Category: PART I – Normal Tax (ITA)

Section 10(1)(k) of ITA

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(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 10(1)(o) of ITA

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(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;

“Purchaser” definition of section 10A of ITA

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“purchaser”, in relation to an annuity contract means –

 

(a)     any natural person and includes such person’s deceased or insolvent estate; or

 

(b)     a curator bonis of, or a trust created solely for the benefit of, any natural person where the High Court has declared such person to be of unsound mind and incapable of managing his own affairs and such Court has ordered the appointment of such curator or creation of such trust, as the case may be;

Section 11(l) of ITA

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(l)      any amount contributed by a person that is an employer during the year of assessment for the benefit of or on behalf of any employee or former employee of the employer or for any dependant or nominee of a deceased employee or former employee of that employer to any pension fund, provident fund or retirement annuity fund in terms of the rules of that fund: Provided that for the purposes of this paragraph a partner in a partnership must be deemed to be an employee of the partnership and a partnership must be deemed to be the employer of the partners in that partnership;

[Paragraph (l) substituted by section 8 of Act 104 of 1979, amended by section 30 of Act 30 of 1998, section 10 of Act 94 of 1983, section 10 of Act 3 of 2008 and section 271 of Act 28 of 2011 and substituted by section 27(1)(l) of Act 31 of 2013 effective on 1 March 2016 (Date of operation in section 27(1)(l) of Act 31 of 2013 as substituted by section 122(1)(b) of Act 43 of 2014) and section 25 of Act 23 of 2018 effective on 1 March 2018]

Section 11(a) of ITA – general deduction formula

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For the purpose of determining the taxable income derived by any person from carrying on any trade, there shall be allowed as deductions from the income of such person so derived –

 

(a)     expenditure and losses actually incurred in the production of the income, provided such expenditure and losses are not of a capital nature;

 

(b)     ……….

Section 11(k) of ITA

Posted on by admin_kmos

(k)       ……….

[Paragraph (k) amended by section 8 of Act 72 of 1963, substituted by section 12 of Act 55 of 1966, section 9 of Act 65 of 1973, section 9 of Act 69 of 1975 and section 9 of Act 113 of 1977, amended by section 5 of Act 101 of 1978, section 8 of Act 104 of 1979, section 9 of Act 96 of 1981, section 10 of Act 94 of 1983, section 11 of Act 121 of 1984, section 30 of Act 30 of 1998, section 18 of Act 31 of 2005, section 2 of Act 8 of 2007, section 1 of Act 3 of 2008, section 10 of Act 3 of 2008, section 14 of Act 17 of 2009, substituted by section 27(1)(k) of Act 31 of 2013 (substitution by and date of operation in terms of section 27(1)(k) of Act 31 of 2013 substituted by section 122(1)(a) and (b) of Act 43 of 2014), amended by section 2 of Act 2 of 2016 and section 26 of Act 15 of 2016 and deleted by section 19 of Act 17 of 2017 effective on 1 March 2016]