(2)     There shall be allowed to be deducted an allowance in respect of the cost actually incurred by the taxpayer in respect of the acquisition of –

[Words preceding paragraph (a) substituted by section 19 of Act 43 of 2014 effective on 1 April 2015]

(a)

(i)      any new and unused affected asset; or

(ii)     in the case of an asset contemplated in paragraph (c) of the definition of ‘affected asset’ any asset,

owned by the taxpayer that is brought into use for the first time by the taxpayer; and;

[Paragraph (a) substituted by section 23 of Act 35 of 2007, section 12 of Act 3 of 2008 and section 19 of Act 43 of 2014 effective on1 April 2015]

(b)     the asset as contemplated in paragraph (a) which is used directly by such taxpayer for purposes contemplated in the definition of ‘affected asset’,

[Paragraph (b) substituted by section 12 of Act 3 of 2008 and section 19 of Act 43 of 2014 effective on 1 April 2015]

(2A)  For the purposes of this section, if a taxpayer completes an improvement as contemplated in section 12N, the expenditure incurred by the taxpayer to complete that improvement shall be deemed to be the cost actually incurred by the taxpayer in respect of the acquisition of any new and unused affected asset contemplated in subsection (2).

(3)     The allowance contemplated in subsection (2) shall not for any one year exceed –

(a)     10 per cent of the cost incurred in respect of any asset contemplated in paragraph (a) of the definition of “affected asset”;

[Paragraph (a) amended by section 19 of Act 43 of 2014 effective on 1 April 2015]

(b)     5 per cent of the cost incurred in respect of any asset contemplated in paragraph (aA), (b) or (d) of the definition of affected asset; or

[Paragrpah (b) substituted by section 12 of Act 3 of 2008 and seciton 19 of Act 43 of 2014 effective on 1 April 2015]

(c)     10 per cent of the cost incurred in respect of any asset contemplated in paragraph (c) of the definition of ‘affected asset’.

[Paragraph (c) added by section 19 of Act 43 of 2014 and substituted by section 28 of Act 23 of 2018 effective on 1 April 2019, applies in respect of assets acquired on or after that date]

(3A)  Where any affected 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 previous year or any subsequent year in which such asset was used by such 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.

(4)     For the purposes of this section the cost to a taxpayer of any affected asset shall be deemed to be the lesser of-

(a)     the actual cost of the asset incurred by the taxpayer; or

(b)     the cost which the taxpayer would, if the taxpayer had acquired or improved the said asset under a cash transaction concluded at arm’s length on the date on which the transaction for the acquisition or improvement of the said asset was in fact concluded, have incurred in respect of the direct cost of acquisition or improvement of the asset (including the direct cost of the installation or erection thereof).

[Subsection (4) amended by section 23 of Act 35 of 2007 and substituted by section 24 of Act 17 of 2017 effective on 18 December 2017]

(5)     No deduction shall be allowed under this section in respect of any affected asset which has been disposed of by the taxpayer during any previous year of assessment.

(6)     The deductions which may be allowed or deemed to have been allowed in terms of this section and any other provision of this Act in respect of the cost of any affected asset shall not in the aggregate exceed the amount of such cost.