Category: PART I – Normal Tax (ITA)

Section 13sept (ITA) – Deduction in respect of sale of low-cost residential units on loan account

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13sept.     Deduction in respect of sale of low-cost residential units on loan account

(1)     Subject to section 36, there must be allowed as a deduction from the income of the taxpayer, in respect of any year of assessment ending on or before 28 February 2022, an amount determined in terms of subsection (2) in respect of the disposal of any low-cost residential unit by the taxpayer to an employee of the taxpayer (or an associated institution as defined in the Seventh Schedule in relation to the taxpayer).

[Subsection (1) substituted by section 21 of Act 23 of 2020]

(2)     The deduction contemplated in subsection (1) is an amount equal to 10 per cent of any amount owing to the taxpayer by the employee in respect of the unit at the end of the taxpayer s year of assessment: Provided that no such deduction shall be allowed in the eleventh and subsequent years of assessment after the disposal of that low-cost residential unit, as contemplated in subsection (1).

(3)     No deduction is allowed in terms of this section in respect of any disposal by the taxpayer if-

(a)     the disposal is subject to any condition other than a condition in terms of which the employee is required-

(i)      on termination of employment; or

(ii)     in the case of consistent failure for a period of three months on the part of the employee to pay an amount owing to the taxpayer (or an associated institution, as defined in the Seventh Schedule, in relation to the taxpayer) in respect of a low-cost residential unit,

to dispose of the low-cost residential unit to the taxpayer (or an associated institution, as defined in the Seventh Schedule, in relation to the taxpayer) for an amount equal to the actual cost (other than borrowing or finance costs) to the employee of the unit and the land on which the unit is erected;

(b)     the employee must pay interest to the taxpayer in respect of the amount owing to the taxpayer by the employee in respect of the unit; or

(c)     the disposal is for an amount that exceeds the actual cost (other than borrowing or finance costs) to the taxpayer of the unit and the land on which the unit is erected.

(4)     If the amount owing contemplated in subsection (2) or any part thereof is paid to the taxpayer, the taxpayer is deemed to have recovered or recouped an amount equal to the lesser of-

(a)     the amount so paid; or

(b)     the amount allowed as a deduction in terms of this section in the current and any previous year of assessment.

Section 15 (ITA) – Deductions from income derived from mining operations

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15.     Deductions from income derived from mining operations

There shall be allowed to be deducted from the income derived by the taxpayer from mining operations –

(a)     an amount to be ascertained under the provisions of section 36, in lieu of the allowances in sections 11(e), (f), (gA), (gC), (o), 12B, 12BA, 12D, 12DA, 12F and 13quin;

[Paragraph (a) substituted by section 20 of Act 55 of 1966, by section 18 of Act 129 of 1991, by section 24 of Act 31 of 2005, by section 29 of Act 35 of 2007 and by section 22(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]

(b)     any expenditure incurred by the taxpayer during the year of assessment on prospecting operations (including surveys, boreholes, trenches, pits and other prospecting work preliminary to the establishment of a mine) in respect of any area within the Republic together with any other expenditure which is incidental to such operations:

Provided that –

(i)      except in the case of any person who derives income from mining for diamonds in the Republic, the Commissioner may determine that any expenditure referred to in this paragraph shall be deducted in a series of annual instalments, so that only a portion of such expenditure is deducted in the year of assessment in which it is incurred, and the residue in such subsequent years of assessment and in such proportions as the Commissioner may determine, until the expenditure is extinguished;

(ii)     in the case of any company which derives income from different classes of mining operations, the deduction under this paragraph shall be made from the income derived from such class or classes of mining operations and in such proportions as the Commissioner may determine;

(iii)    any expenditure which has been allowed to be deducted from the income of any person in terms of this paragraph shall not be included in such person’s capital expenditure as defined in subsection (11) of section 36.

Section 20A (ITA) – Ring-fencing of assessed losses of certain trades

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20A.    Ring-fencing of assessed losses of certain trades

(1)     Subject to subsection (3), where the circumstances in subsection (2) apply during any year of assessment in respect of any trade carried on by a natural person, any assessed loss incurred during that year in carrying on that trade may not be set off against any income of that person derived during that year otherwise than from carrying on that trade, notwithstanding section 20(1)(b).

(2)     Subsection (1) applies where the taxable income of a person for a year of assessment, determined without having regard to the other provisions of this section and before setting off any assessed loss and balance of assessed loss in terms of section 20, equals or exceeds the amount at which the marginal rate of tax of 39 per cent chargeable in respect of the taxable income of individuals becomes applicable, and where-

(a)     that person has, during the five year period ending on the last day of that year of assessment, incurred an assessed loss in at least three years of assessment in carrying on the trade contemplated in subsection (1) (before taking into account any balance of assessed loss carried forward); or

(b)     the trade contemplated in subsection (1), in respect of which the assessed loss was incurred constitutes-

(i)      any sport practised by that person or any relative;

(ii)     any dealing in collectibles by that person or any relative;

(iii)    the rental of residential accommodation, unless at least 80 per cent of the residential accommodation is used by persons who are not relatives of that person for at least half of the year of assessment;

(iv)    the rental of vehicles, aircraft or boats as defined in the Eighth Schedule, unless at least 80 per cent of the vehicles, aircraft or boats are used by persons who are not relatives of that person for at least half of the year of assessment;

(v)     animal showing by that person or any relative;

(vi)    farming or animal breeding, unless that person carries on farming or animal breeding on a full-time basis;

[Subparagraph (vi) substituted by section 19(1)(b) of Act 5 of 2026 effective on 1 March, 2026 and applicable in respect of years of assessment commencing on or after that date]

(vii)   any form of performing or creative arts practised by that person or any relative;

[Subparagraph (vii) amended by section 37 of Act 23 of 2018 effective on 17 January 2019]

(viii)  any form of gambling or betting practised by that person or any relative; or

[Subparagraph (viii) amended by section 37 of Act 23 of 2018 effective on 17 January 2019]

(ix)    the acquisition or disposal of any crypto asset.

[Subparagraph (ix) added by section 37 of Act 23 of 2018 and substituted by section 23 of Act 23 of 2020]

[Subsection (2) amended by section 27(1) of Act 31 of 2005 and by section 19(1)(a) of Act 5 of 2026 effective on 1 March, 2026 and applicable in respect of years of assessment commencing on or after that date]

(3)     The provisions of subsection (1) do not apply in respect of an assessed loss incurred by a person during any year of assessment from carrying on any trade contemplated in subsection (2)(a) or (b), where that trade constitutes a business in respect of which there is a reasonable prospect of deriving taxable income (other than taxable capital gain) within a reasonable period having special regard to-

(a)     the proportion of the gross income derived from that trade in that year of assessment in relation to the amount of the allowable deductions incurred in carrying on that trade during that year;

(b)     the level of activities carried on by that person or the amount of expenses incurred by that person in respect of advertising, promoting or selling in carrying on that trade;

(c)     whether that trade is carried on in a commercial manner, taking into account-

(i)      the number of full-time employees appointed for purposes of that trade (other than persons partly or wholly employed to provide services of a domestic or private nature);

(ii)     the commercial setting of the premises where the trade is carried on;

(iii)    the extent of the equipment used exclusively for purposes of carrying on that trade; and

(iv)    the time that the person spends at the premises conducting that business;

(d)     the number of years of assessment during which assessed losses were incurred in carrying on that trade in relation to the period from the date when that person commenced carrying on that trade and taking into account-

(i)      any unexpected events giving rise to any of those assessed losses; and

(ii)     the nature of the business involved;

(e)     the business plans of that person and any changes thereto to ensure that taxable income is derived in future from carrying on that trade; and

(f)      the extent to which any asset attributable to that trade is used, or is available for use, by that person or any relative of that person for recreational purposes or personal consumption.

(4)     Subsection (3) does not apply in respect of a trade contemplated in subsection (2)(b) (other than farming) carried on by a person during any year of assessment where that person has, during the 10 year period ending on the last day of that year of assessment, incurred an assessed loss in at least six years of assessment in carrying on that trade (before taking into account any balance of assessed loss carried forward).

[Sub­section (4) substituted by section 23 of Act 34 of 2019]

(5)     Notwithstanding section 20(1)(a), any balance of assessed loss carried forward from the preceding year of assessment, which is attributable to an assessed loss in respect of which subsection (1) applied in that preceding year or any prior year of assessment, may not be set off against any income derived by that person otherwise than from carrying on the trade contemplated in subsection (1).

(6)     For the purposes of this section and section 20, the income derived from any trade referred to in subsections (1) or (5), includes any amount-

(a)     which is included in the income of that person in terms of section 8 in respect of an amount deducted in any year of assessment in carrying on that trade; or

(b)     derived from the disposal after cessation of that trade of any assets used in carrying on that trade.

(7)     Notwithstanding anything to the contrary contained in this Act, all farming activities carried on by a person shall be deemed to constitute a single trade carried on by that person for the purposes of this section.

(8)     Where the provisions of subsection (2) apply during any year of assessment in respect of any trade carried on by a person, that person must indicate the nature of the business in his or her return contemplated in section 66 for that year of assessment.

(9)     For the purposes of subsections (2)(a) and (4), any assessed loss incurred in any year of assessment ending on or before 29 February 2004 shall not be taken into account.

“Shipbuilding structure” definition of section 13 of ITA

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“shipbuilding structure” means any launching way, fitting–out quay or craneway which is not part of a building.

[Section 13 amended by section 30 of Act 60 of 2001 and by section 13(1)(a) of Act 42 of 2024. Subsection (9) added by section 17(1)(f) of Act 55 of 1966 and substituted by section 13(1)(c) of Act 88 of 1971]

Section 15A (ITA) – Amounts to be taken into account in respect of trading stock derived from mining operations

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15A.     Amounts to be taken into account in respect of trading stock derived from mining operations

For the purposes of section 22, trading stock related to mining operations –

(a)     includes anything that is –


(i)      won or in any other manner acquired during the course of mining operations by a taxpayer for the purposes of extraction, processing, separation, refining, beneficiation, manufacture, sale or exchange by the taxpayer or on the taxpayer’s behalf; and


(ii)     taken into account as inventory in terms of South African Generally Accepted Accounting Practice; and


(b)     must not be valued at an amount less than the amount so taken into account.


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