13sept.     Deduction in respect of sale of low-cost residential units on loan account

(1)     Subject to section 36, there must be allowed as a deduction from the income of the taxpayer, in respect of any year of assessment ending on or before 28 February 2022, an amount determined in terms of subsection (2) in respect of the disposal of any low-cost residential unit by the taxpayer to an employee of the taxpayer (or an associated institution as defined in the Seventh Schedule in relation to the taxpayer).

[Subsection (1) substituted by section 21 of Act 23 of 2020]

(2)     The deduction contemplated in subsection (1) is an amount equal to 10 per cent of any amount owing to the taxpayer by the employee in respect of the unit at the end of the taxpayer s year of assessment: Provided that no such deduction shall be allowed in the eleventh and subsequent years of assessment after the disposal of that low-cost residential unit, as contemplated in subsection (1).

(3)     No deduction is allowed in terms of this section in respect of any disposal by the taxpayer if-

(a)     the disposal is subject to any condition other than a condition in terms of which the employee is required-

(i)      on termination of employment; or

(ii)     in the case of consistent failure for a period of three months on the part of the employee to pay an amount owing to the taxpayer (or an associated institution, as defined in the Seventh Schedule, in relation to the taxpayer) in respect of a low-cost residential unit,

to dispose of the low-cost residential unit to the taxpayer (or an associated institution, as defined in the Seventh Schedule, in relation to the taxpayer) for an amount equal to the actual cost (other than borrowing or finance costs) to the employee of the unit and the land on which the unit is erected;

(b)     the employee must pay interest to the taxpayer in respect of the amount owing to the taxpayer by the employee in respect of the unit; or

(c)     the disposal is for an amount that exceeds the actual cost (other than borrowing or finance costs) to the taxpayer of the unit and the land on which the unit is erected.

(4)     If the amount owing contemplated in subsection (2) or any part thereof is paid to the taxpayer, the taxpayer is deemed to have recovered or recouped an amount equal to the lesser of-

(a)     the amount so paid; or

(b)     the amount allowed as a deduction in terms of this section in the current and any previous year of assessment.