Category: CHAPTER II – The Taxes (ITA)

“Cost of training” definition of section 12I of ITA

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‘cost of training’ means-

  

(a)     in the case of training provided by the taxpayer, the cost of remuneration of employees of the taxpayer who are employed exclusively to provide training to the taxpayer’s employees and the cost of training materials;

 

(b)     in the case of training provided by a person that is a connected person in relation to the taxpayer, so much of the cost charged by the connected person as is incurred in respect of the remuneration of employees who are employed to provide training to the taxpayer’s employees and the cost of materials used by the connected person to provide the training; and

 

(c)     in any other case, the cost to the taxpayer of the training charged by the person providing the training;

“Research and development” definition of section 11D of ITA

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(1)     For the purposes of this section “scientific or technological research and development” means systematic investigative or systematic experimental activities aimed at resolving scientific or technological uncertainty and the resolution of which is not readily deducible by a person skilled in the relevant scientific or technological field for the purpose of—

(a)     discovering new scientific or technological knowledge;

[Paragraph (a) substituted by section 12(1)(b) of Act 17 of 2023 with effect from 1 January, 2024 and applicable in respect of applications received and expenditure incurred on or after that date]

(b)     creating or developing new or significantly improved products, processes or services;

[Paragraph (b) amended by section 18(1)(a) of Act 43 of 2014 and substituted by section 12(1)(c) of Act 17 of 2023 with effect from 1 January, 2024 and applicable in respect of applications received and expenditure incurred on or after that date]

(c)     . . . . . .

[Paragraph (c) amended by section 18(1)(b) of Act 43 of 2014(effective date in section 18(3) of Act 43 of 2014 as substituted section 64(1) of Act 17 of 2023) and deleted by section 12(1)(d) of Act 17 of 2023 with effect from 1 January, 2024 and applicable in respect of applications received and expenditure incurred on or after that date]

(d)     creating or developing a multisource pharmaceutical product, as defined in the World Health Organisation Technical Report Series, No. 937, 2006 Annex 7 Multisource (generic) pharmaceutical products: guidelines on registration requirements to establish interchangeability issued by the World Health Organisation, conforming to Regulation 344 of 23 April 2015 and any requirements as must be prescribed by regulations made by the Minister after consultation with the Minister of Higher Education, Science and Innovation; or

[Paragraph (d) inserted by section 18(1)(c) of Act 43 of 2014(effective date in section 18(3) of Act 43 of 2014 as substituted section 64(1) of Act 17 of 2023) and substituted by section 12(1)(e) of Act 17 of 2023 with effect from 1 January, 2024 and applicable in respect of applications received and expenditure incurred on or after that date]

(e)     conducting a clinical trial as defined in Appendix F of the Guidelines for good practice in the conduct of clinical trials with human participants in South Africa issued by the Department of Health (2006), conforming to Regulation 346 of 23 April 2015 and any requirements as must be prescribed by regulations made by the Minister after consultation with the Minister of Higher Education, Science and Innovation;

[Paragraph (e) inserted by section 18(1)(c) of Act 43 of 2014 and substituted by section 12(1)(f) of Act 17 of 2023 with effect from 1 January, 2024 and applicable in respect of applications received and expenditure incurred on or after that date]

Provided that for the purposes of this definition, “scientific or technological research and development” does not include activities for the purpose of-

(a)     routine testing, analysis, collection of information or quality control in the normal course of business;

(b)     . . . . . .

[Paragraph (b) amended by section 18(1)(a) of Act 43 of 2014(effective date in section 18(2) of Act 43 of 2014 as substituted section 64(1) of Act 17 of 2023) and substituted by section 18(1)(d) of Act 43 of 2014 and deleted by section 12(1)(h) of Act 17 of 2023 with effect from 1 January, 2024 and applicable in respect of applications received and expenditure incurred on or after that date]

(c)     market research, market testing or sales promotion;

(d)     social science research, including the arts and humanities;

(e)     oil and gas or mineral exploration or prospecting except research and development carried on to develop technology used for that exploration or prospecting;

(f)      the creation or development of financial instruments or financial products;

(g)     the creation or enhancement of trademarks or goodwill; or

(h)     any expenditure contemplated in section 11(gB) or (gC).

[Subsection (1) substituted by section 13(1)(a) of Act 8 of 2007, amended by section 19(1)(a) of Act 35 of 2007 and by section 19(1) of Act 60 of 2008, substituted by section 32(1) of Act 24 of 2011(effective date in section 32(2) of Act 24 of 2011 as substituted section 168(1) of Act 22 of 2012 and by section 57(1) of Act 17 of 2023) and by section 29(1)(a) of Act 31 of 2013(effective date in section 29(2) of Act 31 of 2013 as substituted section 62(1) of Act 17 of 2023) and amended by section 12(1)(g) of Act 17 of 2023 with effect from 1 January, 2024 and applicable in respect of applications received and expenditure incurred on or after that date]

“Airport asset” definition of section 12F of ITA

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(1)     For the purposes of this section-

  

“airport asset” means any aircraft hangar, apron, runway or taxiway on any designated airport, and includes any earthworks or supporting structures forming part of such aircraft hangar, apron, runway or taxiway and any improvements to such aircraft hangar, apron, runway or taxiway; and

Section 11E (ITA) – Deduction of certain expenditure incurred by sporting bodies

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11E.     Deduction of certain expenditure incurred by sporting bodies

 

For the purpose of determining the taxable income derived by-

 

(a)     any non-profit company as defined in the Companies Act; or

 

(b)     an association of persons that has been incorporated, formed or established in the Republic,

 

from carrying on any sporting activities falling under a code of sport administered and controlled by a national federation as contemplated in section 1 of the National Sport and Recreation Act, 1998 (Act No. 110 of 1998), there shall be allowed as a deduction from the income of that company or association-

 

(i)      expenditure, not of a capital nature, incurred by that company or association on the development and promotion, directly by that company or association ;or

 

(ii)     any payment made to any other company or association contemplated in this section for expenditure to be incurred on the development and promotion,

 

of sporting activities contemplated in paragraph 9 of Part I of the Ninth Schedule falling under that code of sport.

Section 11sex (ITA) – Deduction of compensation for railway operating losses

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11sex.  Deduction of compensation for railway operating losses

 

For the purpose of determining the taxable income derived by any taxpayer from carrying on any trade within the Republic, there shall be allowed as a deduction from the income of the taxpayer so derived the amount of any compensation due to Transnet Limited and paid by the taxpayer (whether directly or through any trade association of which the taxpayer is a member) in respect of any loss incurred by Transnet Limited in operating any railway line, if –

 

(a)     such railway line was constructed under or in pursuance of a written agreement with Transnet Limited in terms of which Transnet Limited undertook to operate the railway line;

 

(b)     the compensation so paid was paid in order to discharge an obligation under the said agreement to pay such compensation; and

 

(c)     the taxpayer’s liability to pay such compensation was incurred in connection with his trade.

 

12.      ……….

 

12A.    ……….

“Port asset” definition of section 12F of ITA

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 “port asset” means any port terminal, breakwater, sand trap, berth, quay wall, bollard, graving dock, slipway, single point mooring, dolos, fairway, surfacing, wharf, seawall, channel, basin, sand bypass, road, bridge, jetty or off-dock container depot, and includes any earthworks or supporting structures forming part of such terminal, breakwater, sand trap, berth, quay wall, bollard, graving dock, slipway, single point mooring, dolos, fairway, surfacing, wharf, seawall, channel, basin, sand bypass, road, bridge, jetty or depot and any improvements thereto.