(4)
(a) There shall be included in the taxpayer’s income all amounts allowed to be deducted or set off under the provisions of sections 11 to 20, inclusive, section 24D, section 24F, section 24G, section 24I, section 24J, section 27(2)(b) and section 37B(2) of this Act, except section 11(k), 11(n), 11(p) and (q), section 11F, section 12(2) or section 12(2) as applied by section 12(3), section 12A(3), section 13(5), or section 13(5) as applied by section 13(8), or section 13bis(7), section 15(a) or section 15A, or under the corresponding provisions of any previous Income Tax Act, whether in the current or any previous year of assessment which have been recovered or recouped during the current year of assessment:
[Words preceding the proviso substituted by section 9 of Act 31 of 2013 and section 8 of Act 17 of 2017 effective on 1 March 2016]
Provided that the provisions of this paragraph shall not apply in respect of any such amount so recovered or recouped which has been-
(i) included in the gross income of such taxpayer in terms of paragraph (jA) of the definition of ‘gross income’;
(ii) applied to reduce any cost or expenditure incurred by such taxpayer in terms of section 19; or
(iii) previously taken into account as an amount that is deemed to have been recovered or recouped in terms of section 19(4), (5), (6) or (6A).
[Paragraph (a) amended by section 6(1)(a) of Act 90 of 1964, substituted by section 9(1)(a) of Act 88 of 1965, by section 10(1)(a) of Act 55 of 1966, by section 10(a) of Act 89 of 1969, by section 8(d) of Act 85 of 1974, by section 7(1)(b) of Act 69 of 1975, by section 7(1)(a) of Act 113 of 1977, by section 8(a) of Act 94 of 1983, by section 5(1)(b) of Act 121 of 1984, by section 6(f) of Act 85 of 1987 and by section 6(a) of Act 90 of 1988 and amended by section 17(1)(b) of Act 30 of 2000, by section 21(1)(a) of Act 60 of 2001, by section 6 of Act 32 of 2004, by section 6(1) of Act 8 of 2007, by section 5(1)(a) of Act 3 of 2008, by section 11(1)(b) of Act 17 of 2009, by section 16(1)(b) of Act 24 of 2011, by section 9(1)(b) of Act 22 of 2012, by section 9(1)(a) of Act 31 of 2013 and by section 8(1) of Act 17 of 2017 deemed effective on 1 March, 2016. Paragraph (iii) added by section 9(1)(d) of Act 31 of 2013 and substituted by section 6 of Act 20 of 2021]
(b) For the purposes of paragraph (a), where during any year of assessment any actuarial surplus is paid to a taxpayer pursuant to the provisions of section 15E(1)(f) or (g) of the Pension Funds Act the taxpayer must be deemed to have recovered or recouped an amount equal to the amount of that actuarial surplus less any expenditure incurred by that taxpayer in respect of that actuarial surplus that was not allowed as a deduction during any year of assessment.
(c) ……….
(d) ……….
(dA) ……….
(dB) ……….
(e) Notwithstanding paragraph (a), but subject to paragraph (eB), (eC), (eD) and (eE), there shall not be included in the income of a person any amount recovered or recouped as a result of the disposal of any asset, where that person has elected that paragraph 65 or 66 of the Eighth Schedule applies in respect of the disposal of that asset.
(eA) Where a person acquires more than one asset (hereinafter referred to as “the replacement asset or assets”) contemplated in paragraph (e), that person must, in applying paragraphs (eB), (eC) and (eD), apportion the amount recovered or recouped to each replacement asset in the same ratio as the receipts and accruals from that disposal respectively expended in acquiring each replacement asset bear to the total amount of those receipts and accruals expended in acquiring all those replacement assets.
(eB) Where a replacement asset in relation to an asset of a person as contemplated in paragraph (e) constitutes a depreciable asset, that person shall be deemed to have recovered or recouped in a year of assessment so much of the amount contemplated in paragraph (e) apportioned to that asset as contemplated in paragraph (eA) as bears to the total amount of the recovery or recoupment contemplated in paragraph (e) the same ratio as the amount of any deduction or allowance allowed in that year of assessment in respect of that replacement asset bears to the total amount of the deduction or allowance (determined with reference to the cost or value of that asset at the time of acquisition thereof) allowable for all years of assessment in respect of that replacement asset.
(eC) Where a person during any year of assessment disposes of a replacement asset in relation to an asset contemplated in paragraph (e) and any portion of the recovery or recoupment which is apportioned to that replacement asset has not been included in the income of that person in terms of paragraph (eE) or (eD), that portion must be deemed to be an amount recovered or recouped by that person in respect of that replacement asset in that year of assessment.
(eD) Where during any year of assessment a person ceases to use a replacement asset in relation to an asset contemplated in paragraph (e), in respect of which paragraph 66 of the Eighth Schedule applies, for the purposes of that person’s trade and any portion of the amount which is apportioned to that replacement asset has not been included in the income of that person in terms of paragraph (eE) or (eC), that portion must be deemed to be an amount recovered or recouped in that year of assessment.
(eE) Where a person contemplated in paragraph (e) fails to conclude a contract or fails to bring any replacement asset into use within the period prescribed in paragraphs 65 or 66 of the Eighth Schedule, as the case may be, paragraph (e) shall not apply and that person must-
(i) deem the amount contemplated in paragraph (e) to be an amount recovered or recouped for purposes of paragraph (a) on the date on which the relevant period ends;
(ii) determine interest at the prescribed rate on the amount recovered or recouped from the date of the disposal contemplated in paragraph (e) to the date contemplated in subparagraph (i); and
(iii) deem that interest to be an amount recovered or recouped for purposes of paragraph (a) on the date contemplated in subparagraph (i).
(f) If as a result of the loss, sale or disposal in any other manner by the taxpayer of the further asset referred to in paragraph (e) there has accrued to or has been received by the taxpayer an amount in excess of the cost thereof less the amount referred to in the said paragraph, so much of the excess as does not exceed such last–mentioned amount shall (unless such last–mentioned amount has been included in income in terms of the proviso to the said paragraph) be deemed to have been recovered or recouped and shall be included in the taxpayer’s income for the year of assessment during which such further asset was so lost, sold or disposed of in addition to any recovery or recoupment referred to in paragraph (a).
(g) ……….
[Paragraph (g) added by section 9 of Act 88 of 1965, amended by section 6 of Act 141 of 1992 and deleted by section 5 of Act 43 of 2014 effective on 12 December 2013]
(h) ……….
[Paragraph (h) added by section 9 of Act 88 of 65 and deleted by section 5 of Act 43 of 2014 effetive on 12 December 2013]
(i) ……….
[Paragraph (i) added by section 9 of Act 88 of 1965 and deleted by section 5 of Act 43 of 2014 effecive on 12 December 2013]
(j) ……….
[Paragraph (j) added by section 9 of Act 88 of 1965 and deleted by section 5 of Act 43 of 2014 effective on 12 December 2013]
(k) For the purposes of paragraph (a), where during any year of assessment any person has –
(i) donated any asset;
(ii) in the case of a company, transferred in whatever manner or form any asset to any holder of a share in that company;
[Subparagraph (ii) substituted by section 9(1)(g) of Act 31 of 2013 and amended by section 6(d) of Act 34 of 2019]
(iii) disposed of any asset to a person who is a connected person in relation to that person; or
[Subparagraph (iii) amended by section 6(d) of Act 34 of 2019]
(iv) commenced to hold any asset as trading stock which was previously not held as trading stock,
[Subparagraph (iv) added by section 6(d) of Act 34 of 2019]
in respect of which a deduction or an allowance has been granted to such person in terms of any of the provisions referred to in that paragraph, that person shall be deemed to have disposed of that asset for an amount equal to the market value of that asset as at the date of that donation, transfer, disposal or commencement.
[Paragraph (k) added by section 4(1) of Act 113 of 1993, substituted by section 7(g) of Act 19 of 2001 and by section 21(1)(b) of Act 60 of 2001, amended by section 11(1)(c) and (d) of Act 74 of 2002, substituted by section 5(b) of Act 20 of 2006 and amended by section 4(1)(b) of Act 23 of 2020 deemed effective on 15 January, 2020]
(l) For the purposes of paragraph (a), where –
(i) any person was entitled to a deduction in respect of any interest or related finance charges (including a discount or premium), which was incurred or deemed to have been incurred by such person in relation to any financial arrangement during any year of assessment and such interest or related finance charges were allowed as a deduction in terms of the provisions of this Act during such year of assessment in the hands of such person;
(ii) such person has transferred such financial arrangement during any year of assessment to any other person; and
(iii) any obligation or part thereof in respect of such interest or related finance charges which such person is legally liable to pay has, as a result of such transfer, been transferred to such other person,
such person shall be deemed to have recovered or recouped an amount equal to the amount of such obligation or part thereof so transferred during the year of assessment in which such obligation or part thereof has been so transferred
.
(m) ……….
(n) Where a taxpayer disposes of an industrial asset contemplated in section 12G or a manufacturing asset contemplated in section 12I before completion of the write off period of that asset for purposes of section 11(e), 12C or 13, as applicable, there shall be included in the taxpayer’s income, all amounts allowed to be deducted in respect of that industrial asset under section 12G or manufacturing asset under section 12I, whether in the current year or any previous year of assessment, which have been recovered or recouped during the current year of assessment, in addition to the inclusion of those amounts in terms of paragraph (a).
(nA) Where, before 1 March 2026, a taxpayer disposes of an asset contemplated in section 12BA, there shall be included in the taxpayer’s income 25 per cent of the cost of that asset, which has been recouped during the current year of assessment, in addition to the inclusion of amounts in terms of paragraph (a), but limited to the total amount allowed to be deducted in respect of that asset.
[Paragraph (nA) inserted by section 4(1) of Act 17 of 2023 effective on 1 March, 2023 and applicable in respect of assets brought into use on or after that date]
(4A) The provisions of subsection (4)(a), (e), (f) or (k) shall not apply in respect of any amount which is deemed to have been allowed as a deduction in terms of subparagraph (ix) of the proviso to section 11(e), section 12B(4B), section 12C(4A), section 12D(3A), section 12DA(4), section 12F(3A), section 13(1A), section 13bis(3A), section 13ter(6A), section 13quin(3) or section 37B(4).