‘policy benefits’ means any amount, in cash or otherwise, received or accrued under a policy;
Category: PART I – Normal Tax (ITA)
Section 24C (ITA) – Allowance in respect of future expenditure on contracts
24C. Allowance in respect of future expenditure on contracts
(1) For the purposes of this section, “future expenditure” in relation to any year of assessment means an amount of expenditure which will be incurred after the end of such year –
(a) in such manner that such amount will be allowed as a deduction from income in a subsequent year of assessment; or
(b) in respect of the acquisition of any asset in respect of which any deduction will be admissible under the provisions of this Act.
[Subsection (1) substituted by section 42 of Act 25 of 2015 effective on 8 January 2016]
(2) If the income of any taxpayer in any year of assessment includes or consists of an amount received by or accrued to him in terms of any contract and such amount will be utilised in whole or in part to finance future expenditure which will be incurred by the taxpayer in the performance of the taxpayer’s obligations under such contract, there shall be deducted in the determination of the taxpayer’s taxable income for such year such allowance (not exceeding the said amount) in respect of so much of such future expenditure as relates to the said amount.
[Subsection (2) substituted by section 42 of Act 25 of 2015 effective on 8 January 2016]
(3) The amount of any allowance deducted under subsection (2) in any year of assessment shall be deemed to be income received by or accrued to the taxpayer in the following year of assessment.
Subsections 2 and 3 of section 23I of ITA
(2) Other than a deduction allowed in terms of section 11(gC) or a deduction allowed in respect of trading stock, a deduction is not allowed in respect of-
(a) any amount of expenditure incurred for the use or right of use of or permission to use tainted intellectual property; or
(b) expenditure the incurral or amount of which is determined directly or indirectly with reference to expenditure incurred for the use or, right of use of or permission to use tainted intellectual property,
[Paragraph (b) substituted by section 36 of Act 43 of 2014 effective on 20 January 2015]
to the extent that the amount of expenditure does not constitute income received by or accrued to any other person or to the extent that the amount of expenditure does not constitute a proportional amount of net income of a controlled foreign company an amount equal to which is included in the income of any resident in terms of section 9D.
(3) Notwithstanding any provision of subsection (2) to the contrary, an amount equal to-
(a) one third of any expenditure contemplated in subsection (2) must be allowed to be deducted if withholding tax on royalties contemplated in Part IVA is payable in respect of that amount at a rate of 10 per cent; or
(b) one half of any expenditure contemplated in subsection (2) must be allowed to be deducted if withholding tax on royalties contemplated in Part IVA is payable in respect of that amount at a rate of 15 per cent.
(4) Subsection (2) must not apply where the aggregate amount of taxes on income payable to all spheres of government of any country other than the Republic by a controlled foreign company contemplated in that subsection in respect of the foreign tax year of that controlled foreign company is at least 67,5 per cent of the amount of normal tax that would have been payable in respect of any taxable income of the controlled foreign company had the controlled foreign company been a resident for that foreign tax year: Provided that the aggregate amount of tax payable by a controlled foreign company in respect of a foreign tax year of that controlled foreign company must be determined—
(a) after taking into account any applicable agreement for the prevention of double taxation and any credit, rebate or other right of recovery of tax from any sphere of government of any country other than the Republic; and
(b) after disregarding any loss in respect of a year other than that foreign tax year or from a company other than that controlled foreign company.
[Subsection (4) added by section 38(1) of Act 17 of 2017 and amended by section 27(1) of Act 34 of 2019 effective on 1 January, 2020 and applicable in respect of years of assessment ending on or after that date]
“Investment policy” definition of section 23L of ITA
(1) For the purposes of this section-
“investment policy” . . . . . .
[Definition of “investment policy” deleted by section 60(1)(b) of Act 31 of 2013 effective on 1 April, 2014 and applicable in respect of premiums incurred on or after that date]
Section 24D (ITA) – Deduction of certain expenditure incurred in respect of any National Key Point or specified important place or area
24D. Deduction of certain expenditure incurred in respect of any National Key Point or specified important place or area
(1) There shall be allowed to be deducted from the income of any taxpayer for any year of assessment so much of any expenditure actually incurred by the taxpayer during such year –
[Words preceding paragraph (a) substituted by section 43 of Act 25 of 2015 effective on 8 January 2016]
(a) directly in the performance of any act ordered, performed or executed under the provisions of the National Key Points Act, 1980 (Act No. 102 of 1980), in respect of any National Key Point or Key Point as defined in section 1 of that Act; or
(b) directly in providing efficient security against loss, damage, disruption or immobilization of any place or area as defined in section 1 of the said Act which, although not declared a National Key Point under the provisions of the said Act, has been evaluated and approved by the Minister of Defence or any person or committee appointed by him as such a place or area in respect of which measures for the efficient security thereof ought to be taken by such taxpayer.
(2) The amount of any expenditure allowed to be deducted under the provisions of subsection (1) shall be restricted to expenditure –
(a) actually incurred by the taxpayer on or after 1 September 1978; and
(b) which was or is not otherwise allowable as a deduction under the provisions of this Act,
and no expenditure shall be deducted under the provisions of this section unless the Minister of Defence or any person or committee appointed by that Minister has confirmed in writing that it was deemed necessary or expedient that the expenditure in question be incurred by the taxpayer concerned.
[Words following paragraph (b) substituted by section 43 of Act 25 of 2015 effective on 8 January 2016]
(3) Where an amount has been paid by the State to a taxpayer in respect of expenditure incurred by him prior to 1 July 1983 which has qualified for deduction from his income under subsection (1) and the Minister, person or committee referred to in subsection (2) confirms that such amount was paid as a supplement to the benefit which the taxpayer has enjoyed or will enjoy by way of the said deduction, the provisions of section 8(4)(a) shall not apply in respect of the said amount [K-MOS].
“Taxable person” definition of section 23I of ITA
“taxable person” means any person other than-
(a) a person that is not a resident;
(b) the government of the Republic in the national, provincial or local sphere contemplated in section 10(1)(a);
(c) an institution, board or body contemplated in section 10(1)(cA);
(d) any public benefit organisation as defined in section 30 that has been approved by the Commissioner in terms of that section;
(e) any recreational club as defined in section 30A that has been approved by the Commissioner in terms of that section;
(f) any company or trust contemplated in section 37A;
(g) any fund contemplated in section 10(1)(d)(i) or (ii); or
(h) any person contemplated in section 10(1)(t).
Section 23N (ITA) – Limitation of interest deductions in respect of reorganisation and acquisition transactions
23N. Limitation of interest deductions in respect of reorganisation and acquisition transactions
Section 24E (ITA) – Allowance in respect of future expenditure by sporting bodies
24E. Allowance in respect of future expenditure by sporting bodies
(1) If income is received by or accrued to a taxpayer contemplated in section 11E in respect of an event that will not recur in the following year of assessment, the taxpayer may for the purposes of determining taxable income deduct so much of that income as will be required to fund expenditure contemplated in section 11E that will be incurred in a future year of assessment.
(2) Any amount allowed to be deducted in terms of subsection (1) in any year of assessment must be deemed to be income received by or accrued to the taxpayer in the following year of assessment.
24F. ………
“Tainted intellectual property” definition of section 23I of ITA
“tainted intellectual property” means intellectual property-
(a) which was the property of the end user or of a taxable person that is or was a connected person, as defined in section 31(4), in relation to the end user;
(b) which is the property of a taxable person;
(c) a material part of which was used by a taxable person in carrying on a business while that property was the property of a taxable person and the end user of that property acquired that business or a material part thereof as a going concern; or
(d) which was discovered, devised, developed, created or produced by the end user of that property, or by a taxable person that is a connected person, as defined in section 31(4), in relation to the end user, if that end user, together with any taxable person that is a connected person in relation to that end user, holds at least 20 per cent of the participation rights, as defined in section 9D, in a person by or to whom an amount is received or accrues-
(i) by virtue of the grant of use or right of use or permission to use that property; or
[Subparagraph (i) substituted by section 36 of Act 43 of 2014 effective on 20 January 2015]
(ii) where that receipt, accrual or amount is determined directly or indirectly with reference to expenditure incurred for the use or right of use or permission to use that property;
[Subparagraph (ii) substituted by section 36 of Act 43 of 2014 effective on 20 January 2015]
Subsection 2, 3, 4 and 5 of section 23N of ITA
(2) Where an amount of interest is incurred by an acquiring company in terms of a debt-
[Words preceding paragraph (a) substituted by section 38 of Act 43 of 2014 effective on 1 January 2015]
(a) directly or indirectly assumed or applied for the purpose of procuring, enabling, facilitating or funding the acquisition by that acquiring company of any asset in terms of a reorganisation transaction;
(b) used directly or indirectly for the purpose of redeeming, refinancing or settling the debt contemplated in paragraph (a);
(c) issued, assumed or used in terms of an acquisition transaction; or
(d) used directly or indirectly for the purpose of redeeming, refinancing or settling the debt contemplated in paragraph (c),
the amount of interest allowed to be deducted must not exceed the amount determined in terms of subsection (3).
(3) The amount of interest allowed to be deducted in terms of all debts owed as contemplated in subsection (2), in respect of any year of assessment in which the acquisition transaction or reorganisation transaction is entered into and in respect of five years of assessment immediately following that year of assessment, must not exceed the sum of-
(a) the amount of interest received by or accrued to the acquiring company; and
(b) the highest of the amounts determined by multiplying the percentage determined under subsection (4) by the adjusted taxable income of the acquiring company for each of the years of assessment-
(i) in which the acquisition transaction or reorganisation transaction is entered into;
(ii) in which the amount of interest is incurred by that acquiring company; or
(iii) immediately prior to the year of assessment contemplated in subparagraph (i),
[Paragraph (b) substituted by section 38 of Act 43 of 2014 and section 40 of Act 17 of 2017 effective on 18 December 2017]
reduced by any amount of interest incurred by the acquiring company in respect of debts other than debts contemplated in subsection (2).
[Words following paragraph (b) substituted by section 38 of Act 43 of 2014 effective on 1 January 2015]
(4) The percentage contemplated in subsection (3)(b) must be determined in accordance with the formula-
|
A = B x C D |
in which formula-
(a) ‘A’ represents the percentage to be determined;
(b) ‘B’ represents the number 40;
(c) ‘C’ represents the average repo rate plus 400 basis points; and
(d) ‘D’ represents the number 10,
but not exceeding 60 per cent of the adjusted taxable income of that acquiring company.
[Subsection (4) substituted by section 38 of Act 43 of 2014 effective on 1 January 2015]
(5) ……….
[Subsection (5) deleted by section 64 of Act 31 of 2013, re-inserted by section 42 of Act 15 of 2016, amended by section 40 of Act 17 of 2017 and deleted by section 42 of Act 23 of 2018 effective on 1 January 2019 and applies in respect of amounts incurred on or after that date]