Category: PART I – Normal Tax (ITA)

Section 10(1)(nB) of ITA

Posted on by admin_kmos

(nB)   any benefit or advantage accruing to any employee (as defined in paragraph 1 of the Seventh Schedule) by reason of the fact that his employer (as defined in the said paragraph), has, in consequence of the transfer of the employee from one place of employment to another place of employment or the appointment of the employee as an employee of the employer or the termination of the employee’s employment, borne the expense –

(i)      of transporting such employee, members of his household and the personal goods and possessions of himself and the members of his household from his previous place of residence to his new place of residence; or

(ii)     of the costs which have been incurred by the employee in respect of the sale of his or her previous residence and in settling in permanent residential accommodation at his or her new place of residence; or

[Subpara (ii) substituted by section 7 of Act 65 of 1986 and section 16 of Act 25 of 2015 effective on 1 January 2016]

(iii)    of hiring residential accommodation in an hotel or elsewhere for the employee or members of his household during the period ending 183 days after his transfer took effect or after he took up his appointment, as the case may be, if such residential accommodation was occupied temporarily pending the obtaining of permanent residential accommodation;

Section 10(1)(nA) of ITA

Posted on by admin_kmos

(nA)  where an employee is as a condition of his employment required while on duty to wear a special uniform which is clearly distinguishable from ordinary clothing, the value of any such uniform given to the employee by his employer, or so much of any allowance made by the employer to the employee in lieu of any such uniform as is reasonable;

Section 10(1)(l) of ITA

Posted on by admin_kmos

(l)      the amount of any royalty as defined in section 49A which is received by or accrues to any person that is not a resident, unless-

(i)      that person is a natural person who was physically present in the Republic for a period exceeding 183 days in aggregate during the twelve-month period preceding the date on which the amount is received by or accrues to that person; or

(ii)     the intellectual property or the knowledge or information in respect of which that royalty is paid is effectively connected with a permanent establishment of that person in the Republic;

[Paragraph (l) deleted by section 10 of Act 101 of 90. inserted by section 13 of Act 59 of 2000 and substituted by section 19 of Act 22 of 2012 and section 14 of Act 43 of 2014 effective on 1 January 2015]

Section 10(1)(k) of ITA

Posted on by admin_kmos

(k)

 

(i)      dividends (other than dividends paid or declared by a headquarter company) received by or accrued to any person: Provided that this exemption shall not apply –

 

(aa)   to dividends (other than those received by or accrued to or in favour of a person that is not a resident or a dividend contemplated in paragraph (b) of the definition of ‘dividend’) distributed by a company that is a REIT, or a controlled company as defined in section 25BB;

 

(bb)   ……….

 

(cc)    ………

 

(dd)   to any dividend in respect of a restricted equity instrument as defined in section 8Cto the extent that the restricted equity instrument was acquired in the circumstances contemplated in section 8C, unless-

 

(A)    the restricted equity instrument constitutes an equity share, other than an equity share that would have constituted a hybrid equity instrument as defined in section 8E(1) but for the three-year period requirement contemplated in that definition;

 

(B)     the dividend constitutes an equity instrument as defined in that section; or

 

(C)     the restricted equity instrument constitutes an interest in a trust and, where that trust holds shares, all of those shares constitute equity shares, other than equity shares that would have constituted hybrid equity instruments as defined in section 8E(1) but for the three-year period requirement contemplated in that definition;

 

(ee)    to any dividend received by or accrued to a company in consequence of-

 

(A)    any cession of the right to that dividend; or

 

(B)    the exercise of a discretionary power by any trustee of a trust,

 

unless that cession or exercise results in the holding by that company of all of the rights attaching to a share;

(ff)    to any dividends received by or accrued to a company in respect of a share borrowed by that company; or

 

(gg)   to any dividends received by or accrued to a company in respect of a share held by that company to the extent that the aggregate of those dividends does not exceed an amount equal to the aggregate of any amounts incurred by that company as compensation for any distributions in respect of any other share borrowed by the company, other than a share in respect of which any dividends were received by or accrued to that company as contemplated in paragraph (ff), where the share so borrowed and the share so held are identical shares: Provided that where the company borrowing the share has lent out any other share that is an identical share to the share so borrowed, the aggregate amount so incurred must be reduced by the amount accrued to that company as compensation for any distribution in respect of the share so lent;

[Item (gg) added by section 28 of Act 24 of 2011 effective on 1 April 2012, repealed by section 166 of Act 22 of 2012 effective on 10 January 2012, again item (gg) added by section 19 of Act 22 of 2012, amended by section 14 of Act 43 of 2014 and substituted by section 16 of Act 25 of 2015 effective on 1 January 2016]

(hh)   to any dividends received by or accrued to a company in respect of a share to the extent that-

(A) the aggregate of those dividends does not exceed an amount equal to the aggregate of any deductible expenditure incurred by that company or any amount taken into account that has the effect of reducing income in the application of section 24JB(2); and

(B)    the amount of that expenditure or reduction is determined directly or indirectly with reference to the dividend in respect of an identical share to that share;

[Subitem (B) substituted by section 16 of Act 25 of 2015 effective on 1 January 2016]

 

: Provided that the deductible expenditure so incurred or the amount of the reduction must be reduced by any amount of income accrued to the company in respect of any distribution in respect of any other share that is an identical share in relation to that share;

[Proviso to item (hh) added by section 16 of Act 25 of 2015 effective on 1 January 2016]

[Item (hh) added by section 19 of Act 22 of 2012 effective on 1 April 2013, deleted by section 194 of Act 31 of 2013 effective on 1 April 2013, and agian item (hh) added by section 23 of Act 31 of 2013 and substituted by section 14 of Act 43 of 2014]

 

(ii)     to any dividend received by or accrued to a person in respect of services rendered or to be rendered or in respect of or by virtue of employment or the holding of any office, other than a dividend received or accrued in respect of a restricted equity instrument as defined in section 8C held by that person or in respect of a share held by that person;

 

(jj)     notwithstanding the provisions of paragraphs (dd) and (ii), to any dividend in respect of a restricted equity instrument as defined in section 8C that was acquired in the circumstances contemplated in section 8C(1) if that dividend constitutes-

(A)    an amount transferred or applied by a company as consideration for the acquisition or redemption of any share in that company;

(B)    an amount received or accrued in anticipation or in the course of the winding up, liquidation, deregistration or final termination of a company; or

(C)    an equity instrument that does not qualify, at the time of the receipt or accrual of that dividend, as a restricted equity instrument as defined in section 8C; or

[Item (jj) added by section 23 of Act 15 of 2016 effective on 1 March 2017 and applies in respect any amount received or accrued on or after that date and substituted by section 16 of Act 17 of 2017 effective on 18 Decemeber 2017]

(kk)   notwithstanding the provisions of paragraphs (dd) and (ii), to any dividend in respect of a restricted equity instrument as defined in section 8C that was acquired in the circumstances contemplated in section 8C(1) if that dividend is derived directly or indirectly from-

(A)    an amount transferred or applied by a company as consideration for the acquisition or redemption of any share in that company; or

(B)    an amount received or accrued in anticipation or in the course of the winding up, liquidation, deregistration or final termination of a company;

[Item (kk) added by section 16 of Act 17 of 2017 effective on 18 December 2017]

Section 11(cA) of ITA

Posted on by admin_kmos

(cA)   an allowance in respect of any amount actually incurred by such person in the course of the carrying on of his trade, as compensation in respect of any restraint of trade imposed on any other person who –

 

(i)      is a natural person;

(ii)     is or was a labour broker as defined in the Fourth Schedule (other than a labour broker in respect of which a certificate of exemption has been issued in terms of such Schedule);

(iii)    was a personal service company or personal service trust as defined in the Fourth Schedule prior to section 66 of the Revenue Laws Amendment Act, 2008, coming into operation; or

(iv)    is a personal service provider as defined in the Fourth Schedule,

to the extent that such amount constitutes or will constitute income of the person to whom it is paid: Provided that the amount allowed to be deducted under this paragraph shall not exceed for any one year the lesser of –

(aa)   so much of such amount so incurred as is equal to such amount divided by the number of years, or part thereof, during which the restraint of trade shall apply; or

(bb)   one-third of such amount so incurred;

Section 10(1)(o) of ITA

Posted on by admin_kmos

(o)     any form of remuneration –

(i)      as defined in paragraph 1 of the Fourth Schedule, derived by any person as an officer or crew member of a ship engaged –

(aa)   in the international transportation for reward of passengers or goods; or

(bb)   in the prospecting, exploration or mining (including surveys and other work of a similar nature) for, or production of, any minerals (including natural oils) from the seabed outside the Republic, where such officer or crew member is employed on board such ship solely for the purposes of the “passage” of such ship, as defined in the Marine Traffic Act, 1981 (Act No. 2 of 1981),

if such person was outside the Republic for a period or periods exceeding 183 full days in aggregate during the year of assessment;

(iA)   as defined in paragraph 1 of the Fourth Schedule, derived by any person as an officer or crew member of a South African ship as defined in section 12Q(1) mainly engaged-

(aa)   in international shipping as defined in section 12Q(1); or

(bb)   in fishing outside the Republic; or

(ii)     to the extent to which that remuneration does not exceed R1,25 million in respect of a year of assessment and is received by or accrues to any employee during any year of assessment by way of any salary, leave pay, wage, overtime pay, bonus, gratuity, commission, fee, emolument or allowance, including any amount referred to in paragraph (i) of the definition of gross income in section 1 or an amount referred to in section 8, 8B or 8C, in respect of services rendered outside the Republic by that employee for or on behalf of any employer, if that employee was outside the Republic-

(aa)

(a)    for a period or periods exceeding 183 full days in aggregate during any period of 12 months; or

(b)    for a period or periods exceeding 117 full days in aggregate during any period of 12 months in respect of any year of assessment ending on or after 29 February 2020 but on or before 28 February 2021; and

[Item (aa) substituted by section 16(j) of Act 35 of 2007 and by section 10(1)(c) of Act 23 of 2020 deemed to have come into operation 29 February 2020]

(bb)   for a continuous period exceeding 60 full days during that period of 12 months, and those services were rendered during that period or periods: Provided that-

(A)    for purposes of this subparagraph, a person who is in transit through the Republic between two places outside the Republic and who does not formally enter the Republic through a port of entry a contemplated in section 9(1) of the Immigration Act, 2002 (Act No. 13 of 2002), or at any other place as may be permitted by the Director General of the Department of Home Affairs or the Minister of Home Affairs in terms of that Act, shall be deemed to be outside the Republic;

(B)    the provisions of this subparagraph shall not apply in respect of any remuneration-

(AA)  derived in respect of the holding of a public office contemplated in section 9(2)(g); or

(BB)  received by or accrued to any person in respect of services rendered or work or labour performed as contemplated in section 9(2)(h); and

(C)    for the purposes of this subparagraph, where remuneration is received by or accrues to any employee during any year of assessment in respect of services rendered by that employee in more than one year of assessment, the remuneration is deemed to have accrued evenly over the period that those services were rendered;

[Paragraph (C) added by section 16(m) of Act 35 of 2007]

[Paragraph (o) substituted by section 13(1)(l) of Act 89 of 1969, deleted by section 7(1)(c) of Act 65 of 1973, inserted by section 4(1) of Act 140 of 1993, substituted by section 18(1)(h) of Act 53 of 1999 and by section 13(1)(p) of Act 59 of 2000 and amended by section 18(1)(e) of Act 74 of 2002 and by section 16(g) of Act 35 of 2007. Subparagraph (ii) substituted by section 18(1)(g) of Act 74 of 2002 and amended by section 16(i) of Act 35 of 2007, by section 16(1)(g) of Act 17 of 2017 and by section 6(1) of Act 22 of 2020 deemed effective on 1 March, 2020 and applicable in respect of years of assessment commencing on or after that date (section 6(1) of Act 22 of 2020 erroneously refers to the substitution in paragraph (o)(i) for the words preceding item (aa) instead of in paragraph (o)(ii))]

“Expected return” definition of section 10A of ITA

Posted on by admin_kmos

“expected return”, in relation to an annuity under an annuity contract, means an amount determined in a manner contemplated in this section as representing the sum of all the annuity amounts which may, as at the commencement of the annuity contract, be expected to become payable by way of the annuity from the said commencement;