Category: Section 37 (ITA) – Calculation of capital expenditure on sale, transfer, lease or cession of mining property

Section 37

 

  1. Paragraph (1)(b) substituted by section 28 of Act 8 of 2007.

 

  1. Paragraph (1)(c) substituted by section 28 of Act 8 of 2007.

 

  1. Item (d)(i)(aa) substituted by section 28 of Act 8 of 2007 and section 84 of Act 31 of 2013 effective on 12 December 2013.

 

  1. Subsection (1) amended by section 28 of Act 8 of 2007.

 

  1. Subparagraph (2)(a)(i) substituted by section 84 of Act 31 of 2013 effective on 12 December 2013.

 

  1. Subparagraph (2)(a)(ii) substituted by section 84 of Act 31 of 2013 effective on 12 December 2013.

 

  1. Subparagraph (2)(a)(iii) substituted by section 84 of Act 31 of 2013 effective on 12 December 2013.

 

  1. Subparagraph (2)(b)(i) substituted by section 28 of Act 8 of 2007.

 

  1. Subparagraph (2)(b)(ii) substituted by section 28 of Act 8 of 2007.

 

  1. Words preceding paragraph (3)(a) substituted by section 84 of Act 31 of 2013 effective on 12 December 2013.

 

  1. Paragraph (3)(a) substituted by section 28 of Act 8 of 2007.

 

  1. Paragraph (3)(b) substituted by section 84 of Act 31 of 2013 effective on 12 December 2013.

 

  1. Words preceding paragraph (4)(a) substituted by section 84 of Act 31 of 2013 effective on 12 December 2013.

 

  1. Subsection (4) amended by section 28 of Act 8 of 2007.

 

  1. Subsection (5) renumbered to (5)(a) by section 28 of Act 8 of 2007.

 

  1. Paragraph (5)(b) inserted by section 28 of Act 8 of 2007.

 

  1. Paragraph (6)(b) substituted by section 28 of Act 8 of 2007.

 

  1. Subsection (7) amended by section 28 of Act 8 of 2007 and substituted by section 47 of Act 35 of 2007.

 

  1. Paragraph (8)(b) substituted by section 28 of Act 8 of 2007.

 

  1. Section 37A inserted by section 27 of Act 89 of 1969, amended by section 18 of Act 89 of 1969, section 22 of Act 88 of 1971 and section 30 of Act 85 of 1974, repealed by section 26 of Act 94 of 1983 and inserted by section 27 of Act 20 of 2006.

Section 37 (ITA) – Calculation of capital expenditure on sale, transfer, lease or cession of mining property

Posted on by admin_kmos

37.     Calculation of capital expenditure on sale, transfer, lease or cession of mining property

 

(1)     For the purposes of this Act, but subject to subsection (1A), whenever a taxpayer-

 

(a)     sells, transfers, leases or cedes any mining property; and

 

(b)     disposes of any assets contemplated in section 36(11) (hereinafter referred to as ‘the capital assets’) in consequence of the sale, transfer, lease or cession contemplated in paragraph (a),

 

the person acquiring those capital assets shall be deemed to have acquired such capital assets at a cost equal to the effective value of those capital assets to that person on the effective date of that agreement of sale, transfer, lease or cession of the mining property, and the said cost shall be deemed to be expenditure that is incurred by that person during the period of assessment during which that agreement takes effect and to be capital expenditure which is in respect of such period required to be taken into account for the purposes of the definition of ‘capital expenditure incurred’ in section 36(11).

 

(1A)  Where any consideration is given by the person acquiring the assets disposed of by the taxpayer, as contemplated in subsection (1), and the effective value of all those assets (including any mining property) so acquired, exceeds that consideration, the amount of the cost and expenditure in respect of the capital assets shall, for the purposes of subsection ( 1), be deemed to be an amount which bears to the total amount of such consideration the same ratio as such effective value of those capital assets bears to the effective value to that person of all the assets (including any mining property) so disposed of to that person.

 

(2)     For the purposes of paragraph (j) of the definition of ‘gross income’ in section 1 and section 36, the taxpayer who disposes of any capital assets contemplated in subsection (1), shall be deemed to have disposed of such capital assets for a consideration equal in value to the cost of those capital assets to the person acquiring such capital assets as determined under subsection (1) and (1A), and such consideration shall be deemed to have been received by or to have accrued to the said taxpayer on the effective date of the agreement of sale, transfer, lease or cession.

 

(3)     If the value of the consideration given or the value of the property disposed of is in dispute, the value may, be fixed by the Commissioner and shall be determined –

 

(a)     in the case of any mining property, in the same manner as if transfer duty were payable; or

 

(b)     in the case of any capital asset, at the market value of such capital asset.

 

(4)     The effective value on the effective date of the agreement of sale, transfer, lease or cession, of all the assets disposed of, shall be determined by the Director General for Minerals and Energy who shall, notwithstanding the repeal of the Second Schedule to the Transvaal Mining Leases and Mineral Law Amendment Act, 1918 (Act No. 30 of 1918), for the purposes of such determination have all the powers which were conferred upon him by the provisions of that Schedule.

 

(5)     For the purpose of this section, ‘mining property’ means-

 

(a)     any land on which mining is carried on; or

 

(b)     any right to minerals (including any right to mine for minerals) and a lease or sub-lease of such a right.