24G. Taxable income of toll road operators
Category: PART I – Normal Tax (ITA)
“Intellectual property” definition of section 23I of ITA
“intellectual property” means any-
(a) patent as defined in the Patents Act including any application for a patent in terms of that Act;
(b) design as defined in the Designs Act;
(c) trade mark as defined in the Trade Marks Act;
(d) copyright as defined in the Copyright Act;
(e) patent, design, trade mark or copyright defined or described in any similar law to that in paragraph (a), (b), (c) or (d) of a country other than the Republic;
(f) property or right of a similar nature to that in paragraph (a), (b), (c), (d) or (e); and
(g) knowledge connected to the use of such patent, design, trade mark, copyright, property or right;
“Repo rate” definition of section 23N of ITA
‘repo rate’ means the interest rate at which the South African Reserve Bank enters into a repurchase agreement contemplated in section 10(1)(j) of the South African Reserve Bank Act.
Subsections 2, 3, 4 and 5 of section 24G of ITA
(2) Subject to the provisions of subsection (5), there shall be deducted in the determination of the taxable income derived by the taxpayer during any year of assessment –
(a) the sum of any annual allowances determined under subsection (3) in relation to expenditure incurred during the current or any previous year of assessment in respect of any permanent work, road pavement, major rehabilitation of the road pavement or erection or construction of ancillary services in relation to a toll road;
(b) any expenditure incurred during the year of assessment in respect of the repair or maintenance of a toll road or any ancillary service in relation to such toll road, other than expenditure incurred on major rehabilitation of the road pavement;
(c) any interest (other than interest which is deductible under section 11(a) incurred by the taxpayer during the year of assessment in respect of any loan utilized for the purpose of financing any expenditure contemplated in paragraph (a) or (b); and
(d) any amount which has been disallowed in the preceding year of assessment under the provisions of subsection (5):
Provided that the aggregate of the allowances which may be granted under paragraph (a) shall not exceed the total expenditure incurred by the taxpayer on such permanent work, road pavement, major rehabilitation of road pavement or erection or construction of ancillary services.
(3) For the purposes of subsection (2), an annual allowance shall be calculated in respect of expenditure incurred by the taxpayer on permanent works, road pavements, major rehabilitation of road pavements or the erection, construction, installation or provision of ancillary services during any year of assessment, such allowance to be equal to the expenditure so incurred during the year divided by the lesser of the number of years reckoned from the commencement of that year until the end of the tolling period (for which purpose a portion of a year shall be regarded as a year) and –
(a) in the case of expenditure incurred on permanent works or the erection or construction of ancillary services, 25 years; and
(b) in the case of such expenditure incurred on road pavements or major rehabilitation of road pavements, 8 years.
(4) No deduction or allowance shall be granted under this Act in respect of expenditure contemplated in subsection (2) otherwise than as provided in that subsection.
(5) The allowances which may be granted under subsection (2) (a), (b) and (d) in any year of assessment in respect of any single toll road shall not in the aggregate exceed the taxable income (as determined before the deduction of the said allowances) derived by the taxpayer during such year from –
(a) the exploitation of such toll road or any ancillary service in relation to such toll road; and
(b) any interest derived in the ordinary course of such exploitation and the financing of any expenditure contemplated in subsection (3) which relates to such toll road.
“End user” definition of section 23I of ITA
(1) For the purposes of this section-
“end user” means a taxable person or a person with a permanent establishment within the Republic that uses intellectual property or any corresponding invention during a year of assessment to derive income, other than a person that derives income mainly by virtue of the grant of use or right of use or permission to use intellectual property or any corresponding invention;
[Definition of “end user” substituted by section 36 of Act 43 of 2014 effective on 20 January 2015]
“Reorganisation transaction” definition of section 23N of ITA
‘reorganisation transaction’ means-
(a) an intra-group transaction as defined in section 45(1) to which section 45 applies; or
(b) a liquidation distribution as defined in section 47(1) to which section 47 applies;
“Tolling period” definition of section 24G of ITA
“tolling period”, in relation to a toll road, means the initial period during which the South African National Roads Agency Limited has granted to the taxpayer or any other person the right to operate such toll road, including any period in respect of which such right was so granted in terms of an interim agreement concluded by the South African National Roads Agency Limited, but excluding any extension of such first-mentioned period in respect of which a right of renewal may be exercised;
Section 23K (ITA) – Limitation of deductions in respect of reorganisation and acquisition transactions
23K. Limitation of deductions in respect of reorganisation and acquisition transactions
“Issue” definition of section 23N of ITA
‘issue’ in relation to a debt, means the creation of a liability to pay or of a right to receive an amount in terms of that debt;
“Toll road” definition of section 24G of ITA
“toll road” means a road or section thereof, including any access road, crossroad or ramp constituting a necessary adjunct to such road or section, in respect of which the taxpayer derives or will derive income through the imposition of a toll or the exploitation of the right to impose a toll.