11.     If during any year of assessment livestock or produce –

 

(a)     has been applied by the farmer for his private or domestic use or consumption;

 

(b)     has, for purposes other than that of the production to the farmer of income from sources within the Republic, been removed by him from the Republic; or

 

(c)

 

(i)      has been donated by the farmer;

 

(ii)     has been disposed of by the farmer, other than in the ordinary course of his farming operations, for a consideration less than the market value thereof;

 

(iii)    where the farmer is a company, has on or after 21 June 1993 been distributed in specie, to a holder of a share of such company; or

 

(iv)    has been applied by the farmer for any other purpose other than the disposal thereof in the ordinary course of his farming operations and under circumstances other than those contemplated in subparagraph (a) or (b) or item (i), (ii) or (iii) of this subparagraph,

 

there shall be included in the income of such farmer for that year of assessment –

 

(A)    where such livestock or produce has been applied in a manner contemplated in subparagraph (a), an amount equal to the cost price to him of such livestock or produce, or where the cost price cannot be readily determined, the market value of such livestock or produce; or

 

(B)     where such livestock or produce has been applied, disposed of or distributed in a manner contemplated in subparagraph (b) or (c), an amount equal to the market value of such livestock or produce:

 

Provided that where –

 

(a)     any livestock or produce so applied, is used or consumed by the farmer in the ordinary course of his farming operations, the amount included in his income under this paragraph shall for the purposes of this Act be deemed to be expenditure incurred in respect of the acquisition by him of such livestock or produce; or

 

(b)     the provisions of subparagraph (c) (ii) are applicable and an amount of consideration as contemplated in such subparagraph has been received by or accrued to the farmer, the amount included in his income in terms of this paragraph shall be reduced by such consideration.

12.

(1)     Subject to the provisions of subparagraphs (2) to (6), inclusive, there shall be allowed as deductions in the determination of the taxable income derived by any farmer the expenditure incurred by him during the year of assessment in respect of –

(a)     the eradication of noxious plants and alien invasive vegetation;

(b)     the prevention of soil erosion;

(c)     dipping tanks;

(d)     dams, irrigation schemes, boreholes and pumping plants;

(e)     fences;

(f)      the erection of, or extensions, additions or improvements (other than repairs) to, buildings used in connection with farming operations, other than those used for domestic purposes;

(g)     the planting of trees, shrubs or perennial plants for the production of grapes or other fruit, nuts, tea, coffee, hops, sugar, vegetable oils or fibres, and the establishment of any area used for the planting of such trees, shrubs or plants;

(h)     the building of roads and bridges used in connection with farming operations;

(i)      the carrying of electric power from the main transmission lines to the farm apparatus or under an agreement concluded with the Electricity Supply Commission in terms of which the farmer has undertaken to bear a portion of the cost incurred by the said Commission in connection with the supply of electric power consumed by the farmer wholly or mainly for farming purposes;

(1A)  For purposes of this Schedule, expenditure incurred in respect of any matter contemplated in subparagraph (1)(a), (b), (d) or (e) to conserve and maintain land owned by the taxpayer shall be deemed to be expenditure incurred in the carrying on of pastoral, agricultural or other farming operations if-

 

(a)     conservation and maintenance is carried out in terms of a biodiversity management agreement that has a duration of at least five years; and

(b)     the agreement contemplated in item (a) is entered into by the taxpayer in terms of section 44 of the National Environmental Management: Biodiversity Act, 2004 (Act No. 10 of 2004); and

(c)     land utilised by the taxpayer for purposes of carrying on the pastoral, agricultural or other farming operations consists or includes or is in the immediate proximity of the land that is the subject of the agreement contemplated in item (a).

(1B)

(a)     Where any asset in respect of which any deduction has been allowed to a farmer under the provisions of subparagraph (1) or (1A) (whether in the current or any previous year of assessment) and which is or has become a movable asset, is disposed of by the farmer, there shall be included in his income so much of the amounts received by or accrued to or in favour of the farmer in respect of such disposal as does not exceed the expenditure in respect of such asset allowed under subparagraph (1) or the original cost to him of such asset taken into account under subparagraph (1A), as the case may be, less any amounts which in terms of item (c) of this subparagraph are not allowable as deductions under subparagraph (1A) in respect of such asset in respect of the succeeding year or years of assessment referred to in the said item.

(b)     Where any allowance was granted in respect of such asset under the provisions of section 11(e) of this Act the provisions of section 8(4)(a) of this Act shall not apply in respect of any amount recovered or recouped in respect of such allowance.

(c)     ……….

(1C)   For the purposes of this paragraph, where any asset in respect of which any deduction has been allowed to a farmer under the provisions of subparagraph (1) or (1A) (whether in the current or any previous year of assessment) and which is or has become a movable asset, is disposed of by the farmer to any other person by way of donation or for a consideration which is not an adequate consideration or is not readily capable of valuation, a consideration equal in value to the fair value of such asset shall be deemed to have been received by the farmer in respect of his disposal of the asset and to have been paid by such other person in respect of his acquisition of the asset: Provided that the last–mentioned consideration shall not exceed the cost to the farmer of such asset.

(1D)  If during the current or any previous year of assessment deductions are allowed to the taxpayer in terms of subparagraph (1A) in respect of capital expenditure incurred to conserve or maintain land in terms of an agreement contemplated in that subparagraph and the taxpayer 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 of violation must be included in the income of the taxpayer for the current year.

 

(2)     No deduction under section 11(e) or (o) of this Act shall be allowed in respect of any machinery, implements, utensils or articles for which a deduction is allowable under subparagraph (1) or (1A) of this paragraph.

[Sub­paragraph (2) substituted by section 42 of Act 89 of 1969, by section 24(c) of Act 113 of 1977, by section 27(1)(d) of Act 96 of 1981 and by section 47 of Act 34 of 2019]

  

(3)     The amount by which the total expenditure incurred by any farmer during any year of assessment in respect of the matters referred to in items (c) to (i), inclusive, of subparagraph (1) exceeds the taxable income (as calculated before allowing the deduction of such expenditure and before the inclusion as hereinafter provided of the said amount in the farmer’s income) derived by him from farming operations during that year of assessment shall be included in his income from such operations for that year and be carried forward and be deemed for the purposes of subparagraph (1) to be expenditure which has been incurred by him during the next succeeding year of assessment in respect of the matters referred to in the said items.

[Subparagraph (3) substituted by section 42 of Act 89 of 1969, amended by section 24 of Act 113 of 1977 and substituted by section 27 of Act 96 of 1981 and section 64 of Act 23 of 2018 effective on 17 January 2019]

(3A)  For the purposes of subparagraph (3) any amount which has been carried forward from the year of assessment ended 30 June 1961 in terms of the proviso to paragraph 17 (3) of the Third Schedule to the Income Tax Act, 1941, shall be deemed to be an amount which has been so carried forward in terms of the said subparagraph.

(3B)   Where an amount (hereinafter referred to as the recoupment) falls to be included in a farmer’s income for any year of assessment under the provisions of subparagraph (1B) and an amount (hereinafter referred to as the qualifying balance) has in terms of subparagraph (3) been carried forward to the year of assessment in question from the preceding year of assessment the recoupment shall to the extent that it does not exceed the qualifying balance be deducted therefrom, and in such case –

(a)     the recoupment shall, to the extent that it has been deducted from the qualifying balance, not be included in the farmer’s income under subparagraph (1B); and

(b)     only so much of the qualifying balance as remains after the deduction therefrom of the recoupment shall be taken into account for the purposes of subparagraph (3) as expenditure incurred during the year of assessment in question in respect of the matters mentioned in that subparagraph.

(3C)  The amount of any expenditure carried forward and deemed to be incurred by a person in the next succeeding year in terms of subparagraph (3) must be reduced by any amount of expenditure in respect of which an election has been made in terms of paragraph 20A(1) of the Eighth Schedule.

(4)

(a)     For the purposes of this paragraph ‘employees’, in relation to any farmer, means persons employed by that farmer in connection with his or her farming operations, but does not include his or her relatives or, where the farmer is a company, the holders of shares (or the relatives of holders of shares) in that company or in any company which is associated with it by virtue of the holding of shares.

(b)     For the purposes of item (a) ‘holders of shares’ in relation to any company does not include persons who hold all their shares in that company solely because they are employed by that company and who will, in terms of the articles of association of that company, not be entitled to hold those shares after they cease to be so employed.

(5)     ……….

(6)     If in any year of assessment any building in relation to which a deduction has been allowed to any farmer under item (f) of sub–paragraph (1) of this paragraph or item (f) of sub–paragraph (1) of paragraph 17 of the Third Schedule to the Income Tax Act, 1941, whether in the current or in any previous year of assessment, is used for the domestic purposes of any person other than an employee of that farmer, there shall be included in the income of that farmer for the current year of assessment the amount of such deduction less onetenth of the said amount in respect of each completed period of one year, but not exceeding ten years, during which such building was used by the said farmer in connection with his farming operations other than for the domestic purposes of persons who are not his employees.

13.

 

(1)     If-

 

(a)     any farmer-

 

(i)      has in any year of assessment sold livestock on account of drought, stock disease or damage to grazing by fire or plague; and

 

(ii)     has within four years after the close of the said year of assessment purchased livestock to replace the livestock so sold; or

 

(b)     any farmer-

 

(i)      has in any year of assessment (other than a year of assessment in respect of which the normal tax chargeable in the case of such farmer is required to be determined under paragraph 19) sold livestock by reason of his participation in a livestock reduction scheme organised by the Government; and

 

(ii)     has within nine years after the close of the said year of assessment purchased livestock to replace the livestock so sold,

 

the cost of the livestock so purchased shall, notwithstanding anything in this Schedule contained, be allowed, at the option of such farmer, as a deduction in the determination of his taxable income for the year of assessment during which the livestock was so sold, provided the claim for such deduction is made within five years after the close of that year of assessment in the case of a farmer referred to in item (a), or within ten years after the close of that year of assessment in the case of a farmer referred to in item (b).

[Subparagraph (1) amended by section 17 of Act 101 of 1978 and substituted by section 79 of Act 25 of 2015 effective on 8 January 2016]

 

(2)     The cost of livestock so allowed as a deduction shall not be allowed as a deduction in the year of assessment in which the purchases were made.

 

(3)     Every farmer who desires to claim a deduction in terms of subparagraph (1), shall for the year of assessment in which he or she sold livestock on account of conditions of drought or stock disease or by reason of his or her participation in a livestock reduction scheme organised by the Government notify the Commissioner accordingly in such form and within such time as may be prescribed and obtain and retain full particulars in regard to the livestock so sold.

[Subparagraph (3) substituted by section 271 of Act 28 of 2011 and section 79 of Act 25 of 2015 effective on 8 January 2016]

 

(4)     ……….

[Subparagraph (4) deleted by section 25 of 2015 effective on 8 January 2016]

 

(5)     The provisions of this paragraph shall not apply to the cost of any livestock purchased to replace livestock sold if the proceeds derived from the sale of such last–mentioned livestock have been dealt with under the provisions of paragraph 13A.

 

(6)     The Commissioner may, notwithstanding the provisions of sections 93, 99(1) and 100 of the Tax Administration Act, raise an assessment for any year of assessment with respect to which a deduction in terms of subparagraph (1) is allowed.

[Subparagraph (6) added by section 5 of Act 21 of 2021 and substituted by section 12 of Act 18 of 2023]

 

(7)     Where a deduction in terms of subparagraph (1)(a) or (b) may be claimed in respect of a year of assessment, the period prescribed under section 29(3) of the Tax Administration Act after which records, books of account or documents need not be retained shall be extended to six years or eleven years respectively for such year of assessment.

[Subparagraph (7) added by section 5 of Act 21 of 2021]

 

(8)     Where a deduction in terms of subparagraph (1)(b) may be claimed in a year of assessment, the period prescribed under section 97(4) of the Tax Administration Act after which a record of assessment may be destroyed shall be extended to eleven years for such year of assessment.

[Paragraph 13 substituted by section 21(1) of Act 90 of 1972. Subparagraph (8) added by section 5 of Act 21 of 2021]