Category: PART I – Normal Tax (ITA)

Subsections 1A, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 16, 17, 18, 19, 20, 21, 22, 23 and 24 of section 12I of ITA

Posted on by admin_kmos

(1A)  For the purposes of this section, if a taxpayer completes an improvement as contemplated in section 12N, the improvement shall be deemed to be a new and unused manufacturing asset and the expenditure incurred by the taxpayer to complete the improvement shall be deemed to be the cost of that new and unused manufacturing asset contemplated in subsection (2).

 

(1B)    For the purposes of this section, if a taxpayer completes an improvement on any land not owned by that taxpayer and that improvement consists of machinery or plant as contemplated in section 12C(1)(a), that taxpayer shall be deemed to be the owner of that improvement.

[Subsection (1B) inserted by section 22 of Act 43 of 2014 effective on 1 January 2015]

 

(2)     In addition to any other deductions allowable in terms of this Act, a company may, subject to subsection (3), deduct an amount (hereinafter referred to as an additional investment allowance) equal to-

 

(a)

 

(i)      55 per cent of the cost of any new and unused manufacturing asset used in an industrial policy project with preferred status; or

 

(ii)     100 per cent of the cost of any new and unused manufacturing asset used in an industrial policy project with preferred status that is located within a special economic zone; or

[Subparagraph (ii) substituted by section 22 of Act 43 of 2014 effective on the date on which the Special Economic Zones Act, operational on 9 February 2016]

 

(b)

 

(i)      35 per cent of the cost of any new and unused manufacturing asset used in any industrial policy project other than an industrial policy project with preferred status; or

 

(ii)     75 per cent of the cost of any new and unused manufacturing asset used in any industrial policy project other than an industrial policy project with preferred status that is located within a special economic zone;

[Subparagraph (ii) substituted by section 22 of Act 43 of 2014 effective on the date on which the Special Economic Zones Act, operational on 9 February 2016]

 

in the year of assessment during which that asset is first brought into use by the company as owner thereof for the furtherance of the industrial policy project carried on by that company, if that asset was acquired and contracted for on or after the date of approval and was brought into use within four years from the date of approval.

 

(3)     The additional investment allowance contemplated in subsection (2) may not exceed-

 

(a)     R900 million in the case of any greenfield project with preferred status, or R550 million in the case of any other greenfield project from the date of approval;

 

(b)     R550 million in the case of any brownfield project with preferred status, or R350 million in the case of any other brownfield project from the date of approval.

 

(4)     In addition to any other deductions allowable in terms of this Act, a company may, subject to subsection (5), deduct an amount (hereinafter referred to as an additional training allowance) equal to the cost of training provided to employees in the year of assessment during which the cost of training is incurred for the furtherance of the industrial policy project carried on by that company.

 

(5)

 

(a)     The cost of training contemplated in subsection (4) must be incurred by the end of the compliance period.

 

(b)     Notwithstanding subsection (2), there must be allowed to be deducted, not earlier than the year of assessment preceding the year in which the asset is brought into use, any amount in respect of the additional training allowance.

 

(c)     The additional training allowance contemplated in subsection (4) allowed to a company may not exceed R36 000 per employee.

 

(d)     The additional training allowance contemplated in subsection (4) allowed to a company at the end of the compliance period from the date of approval may not exceed-

 

(i)      R30 million in the case of an industrial policy project with preferred status; and

 

(ii)     R20 million in the case of any other industrial policy project.

[Subsectoin (5) substituted by section 22 of Act 25 of 2015 effective on 1 January 2016]

 

(6)

 

(a)     Where a taxpayer is allowed a deduction in terms of subsection (2) in the current or any previous year of assessment, any balance of assessed loss carried forward by the taxpayer during a year of assessment must be increased by the amount by which that balance of assessed loss exceeds an amount equal to any balance of assessed loss that would have been carried forward during that year had that deduction not been allowed, multiplied by the rate contemplated in paragraph (a) of the definition of ‘prescribed rate’ as at the end of the year of assessment.

 

(b)     Paragraph (a) does not apply in respect of any balance of assessed loss incurred by a taxpayer during any year of assessment more than four years after the year during which the approval contemplated in subsection (8) is granted.

 

(7)     An industrial project of a company constitutes an industrial policy project if-

 

(a)     the Minister of Trade and Industry, after taking into account the recommendations of the adjudication committee, is satisfied that-

 

(i)      the cost of all manufacturing assets to be acquired by the company for the purposes of the project will exceed-

 

(aa)    in the case of greenfield projects, R50 million; and

[Item (aa) substituted by section 22 of Act 43 of 2014 effective on 1 January 2015]

 

(bb)   in the case of brownfield projects, the higher of-

 

(A)    R30 million; or

 

(B)    the lesser of R50 million or 25 per cent of the expenditure incurred to acquire assets previously used in the project;

 [Subitem (B) substituted by section 22 of Act 43 of 2014 effective on 1 January 2015]

 

(ii)     the project does not constitute an industrial participation project and does not receive any concurrent industrial incentive provided by any national sphere of government; and

 

(iii)    the project is not integrally related to any other project of the company (or any other company that forms part of the same group of companies as that company) that has been approved as contemplated in subsection (8);

 

(iv)    ……….

[Subparagraph (iv) deleted by section 22 of Act 25 of 2015 effective on 8 January 2009]

 

(b)     ……….

 

(c)     more than 50 per cent of the manufacturing assets to be acquired by the company for the purposes of the project will be brought into use by that company within four years from the date of approval; and

 

(d)     the application for approval of the project by the company is received by the Minister of Trade and Industry not later than 31 March 2020, in such form and containing such information as the Minister of Trade and Industry may prescribe.

[Paragraph (d) substituted by section 26 of Act 7 of 2010, section 22 of Act 25 of 2015 and section 27 of Act 17 of 2017 effective on 31 March 2017]

 

(8)     The Minister of Trade and Industry must, after taking into account the recommendations of the adjudication committee, approve an industrial project as an industrial policy project, either with or without preferred status, where that Minister is satisfied that the industrial policy project will significantly contribute to the Industrial Policy Programme within the Republic having regard to-

 

(a)     the extent to which the project will upgrade an industry within the Republic by-

 

(i)      utilising innovative processes;

 

(ii)     utilising new technology that results in-

 

(aa)    improved energy efficiency; and

 

(bb)   cleaner production technology; and

 

(iii)    providing skills development;

 

(b)     the extent to which the project will provide general business linkages within the Republic;

 

(c)     the extent to which the project will acquire goods or services from small, medium and micro enterprises;

 

(d)     ……….

[Paragraph (d) deleted by section 22 of Act 43 of 2014 effective on 1 January 2015]

 

(e)    the extent to which the project will provide skills development in the Republic; and

 

(f)     in the case of a greenfield project, the location of the project within a special economic zone.

[Paragraph (f) substituted by section 22 of Act 43 of 2014 effective on the date on which the Special Economic Zones Act is operational, 9 February 2016]

 

(9)     Notwithstanding subsection (8), the Minister of Trade and Industry may not approve any industrial project where the potential additional investment and training allowances in respect of that project and all other approved industrial projects (other than those projects where the approval thereof has been withdrawn under subsection (12)), will in the aggregate exceed R20 billion.

 

(10)   The Minister of Finance, in consultation with the Minister of Trade and Industry, must make regulations prescribing-

 

(a)     the factors to be taken into account in determining whether the industrial project will significantly contribute to the Industrial Policy Programme within the Republic;

 

(b)     the factors to be taken into account in determining whether the project will provide general business linkages within the Republic;

 

(c)     the factors to be taken into account in determining whether goods or services will be acquired from small, medium and micro enterprises;

 

(d)     ……….

[Paragraph (d) deleted by section 22 of Act 43 of 2014 effective on 1 January 2015]

 

(e)     the extent to which the project must provide skills development in the Republic and the factors to be taken into account in determining whether the project provides skills development in the Republic;

 

(f)      the factors to be taken into account in determining the location of the project within a special economic zone.

[Paragraph (f) substituted by section 22 of Act 43 of 2014 effective on the date on which the Special Economic Zones Act is operational, 9 February 2016]

 

(g)     the extent to which the project must improve energy efficiency and the factors to be taken into account in determining the extent to which the project must utilise new technology that results in improved energy efficiency and cleaner production technology; and

 

(h)     what constitutes an industrial participation project and a concurrent industrial incentive.

 

(11)   Within 12 months after the close of each year of assessment, starting with the year in which approval is granted in terms of subsection (8), a company carrying on an industrial policy project must report until the end of the compliance period to the adjudication committee with respect to the progress of the industrial policy project in terms of the requirements of subsections (7) and (8) within such time, in such form and in such manner as the Minister of Finance may prescribe.

[Subsection (11) substituted by section 6 of Act 21 of 2012 and section 22 of Act 25 of 2015 effective on 8 January 2009]

 

(12)   Where in respect of any company carrying on an industrial policy project-

 

(a)   

 

(i)      during any year of assessment-

 

(aa)   any material fact changes; or

 

(bb)   the company fails to comply with any requirement contemplated in subsection (7), which would have had the effect that approval in terms of subsection (8) would not have been granted had such change in fact or such failure been known to the Minister of Trade and Industry at the time of granting approval; or

 

(ii)     the company fails to comply with any requirement contemplated in subsection (8) at the end of the compliance period;

[Paragraph (a) substituted by section 22 of Act 25 of 2015 effective on 8 January 2009]

 

(b)     the company fails to submit a report to the adjudication committee as required in terms of subsection (11); or

 

(c)     the approval granted in terms of subsection (8) was based on fraudulent information or misrepresentation or non-disclosure of material facts,

 

the Minister of Trade and Industry may, after taking into account the recommendations of the adjudication committee, withdraw the approval granted in respect of that industrial policy project with effect from a date specified by that Minister, and must inform the Commissioner of that withdrawal and of that date.

 

(12A) Where in respect of any company carrying on an industrial policy project the Minister of Trade and Industry approved that project as an industrial policy project with preferred status in terms of subsection (8) in accordance with Regulation 4 of the Regulations (GNR.639 of 23 July 2010: Government Gazette No. 33385) as amended) and that project did not comply with the criteria of a project with preferred status at the end of the compliance period, the Minister of Trade and Industry may, after taking into account the recommendations of the adjudication committee, withdraw the approval granted in respect of that industrial policy project as an industrial policy project with preferred status and substitute that approval with an approval of the industrial policy project as a project with qualifying status with effect from a date specified by that Minister, and must inform the Commissioner of that withdrawal, substitution and of that date.

[Subsection (12A) inserted by section 31 of Act 15 of 2016 effective on 19 January 2017]

 

(13)   The Commissioner may, notwithstanding the provisions of Chapter 6 of the Tax Administration Act–

 

(a)     notify the Minister of Trade and Industry whenever the Commissioner discovers information that may cause a withdrawal of approval in terms of subsection (12);

 

(b)     disallow all deductions otherwise provided for under this section starting with the date of approval if the company is guilty of fraud or misrepresentation or non-disclosure of material facts with regard to any tax, duty or levy administered by the Commissioner and must notify the Minister of Trade and Industry accordingly; and

 

(c)     inform the Minister of Trade and Industry where any company has requested the Commissioner to issue a certificate contemplated in subsection (7)(b)(ii) and that certificate was denied;

[Paragraph (c) amended by section 31 of Act 15 of 2016 effective on 19 January 2017]

 

(d)     where the approval granted in respect of that industrial policy project as an industrial policy project with preferred status was withdrawn and substituted as an industrial policy project with qualifying status as contemplated in subsection (12A), make an appropriate adjustment to the taxable income of that company during the year of assessment in which that approval is substituted in relation to all deductions of the company as at the end of that year of assessment, having regard to all amounts which would have been deemed to have been incurred by that company had the provisions of this paragraph not been applicable during all years of assessment before that year of assessment and all amounts which have been deducted from the income of that company during those years of assessment.

[Paragraph (d) added by section 31 of Act 15 of 2016 effective on 19 January 2017]

 

(14)  The Commissioner may, notwithstanding the provisions of sections 99(1) and 100 of the Tax Administration Act, raise an additional assessment for any year of assessment where-

 

(a)     an additional investment allowance which has been allowed in any previous year must be disallowed in terms of subsection (12) or (13); or

 

(b)     an adjustment must be made as contemplated in subsection (13)(d).

[Subsection (14) substituted by section 271 read with paragraph 36(b) of Schedule 1 of Act 28 of 2011 and by section 31(c) of Act 15 of 2016 and amended by section 5 of Act 18 of 2023]

 

(15)   ……….

 

(16)   There shall for the purposes of this section be an adjudication committee which must consist of at least-

 

(a)     three persons employed by the Department of Trade and Industry, appointed by the Minister of Trade and Industry; and

 

(b)     three persons employed by the National Treasury or the South African Revenue Service, appointed by the Minister of Finance:

 

Provided that the Minister of Trade and Industry or the Minister of Finance, as the case may be, may appoint alternative persons so employed if any person appointed in terms of paragraph (a) or (b) is not available to perform any function as a member of the committee.

 

(17)   The adjudication committee is an independent committee which performs its functions impartially and without fear, favour or prejudice and for the purpose of this section, the adjudication committee may-

 

(a)     evaluate any application and make recommendations to the Minister of Trade and Industry for purposes of the approval of any industrial project in terms of subsection (8);

 

(b)     investigate or cause to be investigated any industrial policy project for the purposes of this section;

 

(c)     monitor all industrial policy projects-

 

(i)      to determine whether the objectives of this section are being achieved; and

 

(ii)     to advise the Minister of Finance and the Minister of Trade and Industry on any future proposed amendment or adjustment thereof;

 

(d)     require any company applying for approval of any industrial project as an industrial policy project in terms of this section to furnish such information or documents as are necessary for the committee and Minister of Trade and Industry to perform their functions in terms of this section;

 

(e)     for a specific purpose and on such conditions and for such period as it may determine obtain the assistance of any person to advise the adjudication committee relating to any function assigned to the committee in terms of this section; and

 

(f)      appoint its own chairperson and determine the procedures for its meetings provided that all procedures must be properly recorded and minuted.

 

(18)   The members of the adjudication committee and any person whose assistance has been obtained by that committee may not-

 

(a)     act in any way that is inconsistent with the provisions of subsection (17) or expose themselves to any situation involving the risk of a conflict between their responsibilities and private interests; or

 

(b)     use their position or any information entrusted to them, to enrich themselves or improperly benefit any other person.

 

(19)   The Minister of Trade and Industry-

 

(a)     may, after taking into account the recommendations of the adjudication committee, extend the periods contemplated in subsections (2), (6)(b) and (7)(c) by a period not exceeding one year;

[Paragraph (a) substituted by section 31 of Act 15 of 2016 effective on 19 January 2017]

 

(aA)  may, if application is made to the adjudication committee, after taking into account the recommendations of the adjudication committee in respect of that application, extend the periods contemplated in—

 

(i)      paragraph (b) of the definition of “compliance period” in subsection (1); and

 

(ii)      subsections (2), (6)(b) and (7)(c),

 

by a period not exceeding two years, in addition to the extension of periods contemplated in paragraph (a), if it is shown that the fundamental reason for non-compliance was the COVID-19 pandemic or any circumstances arising therefrom;

[Paragraph (aA) inserted by section 15(1) of Act 20 of 2021 deemed effective on 1 January, 2020]

 

(b)     must provide written reasons for any decision to grant or deny any application for approval of an industrial project as an industrial policy project in terms of subsection (8), or for any withdrawal of approval as contemplated in subsection (12);

 

(c)     must inform the Commissioner of the approval of any industrial project as an industrial policy project in terms of subsection (8), setting out such particulars as are required by the Commissioner to determine the amount of the additional investment allowance allowable in terms of this section;

 

(d)     must publish the particulars of any application received from a company for approval of an industrial project as an industrial policy project in the Gazette not later than 30 days after providing to that company the written reasons for any decision as contemplated in paragraph (b);

 

(e)     must submit an annual report to Parliament, and must provide a copy of that report to the Auditor-General, setting out the following information in respect of each company that received approval in terms of subsection (8):

 

(i)      The name of each company;

 

(ii)     the description of each industrial policy project;

 

(iii)    the potential national revenue forgone by virtue of the deductions allowable in respect of that industrial policy project in terms of this section;

 

(iv)    the annual progress relating to the direct benefits of the industrial policy project in terms of economic growth or employment, setting out the details of the factors contemplated in subsections (7) and (8) on the basis of which approval of the industrial project as an industrial policy project was granted;

 

(v)     any decision to withdraw the approval of an industrial policy project in terms of subsection (12); and

 

(vi)    any decision not to withdraw the approval of an industrial policy project, despite any material change in facts.

 

(20)   ……….

[Subsection (20) deleted by section 22 of Act 25 of 2015 effectve on 8 January 2016]

 

(21)   Notwithstanding the provisions of Chapter 6 of the Tax Administration Act, the Commissioner must disclose to the Minister of Trade and Industry and the adjudication committee, including any person whose assistance has been obtained by that committee, such information relating to the affairs of any company carrying on an industrial policy project as is necessary to enable the Minister of Trade and Industry and the adjudication committee to perform their functions in terms of this section.

 

(22)   Every employee of the Department of Trade and Industry and every member of the adjudication committee, including any person whose assistance has been obtained by that committee, must preserve and aid in preserving secrecy with regard to all matters that may come to their knowledge in the performance of their functions in terms of this section, and may not communicate any such matter to any person whatsoever other than to the company concerned or its legal representative, nor allow any such person to have access to any records in the possession or custody of that Department or committee, except in terms of the law or an order of court.

 

(23)   Any person who contravenes the provisions of subsections (18) and (22), is guilty of an offence and liable on conviction to a fine or to imprisonment for a period not exceeding two years.

 

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

“Venture capital share” definition of section 12J of ITA

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“venture capital share” means an equity share held by a taxpayer in a venture capital company which was issued to that taxpayer by that venture capital company, and does not include any share which-

[Words preceding paragraph (b) substituted by section 29 of Act 23 of 2018 effective on 1 January 2019 applies in respect of years of assessment commencing on or after that date]

(b)     would have constituted a hybrid equity instrument, as defined in section 8E(1), but for the three-year period requirement contemplated in paragraph (b)(i) of the definition of ‘hybrid equity instrument’ in that section;

[Paragraph (b) substituted by section 29 of Act 23 of 2018 effective on 1 January 2019 applies in respect of years of assessment commencing on or after that date]

(c)     constitutes a third-party backed share as defined in section 8EA(1); or

(d)     was issued to that taxpayer solely in respect or by reason of services rendered or to be rendered by that taxpayer in respect of the incorporation, marketing, management or administration of that venture capital company or of any qualifying company in which that venture capital company holds or acquires any share.

[Paragraph (d) added by section 29 of Act 23 of 2018 effective on 24 October 2018]

Subsections 2, 3, 4, 5 and 6 of section 12P of ITA

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(2)     There must be exempt from normal tax any amount received by or accrued to a person as a beneficiary of a government grant if that government grant-

 

(a)     is listed in the Eleventh Schedule; or

 

(b)     is identified by the Minister by notice in the Gazette for the purpose of exempting that government grant with effect from a date specified by the Minister in that notice (including any date that precedes the date of that notice), after having regard to-

 

(i)      the implications of the exemption for the National Revenue Fund; and

 

(ii)     whether the tax implications were taken into account in allocating that grant.

 

(2A)  Notwithstanding subsection (2), there must be exempt from normal tax any amount received by or accrued to or in favour of any person from the Government in the national, provincial or local sphere, where-

 

(a)    that amount is granted for the performance by that person of its obligations pursuant to a Public Private Partnership; and

 

(b)     that person is required in terms of that Public Private Partnership to expend an amount at least equal to that amount in respect of any improvements on land or to buildings owned by any sphere of government or over which any sphere of government holds a servitude.

[Paragraph (b) substituted by section 33 of Act 15 of 2016 effective on 1 March 2016, applies in respect of grants received or expenditure incurred on or after that date]

 

(3)     Where during any year of assessment any amount is received by or accrues to a person by way of a government grant as contemplated in subsection (2) or (2A), other than a government grant in kind, for the acquisition, creation or improvement, or as a reimbursement for expenditure incurred in respect of the acquisition, creation or improvement of-

[Words preceding paragraph (a) substituted by section 26 of Act 25 of 2015 effective on 1 January 2016]

 

(a)     trading stock-

 

(i)      any expenditure incurred in respect of that trading stock allowed as a deduction in terms of section 11(a) ;or

 

(ii)     any amount taken into account in respect of the value of trading stock as contemplated in section 22(1) or (2); or

 

(b)     an allowance asset, the base cost of that allowance asset, must be reduced to the extent that the amount of that government grant is applied for that purpose.

 

(4)     Where any amount is received by or accrues to a person by way of a government grant as contemplated in subsection (2) or (2A) for the acquisition, creation or improvement of an allowance asset or as a reimbursement for expenditure incurred in respect of that acquisition, creation or improve ment, the aggregate amount of the deductions or allowances allowable to that person in respect of that allowance asset may not exceed an amount equal to the aggregate of the expenditure incurred in the acquisition, creation or improvement of that allowance asset, reduced by an amount equal to the sum of-

 [Words preceding paragraph (a) substituted by section 26 of Act 25 of 2015 effective on 1 January 2016]

 

(a)     the amount of the government grant; and

 

(b)     the aggregate amount of all deductions and allowances previously allowed to that person in respect of that allowance asset.

 

Provided that where a person referred to in this subsection qualifies for a deduction under section 12BA in respect of an allowance asset, the aggregate amount of the deductions or allowances allowable to that person in respect of that allowance asset may not exceed an amount equal to 125 per cent of the aggregate amount otherwise determined in terms of this subsection

[Subsection (4) amended by section 26(1)(c) of Act 25 of 2015 and by section 19(1) of Act 17 of 2023 effective on 1 March, 2023 and applicable in respect of assets brought into use on or after that date]

 

(5)     Where during any year of assessment any amount is received by or accrues to a person by way of a government grant as contemplated in subsection (2) or (2A), other than a government grant in kind-

[Words preceding paragraph (a) substituted by section 26 of Act 25 of 2015 effective on 1 January 2016]

 

(a)     for the purpose of the acquisition, creation or improvement of an asset other than an asset contemplated in subsection (3) or (4); or

 

(b)     as a reimbursement for expenditure incurred for the acquisition, creation or improvement of an asset other than an asset contemplated in subsection (3) or (4),

 

the base cost of that asset must be reduced to the extent that the amount of the government grant is applied for that acquisition, creation or improvement.

 

(6)

 

(a)     Where during any year of assessment-

 

(i)      any amount is received by or accrues to a person by way of a government grant as contemplated in subsection (2) or (2A), other than a government grant in kind; and

[Subparagraph (i) substituted by section 26 of Act 25 of 2015 effective on 1 January 2016]

 

(ii)     subsection (3), (4) or (5) does not apply to that amount, any amount allowed to be deducted from that person’s income in terms of section 11 for that year of assessment must be reduced to the extent of the amount of that government grant.

 

(b)     To the extent that the amount received or accrued by way of a government grant exceeds the amount allowed to be deducted as contemplated in paragraph (a), that excess is deemed to be an amount received or accrued in respect of that government grant during the following year of assessment for the purposes of paragraph (a).

“Allowance asset” definition of section 12P of ITA

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(1)     For the purposes of this section-

 

‘allowance asset’ means an asset as defined in paragraph 1 of the Eighth Schedule, other than trading stock, in respect of which a deduction or allowance is allowable in terms of this Act for purposes other than the determination of any capital gain or capital loss;

Section 12L (ITA) – Deduction in respect of energy efficiency savings

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12L     Deduction in respect of energy efficiency savings

(1)     For the purpose of determining the taxable income derived by any person from carrying on any trade in respect of any year of assessment ending before 1 January 2026, there must be allowed as a deduction from the income of that person an amount in respect of energy efficiency savings by that person in respect of that year of assessment determined in accordance with subsection (2), subject to subsection (3).

[Subsection (1) substituted by section 19(1) of Act 34 of 2019 and by section 9(1) of Act 20 of 2022 effective on 1 January, 2023]

(2)    The amount of the deduction contemplated in subsection (1) must be calculated at 95 cents per kilowatt hour or kilowatt hour equivalent of energy efficiency savings.

[Subsection (2) substituted by section 38 of Act 31 of 2013 and section 24 of Act 25 of 2015 effective on 1 March 2015]

(3)     A person claiming the deduction allowed in terms of subsection (1) during any year of assessment must obtain a certificate issued by an institution, board or body prescribed by the regulations contemplated in subsection (5) in respect of the energy efficiency savings for which a deduction is claimed in respect of that year of assessment containing-

(a)     the baseline at the beginning of the year of assessment;

(b)     the reporting period energy use at the end of the year of assessment;

(c)     the annual energy efficiency savings expressed in kilowatt hours or kilowatt hours equivalent for the year of assessment including the full criteria and methodology used to calculate the energy efficiency savings; and

(d)     any other information prescribed by the regulations contemplated in subsection (5).

(4)     A deduction must not be allowed in terms of this section if the person claiming the allowance receives any concurrent benefit in respect of energy efficiency savings.

(5)     The Minister of Finance, in consultation with the Minister of Energy and the Minister of Trade and Industry, must make regulations prescribing-

(a)     the institution, board or body that must issue the certificate contemplated in subsection (3);

(b)     the powers and responsibilities of the institution, board or body contemplated in paragraph (a);

(c)     the information that must be contained in the certificate contemplated in subsection (3) in addition to the information contemplated in that subsection;

(d)     those benefits that constitute concurrent benefits for the purpose of subsection (4); and

(e)     any limitation of energy sources in respect of which the allowance may be claimed.

“Government grant” definition of section 12P of ITA

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‘government grant’ means a grant-in-aid, subsidy or contribution by the government of the Republic in the national, provincial or local sphere.

[Definition of “government grant” substituted by section 33 of Act 15 of 2016 effective on 1 March 2016, applies in respect of grants received or expenditure incurred on or after that date]

Subsection 2 of section 12M of ITA

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(2)     In determining the taxable income derived by any taxpayer in any year of assessment from carrying on any trade, there must be allowed as a deduction from the income of that taxpayer so derived any amount paid by way of a lump sum during the year of assessment by that taxpayer –

 

(a)     to any former employee of the taxpayer who has retired from the taxpayer’s employ on grounds of old age, ill health or infirmity or to any dependant of that former employee; or

 

(b)     under any policy of insurance taken out with an insurer solely in respect of one or more former employees or dependants contemplated in paragraph (a),

 

but only to the extent that the amount is paid for the purposes of making any contribution, in respect of any former employee or dependant contemplated in paragraph (a), to any medical scheme or fund contemplated in section 6A(2)(a)(i) or (ii):

 

Provided that no deduction may be allowed in terms of this section if the taxpayer making the payment, or a connected person in relation to that taxpayer, retains any further obligation, whether actual or contingent, relating to the mortality risk of any former employee or dependant contemplated in paragraph (a).