Category: PART I – Normal Tax (ITA)

Section 10(1)(q) of ITA

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(q)     any bona fide scholarship or bursary, other than any scholarship or bursary contemplated in paragraph (qA), granted to enable or assist any person to study at a recognized educational or research institution: Provided that if any such scholarship or bursary has been so granted by an employer or an associated institution (as respectively defined in paragraph 1 of the Seventh Schedule) to an employee (as defined in the said paragraph) or to a relative of such employee, the exemption under this paragraph shall not apply –

[Words preceding the proviso substituted by section 16 of Act 17 of 2017 effective on 1 March 2018 and applies in respect of years of assessment commencing on or after that date]

(i)      in the case of a scholarship or bursary granted to so enable or assist any such employee, unless the employee agrees to reimburse the employer for any scholarship or bursary granted to that employee if that employee fails to complete his or her studies for reasons other than death, ill-health or injury;

(ii)     in the case of a scholarship or bursary granted to enable or assist any such relative of an employee so to study –

(aa)   if the remuneration proxy derived by the employee in relation to a year of assessment exceeded R600 000;

[Sub-paragraph (aa) amended by section 1(2)(c) of Act 3 of 2008, substituted by section 23(1)(t) of Act 31 of 2013, by section 23(1)(e) of Act 15 of 2016 and by section 7(1)(a) of Act 14 of 2017 and amended by section 10(1)(b) of Act 23 of 2020 effective on 1 March, 2021 and applicable in respect of years of assessment commencing on or after that date]

(bb)   to so much of any scholarship or bursary contemplated in this subparagraph as in the case of any such relative, during the year of assessment, exceeds-

(A)    R20 000 in respect of-

[Words preceding subsubitem (AA) substituted by section 23 of Act 15 of 2016 and section 7 of Act 14 of 2017 effective on 1 March 2017, applies in respect of years of assessment commencing on or after that date]

(AA)  grade R to grade twelve as contemplated in the definition of ‘school’ in section 1 of the South African Schools Act, 1996 (Act No. 84 of 1996); or

(BB)  a qualification to which an NQF level from 1 up to and including 4 has been allocated in accordance with Chapter 2 of the National Qualifications Framework Act, 2008 (Act No. 67 of 2008);

[Subitem (A) substituted by section 16 of Act 25 of 2015 effective on 1 March 2013]

(B)    R60 000 in respect of a qualification to which an NQF level from 5 up to and including 10 has been allocated in accordance with Chapter 2 of the National Qualifications Framework Act, 2008 (Act 67 of 2008); and

[Sub-paragraph (bb) amended by section 1(2)(c) of Act 3 of 2008, substituted by section 23(1)(t) of Act 31 of 2013 and amended by section 10(1)(b) of Act 23 of 2020 effective on 1 March, 2021 and applicable in respect of years of assessment commencing on or after that date] 

[Item (B) substituted by section 23(1)(g) of Act 15 of 2016 and by section 7(1)(c) of Act 14 of 2017 deemed effective on 1 March, 2017 and applicable in respect of years of assessment commencing on or after that date]

(cc)   if any remuneration to which the employee was entitled or might in the future have become entitled was in any manner whatsoever reduced or forfeited as a result of the grant of such scholarship or bursary;

[Sub-paragraph (cc) added by section 10(1)(b) of Act 23 of 2020 effective on 1 March, 2021 and applicable in respect of years of assessment commencing on or after that date]

[Paragraph (q) deleted by section 12(1)(i) of Act 129 of 1991, inserted by section 10(1)(p) of Act 141 of 1992, amended by section 10(1)(f) of Act 28 of 1997, by section 13(1)(c) and (d) of Act 30 of 2002 and substituted by section 10(1)(o) of Act 20 of 2006 and amended by section 16(1)(h) of Act 17 of 2017 effective on 1 March, 2018 and applicable in respect of years of assessment commencing on or after that date] 

“Annuity contract” definition of section 10A of ITA

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“annuity contract” means an agreement concluded between an insurer in the course of his insurance business and a purchaser, in terms of which –

 

(a)     the insurer agrees to pay to the purchaser or the purchaser’s spouse or surviving spouse an annuity or annuities (whether to one such person or to each of them) until the death of the annuitant or the expiry of a specified term;

 

(b)     the purchaser agrees to pay to the insurer a lump sum cash consideration for such annuity or annuities; and

 

(c)     no amounts are or will be payable by the insurer to the purchaser or any other person other than amounts payable by way of such annuity or annuities or, where an annuity is payable for a minimum term and such annuity is in the event of the death of the annuitant before the end of such term to continue to be payable to some third person for the balance of that term, amounts which may be so payable to such third person by way of such annuity,

 

but does not include any agreement for the payment by any insurer of any annuity which is under the rules of a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund payable to a member of such fund or to any other person;

Section 11(d) of ITA

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(d)     expenditure actually incurred during the year of assessment on repairs of property occupied for the purpose of trade or in respect of which income is receivable, including any expenditure so incurred on the treatment against attack by beetles of any timber forming part of such property and sums expended for the repair of machinery, implements, utensils and other articles employed by the taxpayer for the purposes of his trade;

Section 11(cA) of ITA

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(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 12DA (ITA) – Deduction in respect of rolling stock

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12DA.  Deduction in respect of rolling stock

(1)     There shall be allowed to be deducted from the income of the taxpayer an allowance, in respect of rolling stock brought into use by the taxpayer on or before 28 February 2022, in the carrying on of a trade, in respect of the cost actually incurred by the taxpayer in respect of the acquisition or improvement of any rolling stock which is owned by the taxpayer, or acquired by the taxpayer as purchaser in terms of an agreement contemplated in paragraph (a) of the definition of “instalment credit agreement” in section 1 of the Value-Added Tax Act and is used directly by the taxpayer wholly or mainly for the transportation of persons, goods or things to the extent that such rolling stock is used in the production of that taxpayer’s income.

[Subsection (1) substituted by section 34 of Act 31 of 2013, by section 15 of Act 23 of 2020 and by section 12 of Act 20 of 2021]

(2)     The allowance contemplated in subsection (1) shall, in respect of any one year of assessment, be 20 per cent of the cost incurred in respect of any rolling stock.

(3)     For purposes of this section the cost to a taxpayer of any rolling stock shall be deemed to be the lesser of the actual cost to the taxpayer or the cost which a person would, if that person had acquired or improved the rolling stock under a cash transaction concluded at arm’s length on the date on which the transaction for the acquisition or improvement of rolling stock was in fact concluded, have incurred in respect of the direct cost of acquisition or improvement of the rolling stock.

[Subsection (3) substituted by section 25 of Act 17 of 2017 effective on 18 December 2017]

(4)     Where any rolling stock in respect of which any deduction is claimed in terms of this section was during any previous year of assessment used by the taxpayer for the purposes of any trade carried on by such taxpayer, the receipts and accruals of which were not included in the income of such taxpayer during such year, any deduction which could have been allowed in terms of this section during such year or any subsequent year in which such asset was used by the taxpayer shall for the purposes of this section be deemed to have been allowed during such previous year or years as if the receipts and accruals of such trade had been included in the income of such taxpayer.

(5)     No deduction shall be allowed under this section in respect of any rolling stock that has been disposed of by the taxpayer during any previous year of assessment.

(6)     The deductions which may be allowed or deemed to have been allowed in terms of this section and any other provision of this Act in respect of the cost of any rolling stock shall not in the aggregate exceed the amount of such cost.

Section 12E (ITA) – Deduction in respect of small business corporations

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12E.     Deductions in respect of small business corporations

(1)     Where any plant or machinery (hereinafter referred to as an asset) owned by a taxpayer which qualifies as a small business corporation or acquired by such a taxpayer as purchaser in terms of an agreement contemplated in paragraph (a) of the definition of ‘instalment credit agreement’ in section 1 of the Value-Added Tax Act-

[Words preceding paragraph (a) substituted by section 35 of Act 31 of 2013 effective 12 December 2013]

(a)     is brought into use for the first time by that taxpayer on or after 1 April 2001 for the purpose of that taxpayer’s trade (other than mining or farming); and

(b)     is used by that taxpayer directly in a process of manufacture (or any other process which is of a similar nature) carried on by that taxpayer, a deduction equal to the cost of such asset shall be allowed in the year that such asset is so brought into use.

[Subsection (1) amended by section 21 of Act 31 of 2005 and substituted by section 21 of Act 25 of 2015 effective on 8 January 2016]

(1A)  Subject to subsection (1). where any machinery, plant, implement, utensil, article, aircraft or ship in respect of which a deduction is allowable under section 11(e) (‘the asset’) is acquired by a small business corporation under an agreement formally and finally signed by every party to the agreement on or after 1 April 2005, the amount allowed to be deducted in respect of the asset must, at the election of the small business corporation and subject to the provisions of that section, be either-

(a)     the amount allowable in terms of and subject to that section; or

(b)     an amount equal to 50 per cent of the cost of the asset in the year of assessment during which it was first brought into use, 30 per cent in the first succeeding year and 20 per cent in the second succeeding year.

(2)     For purposes of this section the cost to a taxpayer of any asset shall be deemed to be the lesser of the actual cost to the taxpayer to acquire that asset or the cost which a person would, if he had acquired the said asset under a cash transaction concluded at arm’s length on the date on which the transaction for the acquisition of the asset was in fact concluded, have incurred in respect of the direct cost of acquisition of the asset, including the direct cost of the installation or erection thereof.

[Subsection (2) substituted by section 21 of Act 31 of 2005 and section 26 of Act 17 of 2017 effective on 18 December 2017]

(3)     Any expenditure (other than expenditure referred to in section 11(a)) incurred by a taxpayer during any year of assessment in moving an asset in respect of which a deduction was allowed or is allowable under this section from one location to another must –

(a)     where the taxpayer is or was entitled to a deduction in respect of that asset under subsection (1A) in that year and one or more succeeding years, be allowed to be deducted from his or her income in equal instalments in that year and each succeeding year in which that deduction is allowable; or

(b)     in any other case, be allowed to be deducted from that taxpayer’s income in that year.

(3B)  No deduction shall be allowed under this section in respect of any asset in respect of which a deduction has been granted to the taxpayer under section 12BA.

[Subsection (3B) inserted by section 17(1) of Act 17 of 2023 and substituted by section 11(1) of Act 42 of 2024 deemed to have come into operation on 1 March, 2023 and applicable in respect of assets brought into use on or after that date]

“Investment income” definition of section 12E of ITA

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(b)     ‘investment income’ means-

(i)      any income in the form of dividends, foreign dividends, royalties, rental derived in respect of immovable property, annuities or income of a similar nature;

(ii)     any interest as contemplated in section 24J (other than any interest received by or accrued to any co-operative bank as contemplated in paragraph (a)(ii)(ff)), any amount contemplated in section 24K and any other income which, by the laws of the Republic administered by the Commissioner, is subject to the same treatment as income from money lent; and

(iii)    any proceeds derived from investment or trading in financial instruments (including futures, options and other derivatives), marketable securities or immovable property;

(c)     ………