the Commissioner may allow, make a calculation (with due regard to the provisions of subsection (5)) in the manner prescribed in paragraph (a) of subsection (3) or, if the provisions of paragraph (b) of that subsection are applicable, in accordance with that paragraph, of the capital element of all the annuity amounts to be paid under the said contract: Provided that –

  

(i)      where the capital element is calculated under the said paragraph (a), it shall be sufficient if the capital element is calculated as a percentage to be applied to each of the said annuity amounts; or

(ii)     where the capital element is calculated under the said paragraph (b), it shall be sufficient if a calculation is made of the amount to be determined in accordance with the formula in the proviso to that paragraph.

  

(5)     A statutory actuary who makes any calculation as provided in subsection (4) or any recalculation as provided in subsection (6) (b), shall do so in accordance with generally accepted actuarial principles or practice, and where a determination has to be made of the life expectancy of any person for the purpose of a calculation of the expected return of any annuity or the probable number of years during which annuity amounts will be paid under any annuity contract, the mortality tables to be used for such determination shall be the select tables in the volume of tables published in 1953 at the University Press, Cambridge, for the Institute of Actuaries and the Faculty of Actuaries, entitled “The a (55) Tables for Annuitants”, and the age of the person concerned shall for the purposes of such determination be taken to be his age on his birthday immediately preceding the commencement of the annuity contract in question.

  

(6)    

(a)     Where any annuity contract is varied so that it no longer conforms with the requirements prescribed in the definition of “annuity contract” in subsection (1), the exemption conferred by subsection (2) in respect of the capital element of annuity amounts under that contract shall not apply in respect of such amounts under that contract which become due on or after the date of such variation.

(b)     Subject to the provisions of paragraph (a), where any annuity contract is varied as to the payment of any annuity or consideration payable thereunder, the capital element of annuity amounts becoming due thereunder after such variation is effected shall, with due regard to the provisions of subsection (5), be re–calculated by the statutory actuary of the insurer concerned.

(7)    

(a)    Where the capital element of annuity amounts has been calculated as provided in subsection (4) or has been re–calculated as provided in subsection (6) (b), the insurer concerned shall furnish each annuitant under the annuity contract in question, within one month after the date on which the calculation or re–calculation is made, as the case may be, or within such further period as the Commissioner may allow, with two copies of such calculation or re–calculation, as the case may be.

(b)     An annuitant who has received the two copies referred to in paragraph (a) shall submit one of them to the Commissioner as and when required by the Commissioner.

(c)     Where the capital element of annuity amounts has been calculated as provided in subsection (4) or has been re-calculated as provided in subsection (6)(b), the calculation or re-calculation shall apply in respect of all annuity amounts which become due to any person under the annuity contract in question and shall also apply to any year of assessment subsequent to the year of assessment in which the calculation or re-calculation took place.

[Paragraph (c) added by section 24 of Act 15 of 2016 effective on 8 January 2016] 

(8)     ……….

[Subsection (8) deleted by section 17 of Act 25 of 2015 effective on 8 January 2016]

(9)     ……….

(10)   ……….

[Subsection (10) substituted by section 271 of Act 28 of 2011 and deleted by section 24 of Act 15 of 2016 effective on 19 January 2017]

(11)   Where the cash consideration given by the purchaser and the annuity amount receivable under an annuity contract is denominated in any currency other than the currency of the Republic, the capital element of that annuity amount must be calculated in terms of subsection (3) in that other currency and must be translated to the currency of the Republic by applying the exchange rate applied in terms of section 25D in respect of the annuity amount payable during the relevant year of assessment.

Section 11(g) of ITA

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(g)     an allowance in respect of any expenditure actually incurred by the taxpayer, in pursuance of an obligation to effect improvements on land or to buildings, incurred under an agreement whereby the right of use or occupation of the land or buildings is granted by any other person, where the land or buildings are used or occupied for the production of income or income is derived therefrom: Provided that –

(i)      the aggregate of the allowances under this paragraph shall not exceed the amount stipulated in the agreement as the value of the improvements or as the amount to be expended on the improvements or, if no amount is so stipulated, an amount representing the fair and reasonable value of the improvements;

[Subparagraph (i) substituted by section 18 of Act 25 of 2015 effective on 8 January 2016]

(ii)     any such allowance shall not exceed for any one year such portion of the aggregate of the allowances under this paragraph as is equal to the said aggregate divided by the number of years (calculated from the date on which the improvements are completed, but not more than 25 years) for which the taxpayer is entitled to the use or occupation;

(iii)    if-

(aa)   the taxpayer is entitled to such use or occupation for an indefinite period; or

(bb)   the taxpayer or the person by whom such right of use or occupation was granted holds a right or option to extend or renew the original period of such use or occupation, the taxpayer shall for the purposes of this paragraph be deemed to be entitled to such use or occupation for such period as represents the probable duration of such use or occupation;

[Subparagraph (iii) substituted by section 19 of Act 7 of 2010 and section 18 of Act 25 of 2015 effective on 8 January 2016]

(iv)    the aggregate of the allowances under this paragraph in respect of any building or improvements referred to in section 13(1) or 27(2)(b) shall not exceed the cost (after the deduction of any amount which has been set off against the cost of such building or improvements under section 13(3) or section 27(4)) to the taxpayer of such building or improvements less the aggregate of the allowances in respect of such building or improvements made to the taxpayer under the said section 13(1) or 27(2)(b) or the corresponding provisions of any previous Income Tax Act;

(v)     ……….

(vi)    the provisions of this paragraph shall not apply in relation to any such expenditure incurred if the value of such improvements or the amount to be expended on such improvements, as contemplated in paragraph (h) of the definition of “gross income” in section 1, does not for the purposes of this Act constitute income of the person to whom the right to have such improvements effected has accrued;

(vii)   if during any year of assessment the agreement whereby the right of use or occupation of the land or buildings is granted is terminated before expiry of the period to which that taxpayer was entitled to the use or occupation, as contemplated in paragraph (ii) or (iii), so much of the allowance which may be allowed under this paragraph, which has not yet been allowed in that year or any previous year of assessment, shall be allowable as a deduction in that year of assessment;

“Employer” definition of section 12H of ITA

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‘employer’ means-

(a)     where only one employer is party to a registered learnership agreement, that employer; or

(b)     in the case where more than one employer is a party to a registered learnership agreement, the employer which is identified in that agreement as the lead employer;

Section 11(n) of ITA

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(n)     ……….

[Paragraph (n) amended by section 8 of Act 72 of 1963, substituted by section 12 of Act 55 of 1966 and section 9 of Act 76 of 1968, amended by section 9 of Act 65 of 1973 and section 9 of Act 69 of 1975, substituted by section 9 of Act 113 of 1977, amended by section 5 of Act 101 of 1978, section 8 of Act 104 of 1979, section 7 of Act 91 of 1982, section 10 of Act 94 of 1983, section 11 of Act 121 of 1984, section 8 of Act 90 of 1988, section 8 of Act 70 of 1989, section 11 of Act 101 of 1990, section 11 of Act 141 of 1992, section 9 of Act 113 of 1993, section 12 of Act 21 of 1995, section 20 of Act 53 of 1999, section 2 and section 11 of Act 8 of 2007, section 1 and section 10 of Act 3 of 2008, section 18 of Act 60 of 2008 and substituted by section 14 of Act 17 of 2009, amended by section 30 of Act 24 of 2011, deleted by section 27(1)(m) of Act 31 of 2013 effective on 1 March 2016, operation date specified in section 27(1)(m) of Act 31 of 2013 as substituted by section 122(1)(b) of Act 43 of 2014]

“Affected asset” definition of section 12D of ITA

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(1)     For the purposes of this section –

 

“affected asset” means any –

 

(a)     pipeline used for the transportation of natural oil;

 

(aA)   pipeline for the transportation of water used by power stations in the process of generating electricity;

 

(b)     line or cable used for the transmission of electricity;

 

(c)     line or cable used for the transmission of electronic communications; and

 

(d)     railway line used for the transportation of persons, goods or things,

 

and includes any earthworks or supporting structures and equipment forming part of or ancillary to such pipeline, transmission line or cable or railway line and any improvement to such pipeline, transmission line or cable or railway line;