“Permanent work” definition of section 24G of ITA

Posted on by admin_kmos

“permanent work” means –

 

(a)     any earthwork, tunnel, bridge, or structure forming part of a toll road, including any building erected for the purpose of housing toll equipment, but excluding any such work constructed or erected solely for the purposes of the repair or maintenance of a toll road; and

 

(b)     the reimbursement for the cost of acquisition or expropriation of land required for the purposes of the toll road; and

 

(c)     any payment made to the South African National Roads Agency Limited in respect of the acquisition of the right to operate a toll road;

“Ancillary service” definition of section 24G of ITA

Posted on by admin_kmos

“ancillary service” in relation to a toll road, means any –

 

(a)     vehicle service station, breakdown or repair facility;

 

(b)     shop or restaurant;

 

(c)     park, recreation or rest area;

 

(d)     emergency medical or first–aid facility;

 

(e)     hotel or other accommodation; or

 

(f)      entertainment facility,

 

or other service or facility to which persons or vehicles may gain access from the toll road;

Section 24E (ITA) – Allowance in respect of future expenditure by sporting bodies

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24E.     Allowance in respect of future expenditure by sporting bodies

 

(1)     If income is received by or accrued to a taxpayer contemplated in section 11E in respect of an event that will not recur in the following year of assessment, the taxpayer may for the purposes of determining taxable income deduct so much of that income as will be required to fund expenditure contemplated in section 11E that will be incurred in a future year of assessment.

 

(2)     Any amount allowed to be deducted in terms of subsection (1) in any year of assessment must be deemed to be income received by or accrued to the taxpayer in the following year of assessment.


24F.     ………

Section 24D (ITA) – Deduction of certain expenditure incurred in respect of any National Key Point or specified important place or area

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24D.  Deduction of certain expenditure incurred in respect of any National Key Point or specified important place or area

(1)     There shall be allowed to be deducted from the income of any taxpayer for any year of assessment so much of any expenditure actually incurred by the taxpayer during such year –

[Words preceding paragraph (a) substituted by section 43 of Act 25 of 2015 effective on 8 January 2016]

(a)     directly in the performance of any act ordered, performed or executed under the provisions of the National Key Points Act, 1980 (Act No. 102 of 1980), in respect of any National Key Point or Key Point as defined in section 1 of that Act; or

(b)     directly in providing efficient security against loss, damage, disruption or immobilization of any place or area as defined in section 1 of the said Act which, although not declared a National Key Point under the provisions of the said Act, has been evaluated and approved by the Minister of Defence or any person or committee appointed by him as such a place or area in respect of which measures for the efficient security thereof ought to be taken by such taxpayer.

(2)     The amount of any expenditure allowed to be deducted under the provisions of subsection (1) shall be restricted to expenditure –

(a)     actually incurred by the taxpayer on or after 1 September 1978; and

(b)     which was or is not otherwise allowable as a deduction under the provisions of this Act,

and no expenditure shall be deducted under the provisions of this section unless the Minister of Defence or any person or committee appointed by that Minister has confirmed in writing that it was deemed necessary or expedient that the expenditure in question be incurred by the taxpayer concerned.

[Words following paragraph (b) substituted by section 43 of Act 25 of 2015 effective on 8 January 2016]

(3)     Where an amount has been paid by the State to a taxpayer in respect of expenditure incurred by him prior to 1 July 1983 which has qualified for deduction from his income under subsection (1) and the Minister, person or committee referred to in subsection (2) confirms that such amount was paid as a supplement to the benefit which the taxpayer has enjoyed or will enjoy by way of the said deduction, the provisions of section 8(4)(a) shall not apply in respect of the said amount [K-MOS].

Section 24C (ITA) – Allowance in respect of future expenditure on contracts

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24C.    Allowance in respect of future expenditure on contracts

(1)     For the purposes of this section, “future expenditure” in relation to any year of assessment means an amount of expenditure which will be incurred after the end of such year –

(a)     in such manner that such amount will be allowed as a deduction from income in a subsequent year of assessment; or

(b)     in respect of the acquisition of any asset in respect of which any deduction will be admissible under the provisions of this Act.

[Subsection (1) substituted by section 42 of Act 25 of 2015 effective on 8 January 2016]

(2)     If the income of any taxpayer in any year of assessment includes or consists of an amount received by or accrued to him in terms of any contract and such amount will be utilised in whole or in part to finance future expenditure which will be incurred by the taxpayer in the performance of the taxpayer’s obligations under such contract, there shall be deducted in the determination of the taxpayer’s taxable income for such year such allowance (not exceeding the said amount) in respect of so much of such future expenditure as relates to the said amount.

[Subsection (2) substituted by section 42 of Act 25 of 2015 effective on 8 January 2016]

(3)     The amount of any allowance deducted under subsection (2) in any year of assessment shall be deemed to be income received by or accrued to the taxpayer in the following year of assessment.

Section 24BA (ITA) – Transactions where assets are acquired as consideration for shares issued

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24BA.  Transactions where assets are acquired as consideration for shares issued

(1)     For the purposes of this section, ‘asset’ means an asset as defined in paragraph 1 of the Eighth Schedule or a number of such assets.

(2)     Subject to subsection (4), this section applies where-

(a)     in terms of any transaction, a company, for consideration, acquires an asset from a person in exchange for the issue by that company to that person of shares in that company; and

(b)     the consideration contemplated in paragraph (a) is (before taking into account any other transaction, operation, scheme, agreement or understanding that directly or indirectly affects that consideration) different from the consideration that would have applied had that asset been acquired in exchange for the issue of those shares in terms of a transaction between independent persons dealing at arm’s length.

(3)     Notwithstanding paragraph 11(2)(b) of the Eighth Schedule, where a company acquires an asset from a person in exchange for the issue by that company to that person of shares in that company as contemplated in subsection (2) and the market value of-

(a)     that asset immediately before that disposal exceeds the market value of the shares immediately after that issue, the amount of the excess must-

(i)      be deemed to be a capital gain in respect of a disposal by that company of the shares; and

(ii)     where those shares are acquired by that person as-

(aa)   a capital asset, be applied to reduce any amount of expenditure incurred by that person in acquiring those shares that is allowable in terms of paragraph 20 of the Eighth Schedule; or

(bb)   trading stock, be applied to reduce any amount that must be takan into account by the person in respect of the shares in terms of section 11(a) or 22(1) or (2); or 

(b)     the shares immediately after that issue exceeds the market value of that asset immediately before the disposal, the amount of the excess must, for the purposes of Part VIII, be deemed to be a dividend as defined in section 64D that-

(i)      consists of a distribution of an asset in specie; and

(ii)     is paid by the company on the date of that issue.

(4)     This section must not apply where a company acquires an asset from a person as contemplated in subsection (2)(a) if-

(a)

(i)      that company and that person form part of the same group of companies immediately after that company acquires that asset; or

(ii)     that person holds all the shares in that company immediately after that company acquires that asset; or

(b)     paragraph 38 of the Eighth Schedule applies.

Section 24A (ITA) – Transactions whereby fixed property is or company shares are exchanged for shares

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24A.    Transactions whereby fixed property is or company shares are exchanged for shares

 

(1)     If, under any transaction entered into before 1 October 2001 for the disposal by any person (hereinafter referred to as the trader) of any trading stock consisting of fixed property or any shares in any company, the consideration received by or accrued to the trader for such trading stock in effect consists of or includes –

 

(a)     shares in a public company; or

 

(b)     company shares quoted by a recognized stock exchange at the time of such transaction or within six months thereafter; or

 

(c)     shares in any other company, if such shares are, under a scheme for the consolidation or merger of the interests of two or more persons, issued or transferred to the trader,

 

the value of the shares which constitute or are included in such consideration shall, if the trader and the Commissioner agree thereto, be excluded from the trader’s income for the year of assessment during which such consideration is received by or accrues to him.

 

(2)     For the purposes of this Act –

 

(a)     the shares which constitute or are included in the said consideration and any capitalization shares issued in respect of such shares (which shares and capitalization shares are hereinafter referred to as new trading stock) shall be deemed to be trading stock of the trader; and

 

(b)     the cost price to the trader of the shares which constitute or are included in the said consideration shall be deemed to be the cost to him of the trading stock referred to in subsection (1) or, if such last–mentioned trading stock was held by him and had not been disposed of by him at the beginning of the year of assessment, the amount taken into account under section 22(2) as the value thereof, less an amount which bears to the said cost or the amount so taken into account, as the case may be, the same ratio as the value of such portion (if any) of the said consideration as does not consist of the said shares bears to the total value of the said consideration (including the said shares).

 

(3)     Any amount (including the value of any benefit or advantage) which is received by or accrues to the trader from the disposal of new trading stock (or a portion thereof) shall be included in the trader’s income, whether such amount is derived in carrying on any trade or otherwise or is derived from a source within or outside the Republic: Provided that the provisions of this subsection shall not be construed so as to prevent the provisions of subsection (1) being applied in respect of such amount.

 

(4)     If on or after the date of promulgation of the Income Tax Act, 1971, the trader disposes of or ceases to be the owner of new trading stock for any reason other than his death or insolvency or, in the case of a company, the winding–up or liquidation thereof and no consideration accrues to him in respect of such new trading stock or a consideration accrues to him in respect of such new trading stock which in whole or part is not measurable in terms of money (the part of the consideration which is so measurable being less in value than the market value of such new trading stock at the date on which it was disposed of or on which the trader ceased to be the owner thereof), he shall for the purposes of this Act be deemed to have disposed of such new trading stock for a consideration equal to the market value thereof at the date on which it was disposed of or on which the trader ceased to be the owner thereof) or the market value thereof on the date of the transaction referred to in subsection (1), whichever value is the lower, reduced by the amount (if any) included in the trader’s income under subsection (3) in respect of the disposal, and such value, as so reduced, shall be included in his income: Provided that the foregoing provisions of this subsection shall not apply where the trader disposes of or ceases to be the owner of new trading stock by reason of the carrying out of any scheme referred to in section 22A and the trader is a transferor company as contemplated in that section.

 

(5)     Where the trader has until his death or the prior sequestration of his estate or, in the case of a company, the commencement of the winding–up or liquidation thereof, continued to hold new trading stock, the trader shall for the purposes of this Act be deemed to have disposed of such new trading stock on the day preceding the date of his death or the sequestration of his estate (whichever first occurs) or, in the case of a company the date on which the winding–up or liquidation thereof commenced, for a consideration equal to the market value on the said day of such new trading stock or the market value thereof on the date of the transaction referred to in subsection (1), whichever value is the lower, and such value shall be included in his income for the period of assessment within which the said day falls.

 

(6)     For the purposes of this section –

 

(a)     “fixed property” means property as defined in section 1 of the Transfer Duty Act, 1949 (Act No. 40 of 1949); and

 

(b)     a company which has not yet been recognized under the provisions of this Act as a public company, may at the request of the taxpayer, be deemed to be a public company, if the Commissioner is satisfied that such company will be so recognized.

Section 24 (ITA) – Credit agreements and debtors allowance

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24.    Credit agreements and debtors allowance

(1)     Subject to the provisions of section 24J, if any taxpayer has entered into any agreement with any other person in respect of any property the effect of which is that, in the case of movable property, the ownership shall pass or, in the case of immovable property, transfer shall be passed from the taxpayer to that other person, upon or after the receipt by the taxpayer of the whole or a certain portion of the amount payable to the taxpayer under the agreement, the whole of that amount shall for the purposes of this Act be deemed to have accrued to the taxpayer on the day on which the agreement was entered into.

(2)     In the case of such an agreement, other than a lay-by agreement as contemplated in subsection (2A), in terms of which at least 25 per cent of the said amount payable only becomes due and payable on or after the expiry of a period of not less than 12 months after the date of the said agreement, taking into consideration any allowance made under section 11(j), there shall be made such further allowance as under the special circumstances of the trade of the taxpayer, as set out in a public notice issued by the Commissioner, is reasonable, in respect of all amounts which are deemed to have accrued under such agreements but which have not been received at the close of the taxpayer’s accounting period: Provided that any allowance so made shall be included as income in the taxpayer’s returns for the following year of assessment and shall form part of the taxpayer’s income.

[Subsection (2) substituted by section 13(1)(a) of Act 20 of 2022 with effect from 1 January, 2023 and applicable in respect of years of assessment ending on or after that date (section 13(1)(a) of Act 20 of 2022 as substituted by section 68(1) of Act 17 of 2023)]

(2A)   In the case of a lay-by agreement as contemplated in section 62 of the Consumer Protection Act, 2008 (Act 68 of 2008), the Commissioner may make an allowance in respect of all amounts which are deemed to have accrued under such agreement but which have not been received by the end of the taxpayer’s year of assessment.

[Subsection (2A) inserted by section 13(1)(b) of Act 20 of 2022 effective on 1 January, 2023 and applicable in respect of years of assessment ending on or after that date]

(2B)   Any allowance made under subsection (2A) shall be included in the income of that taxpayer in the immediately following year of assessment.

[Subsection (2B) inserted by section 13(1)(b) of Act 20 of 2022 effective on 1 January, 2023 and applicable in respect of years of assessment ending on or after that date]