Category: PART I – Normal Tax (ITA)

Subsections 2, 3, 4, 5, 6, 7, 8 and 9 of section 37B of ITA

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(2)     There shall be allowed to be deducted from the income of the taxpayer, in respect of any year of assessment, an allowance equal to –

 

(a)     in the case of a new and unused environmental treatment and recycling asset owned by the taxpayer or acquired by the taxpayer as purchaser in terms of an agreement contemplated in paragraph (a) of the definition of an ‘instalment credit agreement’ in section 1 of the Value-Added Tax Act, 40 per cent of the cost to the taxpayer to acquire the asset in the year of assessment that it is brought into use for the first time by that taxpayer, and 20 per cent in each succeeding year of assessment; and

 

(b)     in the case of a new and unused environmental waste disposal asset owned by the taxpayer or acquired by the taxpayer as purchaser in terms of an agreement contemplated in paragraph (a) of the definition of an ‘instalment credit agreement’ in section 1 of the Value-Added Tax Act, five per cent of the cost to the taxpayer to acquire the asset in the year of assessment that it is brought into use for the first time by that taxpayer, and five per cent in each succeeding year of assessment.

 

(3)     For the 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 or the cost which a person would, if that person had acquired such 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.

 

(4)     Where any asset 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 asset that has been disposed of by the taxpayer during any previous year of assessment.

 

(6)     For purposes of determining the taxable income derived during any year of assessment by a taxpayer, there shall be allowed as a deduction any expenditure or loss in respect of decommissioning, remediation or restoration arising from any trade previously carried on by that taxpayer to the extent that such expenditure or loss –

 

(a)     is incurred for purposes of complying with any law of the Republic that provides for the protection of the environment upon the cessation of trade;

 

(b)     would otherwise have been allowed as a deduction in terms of section 11 had that taxpayer still been carrying on that trade; and

 

(c)     is not otherwise allowed as a deduction.

 

(7)     Any assessed loss of a taxpayer as defined in section 20(2) that is attributable to any expenditure or loss contemplated in subsection (6) may be set off against income derived by that taxpayer during a year of assessment notwithstanding the fact that the taxpayer is not carrying on any trade during that year.

 

(8)     No deduction shall be allowed under section 11, 12C or 13 in respect of the cost of an environmental treatment and recycling asset or an environmental waste disposal asset.

 

(9)     The deductions which may be allowed in terms of this section in respect of any asset shall not in the aggregate exceed the cost to the taxpayer of such asset.

“Affected transaction” definition of section 31 of ITA

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(1)     For the purposes of this section-

‘affected transaction’ means any transaction, operation, scheme, agreement or understanding where-

(a)     that transaction, operation, scheme, agreement or understanding has been directly or indirectly entered into or effected between or for the benefit of either or both-

(i)

(aa)    a person that is a resident; and

(bb)   any other person that is not a resident;

(ii)

(aa)    a person that is not a resident; and

(bb)   any other person that is not a resident that has a permanent establishment in the Republic to which the transaction, operation, scheme, agreement or understanding relates;

(iii)

(aa)    a person that is a resident; and

(bb)   any other person that is a resident that has a permanent establishment outside the Republic to which the transaction, operation, scheme, agreement or understanding relates; or

(iv)

(aa)    a person that is not a resident; and

(bb)   any other person that is a controlled foreign company in relation to any resident,

and those persons are connected persons or associated enterprises in relation to one another; and

[Subparagraph (iv) amended by section 37(1)(a) of Act 34 of 2019 effective on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date (effective date in section 37(2) of Act 34 of 2019 as substituted by section 78(1) of Act 23 of 2020 and by section 66(1) of Act 20 of 2021)]

(b)     any term or condition of that transaction, operation, scheme, agreement or understanding is different from any term or condition that would have existed had those persons been independent persons dealing at arm’s length;

“Environmental waste disposal asset” definition of section 37B of ITA

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‘environmental waste disposal asset’ means any air, water, and solid waste disposal site, dam, dump, reservoir, or other structure of a similar nature, or any improvement thereto, if the structure is –

 

(a)     of a permanent nature;

 

(b)     utilised in the course of a taxpayer’s trade in a process that is ancillary to any process of manufacture or any other process which, in the opinion of the Commissioner, is of a similar nature; and

 

(c)     required by any law of the Republic for purposes of complying with measures that protect the environment.

“Environmental treatment and recycling asset” definition of section 37B of ITA

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(1)     For purposes of this section –

 

‘environmental treatment and recycling asset’ means any air, water, and solid waste treatment and recycling plant or pollution control and monitoring equipment (and any improvement to the plant or equipment) if the plant or equipment is-

 

(a)     utilised in the course of a taxpayer’s trade in a process that is ancillary to any process of manufacture or any other process which, in the opinion of the Commissioner, is of a similar nature; and

 

(b)     required by any law of the Republic for purposes of complying with measures that protect the environment; and

Section 37C (ITA) – Deductions in respect of environmental conservation and maintenance

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37C.    Deductions in respect of environmental conservation and maintenance

(1)     Expenditure actually incurred by a taxpayer to conserve or maintain land is deemed to be expenditure incurred in the production of income and for purposes of a trade carried on by that taxpayer, if-

(a)     the conservation or maintenance is carried out in terms of a biodiversity management agreement that has a duration of at least five years entered into by the taxpayer in terms of section 44 of the National Environmental Management: Biodiversity Act, 2004 (Act No. 10 of 2004); and

(b)     land utilised by the taxpayer for the production of income and for purposes of a trade consists of, includes or is in the immediate proximity of the land that is the subject of the agreement contemplated in paragraph (a).

(2)

(a)     Any deduction of expenditure contemplated in subsection (1) must not be allowed to the extent that the expenditure exceeds the income of the taxpayer derived from trade carried on by the taxpayer on land utilised as contemplated in subsection (1)(b) in any year of assessment.

(b)     The amount by which the deduction exceeds the income of the taxpayer so derived must be deemed to be expenditure incurred by the taxpayer in the following year of assessment.

(3)     An amount equal to the expenditure actually incurred by a taxpayer to conserve or maintain land owned by the taxpayer is for purposes of section 18A deemed to be a donation by the taxpayer actually paid or transferred during the year to the Government for which a receipt has been issued in terms of section 18A(2), if the conservation or maintenance is carried out in terms of a declaration that has a duration of at least 30 years in terms of section 20, 23 or 28 of the National Environmental Management: Protected Areas Act, 2003 (Act No. 57 of 2003).

(4)     If during the current or any previous year of assessment a deduction is or was allowed to the taxpayer in terms of subsection (1) or (3) in respect of expenditure incurred to conserve or maintain land in terms of an agreement or declaration contemplated in those subsections, and the taxpayer subsequently is in breach of that agreement or violates that declaration, an amount equal to the deductions allowed in respect of expenditure incurred within the period of five years preceding the breach or violation must be included in the income of the taxpayer for the current year of assessment.

(5)       ……….

[Subsection (5) amended by section 86 of Act 31 of 2013, deleted by section 52 of Act 43 of 2014 effective on 1 March 2015]

(6)     ……….

[Subsection (6) deleted by section 52 of Act 43 of 2014 effective on 1 March 2015]

(7)     ……….

[Subsection (7) deleted by section 52 of Act 43 of 2014 effective on 1 March 2015]

Section 33 (ITA) – Assessment of owners or charterers of ships or aircraft who are not residents of the Republic

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33.  Assessment of owners or charterers of ships or aircraft who are not residents of the Republic

 

(1)     Any person other than a resident who embarks passengers or loads livestock, mails or goods in the Republic, as an owner or charterer of any ship or aircraft, shall be deemed to have derived therefrom (apart from any taxable income derived by him from other sources) a taxable income of 10 per cent of the amount payable to him or to any agent on his behalf, whether the amount be payable in or outside the Republic, in respect of passengers, livestock, mails and goods so embarked or loaded, but the provisions of this section shall not apply to any such person who renders accounts which satisfactorily disclose the taxable income derived by him from the embarking of passengers or the loading of livestock, mails and goods as aforesaid.

 

(2)     Where the person so embarking passengers or loading livestock, mails or goods has no recognized agent in the Republic other than the master of the ship or the pilot of the aircraft in connection with which any such amounts are payable, or where the agent fails to make returns of any such amounts payable in respect of any ship or aircraft –

 

(a)     the Commissioner may make the assessment from such information as may be available to him;

 

(b)     the tax thereon shall be payable to the Commissioner prior to the clearance of the ship or aircraft;

 

(c)     the principal officer of customs at the port or airport where such ship or aircraft is being cleared shall have power to detain the clearance until such payment is made; and

 

(d)     upon such payment the master, pilot or agent (as the case may be) shall be entitled to a certificate from such officer of customs that the amount so paid has been paid under the provisions of this Act, and such certificate shall be sufficient warrant to such master, pilot or agent of the amount so paid.

Section 37F (ITA) – Determination of taxable income derived by persons previously assessable under certain other laws

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37F.  Determination of taxable income derived by persons previously assessable under certain other laws

 

Where it is necessary for any rule provided in this Act as to the inclusion in the income of any taxpayer for any year or as to the deduction or set–off of any amount from or against his income for such year, that regard shall be had to anything that has been done or has occurred in or in relation to a previous year of assessment, anything that has in fact been done or has in fact occurred in or in relation to a year of assessment during which the taxpayer was assessable for taxation purposes in terms of any law of a former self–governing territory declared under section 26 of the repealed Self–governing Territories Constitution Act, 1971 (Act No. 21 of 1971), to be a self–governing territory or of the former Republic of Transkei, Bophuthatswana, Venda or Ciskei for any year of assessment, shall, subject to such adjustments as may in the circumstances be appropriate, for the purposes of applying such rule be taken into account.

Section 35A (ITA) – Withholding of amounts from payments to non-resident sellers of immovable property

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35A.  Withholding of amounts from payments to non-resident sellers of immovable property

(1)     Any person (hereinafter referred to as ‘the purchaser’) who must pay any amount to any other person who is not a resident (hereinafter referred to as ‘the seller’), or to any other person for or on behalf of that seller, in respect of the disposal by that seller of any immovable property in the Republic must, subject to subsection (2), withhold from the amount which that person must so pay, an amount equal to-

(a)     7,5 per cent of the amount so payable, in the case where the seller is a natural person;

[Paragraph (a) substituted by section 10 of Act 14 of 2017 effective on 22 February 2017, applies in respect of any disposal on or after that date]

(b)     10 per cent of the amount so payable, in the case where the seller is a company;

[Paragraph (b) substituted by section 10 of Act 14 of 2017 effective on 22 February 2017, applies in respect of any disposal on or after that date and amended by section 47 of Act 17 of 2017 effective on 18 December 2017]

(c)     15 per cent of the amount so payable, in the case where the seller is a trust; and

[Paragraph (c) substituted by section 10 of Act 14 of 2017 effective on 22 February 2017, applies in respect of any disposal on or after that date and amended by section 47 of Act 17 of 2017 effective on 18 December 2017]

(d)     a percentage of the amount so payable as the Minister may announce in the national annual budget contemplated in section 27(1) of the Public Finance Management Act, with effect from a date mentioned in that Announcement.

[Paragraph (d) added by section 47 of Act 17 of 2017 effective on 18 December 2017]

(1A)   If the Minister makes an announcement contemplated in subsection (1)(d), that rate comes into effect on the date determined by the Minister in that announcement and continues to apply for a period of 12 months from that date subject to Parliament passing legislation giving effect to that announcement within that period of 12 months.

[Subsection (1A) inserted by section 47 of Act 17 of 2017 effective on 18 December 2017]

(2)     The seller may apply to the Commissioner, in the form and at the place as the Commissioner may determine, for a directive that no amount or a reduced amount be withheld by the purchaser in terms of subsection (1) solely having regard to-

 

(a)     any security furnished for the payment of any tax due on the disposal of the immovable property by the seller;

 

(b)     the extent of the assets of the seller in the Republic;

 

(c)     whether that seller is subject to tax in respect of the disposal of the immovable property; and

 

(d)     whether the actual liability of that seller for tax in respect of the disposal of the immovable property is less than the amount contemplated in subsection (1).

(3)    

(a)     The amount withheld from any payment to the seller in terms of subsection (1) is an advance in respect of that seller’s liability for normal tax for the year of assessment during which that property is disposed of by that seller.

 [Subsection renumbered as paragraph (a) by section 2 of Act 23 of 2015 effective on 8 January 2016]

(b)     If the seller does not submit a return in respect of that year of assessment within 12 months after the end of that year of assessment, the payment of the amount in terms of subsection (4) is a sufficient basis for an assessment in terms of section 95 of the Tax Administration Act.

[Paragraph (b) added by section 2 of Act 23 of 2015 and substituted by section 2 of Act 16 of 2016]

(4)     The amount withheld by a purchaser in terms of subsection (1), must be paid to the Commissioner-

 

(a)     where that purchaser is a resident, within 14 days after the date on which that amount was so withheld; or

 

(b)     where that purchaser is not a resident, within 28 days after the date on which that amount was so withheld.

(5)     If an amount has been withheld in terms of subsection (1) from any amount payable in a foreign currency, that amount so withheld must be translated to the currency of the Republic at the spot rate on the date that the amount is paid to the Commissioner.

(6)     The purchaser must, together with the payment contemplated in subsection (4), submit to the Commissioner a return.

(7)     A purchaser is person ally liable under the circumstances contemplated in section 157 of the Tax Administration Act, for the amount that must be withheld under subsection (1) only if the purchaser knows or should reasonably have known that the seller is not a resident and must pay that amount to the Commissioner not later than the date on which payment should have been made if the amount had in fact been withheld.

(8)     Subsection (7) does not apply if a property practitioner or conveyancer assists in the disposal of the immovable property and that property practitioner or conveyancer fails to notify the purchaser as contemplated in subsection (11).

[Subsection (8) substituted by section 33(a) by Act 17 of 2023]

(9)     If a purchaser fails to pay any amount contemplated in subsection (1) to the Commissioner within the period allowed for payment in terms of subsection (4), that purchaser must pay a penalty equal to ten per cent of the amount, in addition to any other penalty or charge for which he or she may be liable under this Act.

[Subsection (9) substituted by section 271 read with paragraph 43(c) of Schedule 1 of Act 28 of 2011 effective on 1 October, 2012 except to the extent that it relates to interest under this Act: Proclamation No. 51 in Government Gazette 35687 of 14 September, 2012]

[Subsection (9) substitution by section 271 read with paragraph 43(c) of Schedule 1 of Act 28 of 2011 has only partially commenced to the extent that the amendment relates to the penalty and not to the extent it relates to interest]

(9)     If a purchaser fails to pay any amount contemplated in subsection (1) to the Commissioner within the period allowed for payment in terms of subsection (4), that purchaser-

 

(a)     is liable for interest at the prescribed rate on any amount outstanding calculated from the day following the last date for payment to the date that the amount is received by the Commissioner; and

 

(b)     must pay a penalty equal to ten per cent of that amount, in addition to any other penalty or charge for which he or she may be liable under this Act.

(10)     ……….

(11)   Any property practitioner and any conveyancer who is entitled to any remuneration or other payment in respect of services rendered in connection with the disposal of the immovable property by the seller or the registration of transfer, as the case may be, must before any payment is made to the seller each notify the purchaser in writing of the fact that the seller is not a resident and that the provisions of this section may apply.

[Subsection (11) substituted by section 33(b) by Act 17 of 2023]

(12)   If a property practitioner or conveyancer knows or should reasonably have known that the seller is not a resident and fails to comply with subsection (11), that failing Property practitioner or conveyancer is jointly and severally liable for the payment of the amount which the purchaser is required to withhold and pay to the Commissioner in terms of this section, but limited to the amount of remuneration or other payment in respect of the services rendered in connection with the disposal of the immovable property by the seller or the registration of transfer, as the case may be.

[Subsection (12) substituted by section 33(c) by Act 17 of 2023]

(13)   The property practitioner or conveyancer who paid an amount in terms of subsection (12) is deemed to be a withholding agent for purposes of the Tax Administration Act.

[Subsection (13) substituted by section 271 read with paragraph 43(e) of Schedule 1 of Act 28 of 2011 and by section 33(d) by Act 17 of 2023]

(14)   This section does not apply-

 

(a)     if the amounts payable by the purchaser to the seller and to any other person for or on behalf of the seller, in respect of the acquisition by that purchaser of the immovable property, in aggregate do not exceed R2 million; or

 

(b)     in respect of any deposit paid by a purchaser for purposes of securing the disposal of the immovable property by the seller to that purchaser, until the agreement for that disposal has become unconditional, in which case any amount which would have been required to be withheld from the amount of that deposit, must be withheld from the first following payments made by that purchaser in respect of that disposal.

[Paragraph (b) substituted by section 57 of Act 25 of 2015 effective on 8 January 2016]

(15)   For purposes of this section-

‘conveyancer’ means a ‘conveyancer’ as defined in section 102 of the Deeds Registries Act, 1937 (Act No. 47 of 1937);

“estate agent”     . . . . . . 

[Definition of “estate agent” deleted by section 33(e) of Act 17 of 2023]

 

‘foreign currency’ means any currency other than the currency of the Republic;

 

“immovable property” means immovable property contemplated in paragraph 2(1)(b)(i) and (2) of the Eighth Schedule; and

[Definition of “immovable property” substituted by section 33(f) of Act 17 of 2023]

“property practitioner” means a property practitioner as defined in section 1 of the Property Practitioners Act, 2019 (Act 22 of 2019).

[Definition of “property practitioner” added by section 33(g) of Act 17 of 2023]

Section 37G (ITA) – Determination of taxable income derived from small business undertakings

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37G.    Determination of taxable income derived from small business undertakings

(1)     The Minister of Finance may make regulations to facilitate compliance with the provisions of this Act by natural persons who carry on business through small business undertakings, whether as sole proprietors or in partnership with other natural persons.

(2)     A regulation made under subsection (1) may –

(a)     prescribe what shall constitute a small business undertaking, having regard to –

(i)      the nature of the undertaking;

(ii)     the turnover, taxable income or profit of the undertaking;

(iii)    the number of persons employed in the undertaking;

(iv)    the nature and extent of other income derived by the proprietor or partners; and

(v)     any other feature which, in the opinion of the said Minister, indicates that an undertaking should be regarded as a small business undertaking;

(b)     provide for the variation of any provision of this Act relating to the determination of the taxable income derived from a small business undertaking, including –

(i)      the determination of taxable income having regard only to amounts actually received or expended;

(ii)     any variation in the manner in which the values of trading stock are taken into account;

(iii)    the manner in which expenditure of a capital nature incurred is to be treated; and

(iv)    any other provision which, save in so far as the timing of the receipt or accrual of income or the incurral of expenditure is concerned, will not result in a material variation in the determination of the taxable income derived by the undertaking over a period of time;

(c)     provide for the exemption from, or extension of time limits in, any provision of this Act relating to the preparation and submission of documents, accounts, returns or payments;

(d)     make such other provision as in the opinion of the said Minister will facilitate the carrying on of small business undertakings.


37H.      ……….