Category: Section 11 (ITA) – General deductions allowed in determination of taxable income

Section 11

Paragraph (a) substituted by section 15 of Act 59 of 2000.

Paragraph (b) substituted by section 13 of Act 129 of 1991 and deleted by section 15 of Act 59 of 2000.

Paragraph (bA) inserted by section 9 of Act 96 of 1981, substituted by section 11 of Act 19 of 2001 and deleted by section 30 of Act 24 of 2011 effective on 1 January 2012.

Paragraph (bB) inserted by section 11 of Act 121 of 1984, amended by section 8 of Act 90 of 1988, section 8 of Act 70 of 1989 and section 12 of Act 21 of 1995 and deleted by section 14 of Act 17 of 2009.

Paragraph (bC) inserted by section 27 of Act 45 of 2003 and deleted by section 16 of Act 32 of 2004.

Subparagraph (c)(ii) substituted by section 18 of Act 60 of 2008.

Paragraph (c) substituted by section 10 of Act 88 of 1971.

Subparagraph (cA)(iv) substituted by section 18 of Act 60 of 2008 effective on1 March 2009.

Paragraph (cA) inserted by section 22 of Act 30 of 2000.

Words preceding the proviso of subparagraph (e)(i) substituted by section 10 of Act 3 of 2008, section 19 of Act 7 of 2010 and section 27 of Act 31 of 2013 effective on 12 December 2013.

Subparagraph (e)(i) deleted by section 19 of Act 7 of 2010.

Paragraph (e)(iA) inserted by section 18 of Act 31 of 2005 and substituted by section 27 of Act 31 of 2013 effective on 12 December 2013.

Subparagraph (e)(iiA) inserted by section 12 of Act 85 of 1974 and substituted by section 22 of Act 22 of 2012 effective on 1 January 2013.

Subparagraph (e)(iii) substituted by section 12 of Act 55 of 1966 and section 10 of Act 21 of 1994.

Subparagraph (e)(iiiA) inserted by section 9 of Act 96 of 1981.

Subparagraph (e)(iv) substituted by section 9 of Act 113 of 1977 and deleted by section 19 of Act 7 of 2010.

Subparagraph (e)(vi) substituted by section 12 of Act 55 of 1966, section 9 of Act 113 of 1977 and section 11 of Act 121 of 1984 and deleted by section 11 of Act 8 of 2007.

Subparagraph (e)(vii) added by section 11 of Act 121 of 1984 and amended by section 19 of Act 7 of 2010.

Subparagraph (e)(viii) added by section 9 of Act 113 of 1993, substituted by section 5 of Act 140 of 1993, section 6 of Act 9 of 2005 and section 11 of Act 8 of 2007 and deleted by section 17 of Act 35 of 2007.

Subparagraph (e)(ix) added by section 15 of Act 59 of 2000 and substituted by section 18 of Act 60 of 2008.

Paragraph (e) amended by section 9 of Act 90 of 1962 and section 9 of Act 90 of 1964, substituted by section 11 of Act 88 of 1965 and amended by section 8 of Act 90 of 1988, section 11 of Act 101 of 1990, section 15 of Act 59 of 2000, section 6 of Act 9 of 2005 and section 18 of Act 31 of 2005.

Subparagraph (f)(ii)bis inserted by section 9 of Act 90 of 1962.

Subparagraph (f)(iii) substituted by section 14 of Act 89 of 1969, section 13 of Act 129 of 1991, section 20 of Act 53 of 1999 and section 27 of Act 31 of 2013 effective on 12 December 2013.

Subparagraph (f)(iv) amended by section 9 of Act 90 of 1962 and section 14 of Act 17 of 2009.

Subparagraph (f)(v) added by section 14 of Act 17 of 2009.

Item (f)(v)(aa) amended by section 9 of Act 90 of 1962 and section 14 of Act 17 of 2009.

Item (f)(v)(bb) substituted by section 10 of Act 94 of 1983.

Item (f)(v)(cc) amended by section 9 of Act 90 of 1962.

Item (f)(v)(dd) added by section 11 of Act 121 of 1984 and substituted by section 14 of Act 17 of 2009.

Subparagraph (g)(ii) substituted by section 10 of Act 94 of 1983.

Subparagraph (g)(iii) substituted by section 19 of Act 7 of 2010 effective on 2 November 2010.

Subparagraph (g)(iv) added by section 9 of Act 90 of 1962 and substituted by section 9 of Act 113 of 1977 and section 14 of Act 17 of 2009.

Subparagraph (g)(v) added by section 7 of Act 91 of 1982 and deleted by section 19 of Act 7 of 2010 effective on 2 November 2010.

Subparagraph (g)(vi) added by section 10 of Act 94 of 1983 and substituted by section 16 of Act 32 of 2004, section 14 of Act 17 of 2009 and section 19 of Act 7 of 2010 effective on 2 November 2010.

Subparagraph (g)(vii) added by section 16 of Act 32 of 2004 and substituted by section 19 of Act 7 of 2010.

Subparagraph (gA)(i) substituted by section 13 of Act 129 of 1991, section 20 of Act 53 of 1999 and section 27 of Act 31 of 2013 effective on 12 December 2013.

Subparagraph (gA)(ii) substituted by section 20 of Act 53 of 1999, section 15 of Act 59 of 2000 and section 27 of Act 31 of 2013 effective on 12 December.

Subparagraph (gA)(iii) substituted by section 9 of Act 113 of 1993 and section 11 of Act 8 of 2007.

Subitem (gA)(iii)(aa)(AA) substituted by section 11 of Act 8 of 2007.

Subitem (gA)(iii)(aa)(BB) substituted by section 11 of Act 8 of 2007.

Item (aa) amended by section 9 of Act 36 of 1996, substituted by section 20 of Act 53 of 1999 and amended by section 14 of Act 30 of 2002.

Item (gA)(iii)(bb) substituted by section 10 of Act 94 of 1983.

Subitem (gA)(iii)(cc)(A) substituted by section 27 of Act 31 of 2013 effective on 12 December 2013.

Subitem (gA)(iii)(cc)(B) substituted by section 27 of Act 31 of 2013 effective on 12 December 2013.

Item (gA)(iii)(cc) added by section 8 of Act 90 of 1988 and amended by section 9 of Act 113 of 1993 and section 15 of Act 59 of 2000.

Item (gA)(iii)(dd) added by section 9 of Act 113 of 1993 and substituted by section 5 of Act 140 of 1993 and section 15 of Act 59 of 2000.

Item (gA)(iii)(ee) added by section 20 of Act 53 of 1999 and substituted by section 11 of Act 8 of 2007.

Item (gA)(iii)(ff) added by section 27 of Act 45 of 2003.

Paragraph (gA) inserted by section 12 of Act 55 of 1966, substituted by section 14 of Act 89 of 1969 and amended by section 10 of Act 94 of 1983, section 15 of Act 59 of 2000 and section 11 of Act 8 of 2007.

Paragraph (gB) inserted by section 12 of Act 55 of 1966, amended by section 14 of Act 89 of 1969, substituted by section 13 of Act 129 of 1991, section 20 of Act 53 of 1999 and section 15 of Act 59 of 2000, amended by section 27 of Act 45 of 2003 and substituted by section 11 of Act 20 of 2006, section 11 of Act 8 of 2007, section 17 of Act 35 of 2007 and by section 27 of Act 31 of 2013 effective on 12 December 2013.

Subparagraph (gC)(i) substituted by section 27 of Act 31 of 2013 effective on 12 December 2013.

Subparagraph (gC)(ii) substituted by section 27 of Act 31 of 2013 effective on 12 December 2013.

Subparagraph (gC)(iii) substituted by section 27 of Act 31 of 2013 effective on 12 December 2013.

Subparagraph (gC)(iv) substituted by section 27 of Act 31 of 2013 effective on 12 December 2013.

Subparagraph (gC)(v) substituted by section 11 of Act 8 of 2007.

Subparagraph (gC)(v)(aa)(A) substituted by section 11 of Act 8 of 2007.

Subparagraph (gC)(v)(aa)(B) substituted by section 11 of Act 8 of 2007.

Paragraph (gC)(v)(aa) substituted by section 16 of Act 32 of 2004 and amended by section 2 of Act 8 of 2007and section 1 of Act 3 of 2008.

Paragraph (gC)(v)(bb) substituted by section 16 of Act 32 of 2004 and deleted by section 17 of Act 35 of 2007.

Paragraph (gC) inserted by section 9 of Act 113 of 1977, deleted by section 15 of Act 59 of 2000, inserted by section 27 of Act 45 of 2003 and amended by section 16 of Act 32 of 2004 and section 11 of Act 8 of 2007.

Paragraph (gD) inserted by section 18 of Act 60 of 2008 effective on 1 January 2008 and substituted by section 19 of Act 7 of 2010 and section 27 of Act 31 of 2013 effective on 12 December 2013.

Subparagraph (h)(i) substituted by section 27 of Act 31 of 2013 effective on 12 December 2013.

Subparagraph (h)(i) substituted by section 27 of Act 31 of 2013 effective on 12 December 2013.

Paragraph (h) substituted by section 8 of Act 90 of 1972 and amended by section 10 of Act 94 of 1983.

Paragraph (hA) inserted by section 13 of Act 129 of 1991, substituted by section 12 of Act 28 of 1997, section 27 of Act 45 of 2003, and section 11 of Act 20 of 2006, amended by section 11 of Act 8 of 2007 and deleted by section 30 of Act 24 of 2011 effective on 1 January 2012.

Paragraph (hB) inserted by section 11 of Act 20 of 2006.

Paragraph (i) substituted by section 14 of Act 89 of 1969, section 10 of Act 94 of 1983, section 9 of Act 113 of 1993 and section22 of Act 22 of 2012 effective on 1 January 2013.

Paragraph (j) substituted by section 14 of Act 89 of 1969, amended by section 10 of Act 94 of 1983 and section 18 of Act 31 of 2005 and substituted by section22 of Act 22 of 2012 effective on 1 January 2013.

Subparagraph (k)(i) substituted by section 5 of Act 101 of 1978, amended by section 8 of Act 104 of 1979 and section 9 of Act 96 of 1981, substituted by section 10 of Act 94 of 1983, amended by section 30 of Act 30 of 1998, section 2 of Act 8 of 2007 and section 1 of Act 3 of 2008 and substituted by section 10 of Act 3 of 2008.

Item (k)(ii)(aa) amended by section 11 of Act 121 of 1984, substituted by section 18 of Act 31 of 2005 and amended by section 2 of Act 8 of 2007 and section 1 of Act 3 of 2008.

Item (k)(ii)(bb) added by section 9 of Act 96 of 1981.

Item (k)(ii)(cc) added by section 10 of Act 94 of 1983.

Item (k)(ii)(dd) added by section 10 of Act 94 of 1983 and substituted by section 14 of Act 17 of 2009 and section 27 of Act 31 of 2013 effective on 1 March 2013.

Paragraph (k) amended by section 8 of Act 72 of 1963 and substituted by section 12 of Act 55 of 1966, section 9 of Act 65 of 1973, section 9 of Act 69 of 1975 and section 9 of Act 113 of 1977 and amended by section 9 of Act 96 of 1981.

Subparagraph (l)(v) substituted by section 10 of Act 94 of 1983 and section 10 of Act 3 of 2008.

Subparagraph (l)(vi) of the proviso deleted by section 271 of Act 28 of 2011 effective on 1 October 2012.

Paragraph (l) substituted by section 8 of Act 104 of 1979 and amended by section 30 of Act 30 of 1998.

Paragraph (lA) inserted by section 16 of Act 32 of 2004 and amended by section 18 of Act 31 of 2005, ssection 2 and 11 of Act 8 of 2007, section 1 of Act 3 of 2008 and section 18 of Act 60 of 2008 effective on 21 February 2008.

Subparagraph (m)(ii) substituted by section 9 of Act 113 of 1993.

Paragraph (m) substituted by section 14 of Act 89 of 1969 and section 5 of Act 101 of 1978 and amended by section 9 of Act 96 of 1981, section 11 of Act 121 of 1984 and section 11 of Act 8 of 2007.

Subitem (n)(i)(aa)(A) substituted by section 30 of Act 24 of 2011 effective on 1 March 2011.

Paragraph (cc) of the proviso to subpar. (n)(i) substituted by section 22 of Act 22 of 2012 effective on 1 March 2014 – comes into operation in terms of section 22 of Act 22 of 2012 as substituted by section 195 of Act 31 of 2013.

Paragraph (n) amended by section 8 of Act 72 of 1963, substituted by section 12 of Act 55 of 1966 and section 9 of Act 76 of 1968, amended by section 9 of Act 65 of 1973 and section 9 of Act 69 of 1975, substituted by section 9 of Act 113 of 1977, amended by section 5 of Act 101 of 1978, section 8 of Act 104 of 1979, section 7 of Act 91 of 1982, section 10 of Act 94 of 1983, section 11 of Act 121 of 1984, section 8 of Act 90 of 1988, section 8 of Act 70 of 1989, section 11 of Act 101 of 1990, section 11 of Act 141 of 1992, section 9 of Act 113 of 1993, section 12 of Act 21 of 1995, section 20 of Act 53 of 1999, section 2 and section 11 of Act 8 of 2007, section 1 and section 10 of Act 3 of 2008, section 18 of Act 60 of 2008 and substituted by section 14 of Act 17 of 2009 effective on 1 March 2009 to the extent that it amends references to the Second Schedule and effective on 1 March 2010 in any other case..

Paragraph (nA) inserted by section 18 of Act 60 of 2008.

Paragraph (nB) inserted by section 18 of Act 60 of 2008.

Subparagraph (o)(i) substituted by section 11 of Act 8 of 2007 and section 17 of Act 35 of 2007.

Paragraph (o)(ii)(aa) substituted by section 9 of Act 16 of 2004.

Paragraph (o)(ii)(bb) substituted by section 9 of Act 16 of 2004.

Paragraph (o)(ii)(dd) amended by section 17 of Act 35 of 2007.

Further Proviso to paragraph (o) added by section 17 of Act 35 of 2007.

Paragraph (o) substituted by section 11 of Act 88 of 1965, section 12 of Act 55 of 1966 and section 14 of Act 89 of 1969, amended by section 12 of Act 85 of 1974, section 9 of Act 113 of 1977, section 9 of Act 96 of 1981, section 7 of Act 91 of 1982, section 10 of Act 94 of 1983, section 11 of Act 121 of 1984, section 10 of Act 85 of 1987, section 8 of Act 90 of 1988, section 11 of Act 101 of 1990, section 10 of Act 21 of 1994, section 22 of Act 30 of 2000, section 15 of Act 59 of 2000, section 10 of Act 19 of 2001 and section 27 of Act 60 of 2001, substituted by section 27 of Act 45 of 2003 and amended by section 18 of Act 31 of 2005 and section 17 of Act 35 of 2007.

Paragraph (p) amended by section 8 of Act 90 of 1988 and section 27 of Act 45 of 2003 and deleted by section 18 of Act 60 of 2008.

Paragraph (q) amended by section 10 of Act 94 of 1983, section 9 of Act 113 of 1993 and section 27 of Act 45 of 2003 and deleted by section 18 of Act 60 of 2008.

Paragraph (r) amended by section 9 of Act 90 of 1962 and section 8 of Act 72 of 1963, substituted by section 11 of Act 95 of 1967, deleted by section 10 of Act 89 of 1969, inserted by section 27 of Act 45 of 2003 and deleted by section 16 of Act 32 of 2004.

Paragraph (r)bis inserted by section 9 of Act 90 of 1964 and deleted by section 11 of Act 95 of 1967.

Paragraph (s) substituted by section 14 of Act 89 of 1969, section 12 of Act 28 of 1997 and section 19 of Act 74 of 2002 and deleted by section 22 of Act 22 of 2012 effective on 1 April 2013.

Paragraph (t) amended by section 8 of Act 72 of 1963, substituted by section 9 of Act 76 of 1968, amended by section 8 of Act 90 of 1972, section 12 of Act 85 of 1974, section 9 of Act 69 of 1975, section 9 of Act 113 of 1977, section 8 of Act 104 of 1980, section 7 of Act 91 of 1982, section 10 of Act 94 of 1983, section 2 of Act 8 of 2007 and section 1 of Act 3 of 2008 and deleted by section 18 of Act 60 of 2008 effective on 21 Oct 2008.

Paragraph (u) substituted by section 10 of Act 88 of 1971 and section 11 of Act 121 of 1984, amended by section 9 of Act 113 of 1993 and section 14 of Act 30 of 2002 and deleted by section 9 of Act 16 of 2004 effective on 1 January 2005.

Paragraph (uA) inserted by section 11 of Act 121 of 1984 and deleted by section 10 of Act 21 of 1994.

Paragraph (v) substituted by section 12 of Act 55 of 1966 and section 10 of Act 88 of 1971 and deleted by section 9 of Act 65 of 1973.

Words preceding subparagraph (w)(i) substituted by section 22 of act 22 of 2012 effective on 1 March 2012.
Paragraph (w) substituted by section 14 of Act 89 of 1969 and section 10 of Act 89 of 1969, amended by section 10 of Act 88 of 1971, section 7 of Act 91 of 1982, section 10 of Act 94 of 1983, section 46 of Act 97 of 1986, section 22 of Act 30 of 2000 and section 19 of Act 74 of 2002, substituted by section 19 of Act 7 of 2010 effective on 1 January 2011 (amendment was deleted by section 161 of Act 24 of 2011 effective on 1 January 2011) and substituted by section 30 of Act 24 of 2011 effective on 1 March 2012.

Section 11 (ITA) – General deductions allowed in determination of taxable income

Posted on October 15, 2015February 9, 2019 by admin_kmos

11. General deductions allowed in determination of taxable income

Section 11(a) of ITA – general deduction formula

Posted on October 15, 2015December 1, 2018 by admin_kmos

For the purpose of determining the taxable income derived by any person from carrying on any trade, there shall be allowed as deductions from the income of such person so derived –

(a) expenditure and losses actually incurred in the production of the income, provided such expenditure and losses are not of a capital nature;

(b) ……….

Section 11(c) of ITA

Posted on April 14, 2015December 1, 2018 by admin_kmos

(c) any legal expenses (being fees for the services of legal practitioners, expenses incurred in procuring evidence or expert advice, court fees, witness fees and expenses, taxing fees, the fees and expenses of sheriffs or messengers of court and other expenses of litigation which are of an essentially similar nature to any of the said fees or expenses) actually incurred by the taxpayer during the year of assessment in respect of any claim, dispute or action at law arising in the course of or by reason of the ordinary operations undertaken by him in the carrying on of his trade: Provided that the amount to be allowed under this paragraph in respect of any such expenses shall be limited to so much thereof as –

(i) is not of a capital nature; and

(ii) is not incurred in respect of any claim made against the taxpayer for the payment of damages or compensation if by reason of the nature of the claim or the circumstances any payment which is or might be made in satisfaction or settlement of the claim does not or would not rank for deduction from his income under paragraph (a); and

(iii) is not incurred in respect of any claim made by the taxpayer for the payment to him of any amount which does not or would not constitute income of the taxpayer; and

(iv) is not incurred in respect of any dispute or action at law relating to any such claim as is referred to in paragraph (ii) or (iii) of this proviso;

Section 11(cA) of ITA

Posted on October 15, 2015December 1, 2018 by admin_kmos

(cA) an allowance in respect of any amount actually incurred by such person in the course of the carrying on of his trade, as compensation in respect of any restraint of trade imposed on any other person who –

(i) is a natural person;

(ii) is or was a labour broker as defined in the Fourth Schedule (other than a labour broker in respect of which a certificate of exemption has been issued in terms of such Schedule);

(iii) was a personal service company or personal service trust as defined in the Fourth Schedule prior to section 66 of the Revenue Laws Amendment Act, 2008, coming into operation; or

(iv) is a personal service provider as defined in the Fourth Schedule,

to the extent that such amount constitutes or will constitute income of the person to whom it is paid: Provided that the amount allowed to be deducted under this paragraph shall not exceed for any one year the lesser of –

(aa) so much of such amount so incurred as is equal to such amount divided by the number of years, or part thereof, during which the restraint of trade shall apply; or

(bb) one-third of such amount so incurred;

Section 11(d) of ITA

Posted on October 15, 2015December 1, 2018 by admin_kmos

(d) expenditure actually incurred during the year of assessment on repairs of property occupied for the purpose of trade or in respect of which income is receivable, including any expenditure so incurred on the treatment against attack by beetles of any timber forming part of such property and sums expended for the repair of machinery, implements, utensils and other articles employed by the taxpayer for the purposes of his trade;

Section 11(e) of ITA

Posted on October 15, 2015January 10, 2024 by admin_kmos

(e) save as provided in paragraph 12(2) of the First Schedule, such sum as the Commissioner may think just and reasonable as representing the amount by which the value of any machinery, plant, implements, utensils and articles (other than machinery, plant, implements, utensils and articles in respect of which a deduction may be granted under section 12B, 12BA, 12C, 12DA, 12E(1), 12U or 37B) owned by the taxpayer or acquired by the taxpayer as purchaser in terms of an agreement contemplated in paragraph (a) of the definition of “instalment credit agreement” in section 1 of the Value-Added Tax Act and used by the taxpayer for the purpose of his or her trade has been diminished by reason of wear and tear or depreciation during the year of assessment: Provided that-

(i) ……….

(iA) no allowance may be made in respect of any machinery, plant, implement, utensil or article the ownership of which is retained by the taxpayer as a seller in terms of an agreement contemplated in paragraph (a) of the definition of ‘instalment credit agreement’ in section 1 of the Value-Added Tax Act;

(ii) in no case shall any allowance be made for the depreciation of buildings or other structures or works of a permanent nature;

(iiA) where any machinery, implement, utensil or article qualifying for an allowance under this paragraph is mounted on or affixed to any concrete or other foundation or supporting structure and –

(aa) the foundation or supporting structure is designed for such machinery, implement, utensil or article and constructed in such manner that it is or should be regarded as being integrated with the machinery, implement, utensil or article; and

(bb) the useful life of the foundation or supporting structure is or will be limited to the useful life of the machinery, implement, utensil or article mounted thereon or affixed thereto,

the said foundation or supporting structure shall for the purposes of this paragraph not be deemed to be a structure or work of a permanent nature but shall for the purposes of this Act be deemed to be a part of the machinery, implement, utensil or article mounted thereon or affixed thereto;

(iii) ……….

[Subparagraph (iii) substituted by section 12 of Act 55 of 66 and section 10 of Act 21 of 1994 and deleted by section 18 of Act 25 of 2015 effective on 8 January 2016]

(iiiA) no allowance shall be made under this paragraph in respect of any machinery, implement, utensil or article of which the cost has been allowed as a deduction from the taxpayer’s income under the provisions of section 24D;

(iv) ……….

(v) the value of any machinery, implements, utensils or articles used by the taxpayer for the purposes of his trade shall be increased by the amount of any expenditure (other than expenditure referred to in paragraph (a)) which is incurred by the taxpayer in moving such machinery, implements, utensils or articles from one location to another;

[Subparagraph (v) substituted by section 18 of Act 25 of 2015 effective on 8 January 2016]

(vi) ……….

(vii) where the value of any such machinery, implements, utensils or articles acquired by the taxpayer on or after 15 March 1984 is for the purposes of this paragraph to be determined having regard to the cost of such machinery, implements, utensils or articles, such cost shall be deemed to be the cost which the taxpayer would, if such taxpayer had acquired such machinery, implements, utensils or articles under a cash transaction concluded at arm’s length on the date on which the transaction for the acquisition of such machinery, implements, utensils or articles was in fact concluded, have incurred in respect of the direct cost of the acquisition of such machinery, implements, utensils or articles, including the direct cost of the installation or erection thereof;

[Paragraph (vii) added by section 11(1)(c) of Act 121 of 1984, amended by section 19(1)(c) of Act 7 of 2010 and substituted by section 18(1)(c) of Act 25 of 2015 and by section 8(1)(a) of Act 20 of 2022 deemed effective on 29 July, 2022 and applicable in respect of years of assessment ending on or after that date]

(viii) ……….

(ix) where any such machinery, plant, implement, utensil or article was used by the taxpayer during any previous year of assessment or years of assessment 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 or years the period in use of such asset during such previous year or years shall be taken into account in determining the amount by which the value of such machinery, plant, implement, utensil or article has been diminished; and

[Paragraph (ix) added by section 15(c) of Act 59 of 2000, substituted by section 18(1)(c) of Act 60 of 2008 and by section 18(1)(c) of Act 25 of 2015 and amended by section 8(1)(b) of Act 20 of 2022 deemed effective on 29 July 2022 and applicable in respect of years of assessment ending on or after that date]

(x) no allowance may be made in respect of any machinery, plant, implement, utensil or article acquired by the taxpayer as or with a “government grant” as defined in section 12P(1);

[Paragraph (e) amended by section 9(a) of Act 90 of 1962 and by section 9(a) of Act 90 of 1964, substituted by section 11(1)(a) of Act 88 of 1965 and amended by section 8(1)(b) of Act 90 of 1988, by section 11(1)(a) of Act 101 of 1990, by section 6(a) of Act 9 of 2005, by section 18(a) of Act 31 of 2005, by section 10(1)(a) of Act 3 of 2008, by section 19(1)(a) of Act 7 of 2010, by section 27(1)(a) of Act 31 of 2013, by section 26(1)(a) of Act 15 of 2016 and by section 11(1)(a) of Act 17 of 2023 effective on 1 March, 2023 and applicable in respect of assets brought into use on or after 1 March, 2023. Paragraph (x) added by section 8(1)(b) of Act 20 of 2022 effective on 29 July, 2022 and applicable in respect of years of assessment ending on or after that date]

Section 11(f) of ITA

Posted on April 14, 2015April 6, 2021 by admin_kmos

(f) an allowance in respect of any premium or consideration in the nature of a premium paid by a taxpayer for –

(i) the right of use or occupation of land or buildings used or occupied for the production of income or from which income is derived; or

(ii) the right of use of any plant or machinery used for the production of income or from which income is derived; or

(ii)bis the right of use of any motion picture film or any sound recording or advertising matter connected with such film, if such film, sound recording or advertising matter is used for the production of income or income is derived therefrom; or

(iii) the right of use of any patent as defined in the Patents Act or any design as defined in the Designs Act or any trade mark as defined in the Trade Marks Act or any copyright as defined in the Copyright Act or of any other property which is of a similar nature, if such patent, design, trade mark, copyright or other property is used for the production of income or income is derived therefrom; or

(iv) the imparting of or the undertaking to impart any knowledge directly or indirectly connected with the use of such film, sound recording, advertising matter, patent, design, trade mark, copyright or other property as aforesaid; or

(v) the right of use of any pipeline, transmission line or cable or railway line contemplated in the definition of ‘affected asset’ in section 12D, other than an asset contemplated in paragraph (c) of that definition; or

[Subparagraph (v) added by section 14 of Act 17 of 2009 and substituted by section 25 of Act 23 of 2018 effective on 1 April 2019, applies in respect of assets brought into use on or after that date]

(vi) the right of use of any line or cable used for the transmission of electronic communications contemplated in paragraph (c) of the definition of ‘affected asset’ in section 12D:

[Subparagraph (vi) added by section 25 of Act 23 of 2018 effective on 17 January 2019]

Provided that –

(aa) the allowance under sub-paragraph (i), (ii), (ii)bis, (iii) or (v) shall not exceed for any one year such portion of the amount of the premium or consideration so paid as is equal to the said amount divided by the number of years for which the taxpayer is entitled to the use or occupation, or one twenty-fifth of the said amount, whichever is the greater;

(bb) if the taxpayer is entitled to such use or occupation for an indefinite period, or if, in the case of any such right of use or occupation granted under an agreement concluded on or after 1 July 1983, the taxpayer or the person by whom such right of use or occupation was granted holds a right or option to extend or renew the original period of such use or occupation, he shall be deemed, for the purposes of this paragraph, to be entitled to such use or occupation for the period of the probable duration of such use or occupation; and

[Item (bb) substituted by section 10 of Act 94 of 1983 and section 18 of Act 25 of 2015 effective on 8 January 2016]

(cc) the allowance under sub-paragraph (iv) shall not exceed for any one year such portion (not being less than one twenty-fifth) of the amount of the premium or consideration so paid as may be determined having regard to the period during which the taxpayer will enjoy the right to use such film, sound recording, advertising matter, patent, design, trade mark, copyright or other property as aforesaid and any other circumstances which are relevant;

[Item (cc) amended by section 9 of Act 90 of 1962 and substituted by section 18 of Act 25 of 2015 effective on 8 January 2016]

(dd) the provisions of this paragraph shall not apply in relation to any such premium or consideration paid by the taxpayer which does not for the purposes of this Act constitute income of the person to whom it is paid, unless such premium or consideration is paid in respect of a right of use of a line or cable-

(A) used for the transmission of electronic communications; and

(B) substantially the whole of which is located outside the territorial waters of the Republic,

where the term of the right of use is 10 years or more;

[Words following subparagraph (B) substituted by section 18 of Act 25 of 2015 and section 25 of Act 23 of 2018 effective on 1 April 2019]

[Item (dd) added by section 11 of Act 121 of 1984 and substituted by section 14 of Act 17 of 2009]

(ee) the allowance under subparagraph (vi) shall not exceed for any one year such portion of the amount of the premium or consideration so paid as is equal to the said amount divided by the number of years for which the taxpayer is entitled to the use or occupation, or one tenth of the said amount, whichever is the greater;

[Paragraph (ee) added by section 25 of Act 23 of 2018 effective on 1 April 2019]

Section 11(g) of ITA

Posted on October 15, 2015December 1, 2018 by admin_kmos

(g) an allowance in respect of any expenditure actually incurred by the taxpayer, in pursuance of an obligation to effect improvements on land or to buildings, incurred under an agreement whereby the right of use or occupation of the land or buildings is granted by any other person, where the land or buildings are used or occupied for the production of income or income is derived therefrom: Provided that –

(i) the aggregate of the allowances under this paragraph shall not exceed the amount stipulated in the agreement as the value of the improvements or as the amount to be expended on the improvements or, if no amount is so stipulated, an amount representing the fair and reasonable value of the improvements;

[Subparagraph (i) substituted by section 18 of Act 25 of 2015 effective on 8 January 2016]

(ii) any such allowance shall not exceed for any one year such portion of the aggregate of the allowances under this paragraph as is equal to the said aggregate divided by the number of years (calculated from the date on which the improvements are completed, but not more than 25 years) for which the taxpayer is entitled to the use or occupation;

(iii) if-

(aa) the taxpayer is entitled to such use or occupation for an indefinite period; or

(bb) the taxpayer or the person by whom such right of use or occupation was granted holds a right or option to extend or renew the original period of such use or occupation, the taxpayer shall for the purposes of this paragraph be deemed to be entitled to such use or occupation for such period as represents the probable duration of such use or occupation;

[Subparagraph (iii) substituted by section 19 of Act 7 of 2010 and section 18 of Act 25 of 2015 effective on 8 January 2016]

(iv) the aggregate of the allowances under this paragraph in respect of any building or improvements referred to in section 13(1) or 27(2)(b) shall not exceed the cost (after the deduction of any amount which has been set off against the cost of such building or improvements under section 13(3) or section 27(4)) to the taxpayer of such building or improvements less the aggregate of the allowances in respect of such building or improvements made to the taxpayer under the said section 13(1) or 27(2)(b) or the corresponding provisions of any previous Income Tax Act;

(v) ……….

(vi) the provisions of this paragraph shall not apply in relation to any such expenditure incurred if the value of such improvements or the amount to be expended on such improvements, as contemplated in paragraph (h) of the definition of “gross income” in section 1, does not for the purposes of this Act constitute income of the person to whom the right to have such improvements effected has accrued;

(vii) if during any year of assessment the agreement whereby the right of use or occupation of the land or buildings is granted is terminated before expiry of the period to which that taxpayer was entitled to the use or occupation, as contemplated in paragraph (ii) or (iii), so much of the allowance which may be allowed under this paragraph, which has not yet been allowed in that year or any previous year of assessment, shall be allowable as a deduction in that year of assessment;

Section 11(gA) of ITA

Posted on October 15, 2015December 1, 2018 by admin_kmos

(gA) an allowance in respect of any expenditure (other than expenditure which has qualified in whole or part for deduction or allowance under any of the other provisions of this section or the corresponding provisions of any previous Income Tax Act) actually incurred by the taxpayer –

(i) in devising or developing any invention as defined in the Patents Act or in creating or producing any design as defined in the Designs Act or any trade mark as defined in the Trade Marks Act or any copyright as defined in the Copyright Act or any other property which is of a similar nature;

(ii) in obtaining any patent or the restoration of any patent under the Patents Act or the registration of any design under the Designs Act or the registration of any trade mark under the Trade Marks Act or under similar laws of any other country; or

(iii) in acquiring by assignment from any other person any such patent, design, trade mark or copyright or in acquiring any other property of a similar nature or any knowledge essential to the use of such patent, design, trade mark, copyright or other property or the right to have such knowledge imparted,

if such invention, patent, design, trade mark, copyright, other property or knowledge, as the case may be, is used by the taxpayer in the production of his income: Provided that –

(aa) where such expenditure exceeds R5 000, and was incurred –

(A) before 29 October 1999, the allowance shall not exceed for any one year such portion of the amount of the expenditure as is equal to such amount divided by the number of years, which represents the probable duration of use of the invention, patent, design, trade mark, copyright, other property or knowledge, or four per cent of the said amount, whichever is the greater;

[Subitem (A) substituted by section 18 of Act 25 of 2015 effective on 8 January 2016]

(B) on or after 29 October 1999, the allowance shall not for any one year exceed an amount equal to –

(AA) five per cent of the amount of the expenditure in the case of any invention, patent, trade mark, copyright or other property of a similar nature or any knowledge essential to the use of such invention, patent, trade mark, copyright or other property or the right to have such knowledge imparted; or

(BB) 10 per cent of the amount of the expenditure in the case of any design or other property of a similar nature or any knowledge essential to the use of such design or other property or the right to have such knowledge imparted;

(bb) where such expenditure was incurred before the commencement of the year of assessment in question the allowance shall be calculated on the amount of such expenditure, less an amount equivalent to the sum of the allowances to which the taxpayer was entitled under this paragraph and the allowances to which the taxpayer would have been entitled under this paragraph if this paragraph had been applicable, in respect of such expenditure in respect of previous years of assessment, including any year of assessment under any previous Income Tax Act;

[Item (bb) substituted by section 10 of Act 94 of 1983 and section 18 of Act 25 of 2015 effective on 8 January 2016]

(cc) no allowance shall be made in respect of any such invention, patent, design, trade mark, copyright or other property or knowledge so acquired or obtained by the taxpayer on or after 24 June 1988, but prior to 1 July 1993 from any other person who is a resident of the Republic or who is ordinarily resident in a neighbouring country (or, in the case of a company, is incorporated or has its place of effective management in a neighbouring country), if –

(A) the taxpayer or such other person is a company and such other person or the taxpayer, as the case may be, is interested in more than 50 per cent of any class of shares issued by such company, whether directly as a holder of shares in that company or indirectly as a holder of shares in any other company; or

(B) both the taxpayer and such other person are companies and any third person is interested in more than 50 per cent of any class of shares issued by one of those companies and in more than 50 per cent of any class of shares issued by the other company, whether directly as a holder of shares in the company by which the shares in question were issued or indirectly as a holder of shares in any other company;

(dd) where any such invention, patent, design, trade mark, copyright or other property or knowledge was so acquired or obtained by the taxpayer on or after 1 July 1993 from any other person who is a resident of the Republic or who is ordinarily resient in a neighbouring country (or, in the case of a company, is incorporated or has its place of effective management in a neighbouring country), and who is a connected person in relation to the taxpayer, the allowance under this paragraph shall be calculated on an amount not exceeding the lesser of the cost of such invention, patent, design, trade mark, copyright or other property or knowledge to such connected person or the market value thereof as determined on the date upon which such invention, patent, design, trade mark, copyright or other property or knowledge was acquired or obtained by the taxpayer;

(ee) no allowance shall be made in respect of any expenditure incurred by such taxpayer on or after 29 October 1999, in respect of the acquisition from any other person of any trade mark or other property of a similar nature or any knowledge essential to the use of such trade mark or the right to have such knowledge imparted;

(ff) no deduction shall be allowed under this paragraph in respect of any expenditure incurred by the taxpayer during any year of assessment commencing on or after 1 January 2004;

Section 11(gB) of ITA

Posted on October 15, 2015December 1, 2018 by admin_kmos

(gB) expenditure (other than expenditure which has qualified in whole or in part for deduction or allowance under any of the other provisions of this section) actually incurred by the taxpayer during the year of assessment in obtaining the grant of any patent or the restoration of any patent, or the extension of the term of any patent under the Patents Act or the registration of any design, or the extension of the registration period of any design under the Designs Act or the registration of any trade mark, or the renewal of the registration of any trade mark under the Trade Marks Act or under similar laws of any other country, if such patent, design, or trade mark is used by the taxpayer in the production of his or her income;