Page 1132 - SAIT Compendium 2016 Volume2

EXPLANATORY MEMORANDUM ON THE TAXATION LAWS AMENDMENT BILL, 2015
To cater for projects needing to train staff prior to bringing assets into use, these projects would be allowed to claim the allowance from the beginning of the nancial year which is one year prior to the assets being brought into use.
The intention of introducing the Compliance Period is not to replace the additional investment allowance bene t period, but to complement it. The four year additional investment allowance bene t period as de ned in the Regulations should be left unchanged as it de nes the period in which a project/company must bring assets into use. The objectives and bene ts of the Compliance Period are:
• to de ne the timeframe during which the project/company has to comply with each of the conditions/criteria; • to de ne the end of the period when the project/company is required to submit the last annual progress report. • to de ne the base period for claiming and reporting in terms of the additional training allowance.
• the Compliance Period will coincide with the nancial year of the project/company.
• the Compliance Period is dynamic according to the date the project/company brings assets into use, while the additional investment allowance bene t period is static.
The illustration below shows examples of when a project brings assets into use early (Scenario A) and close to the end (Scenario B) of the additional investment allowance bene t period. In terms of the training allowance bene t period with respect to scenario B for example, the allowance can be claimed from (and reporting will commence on) 1 October 2015, i.e. the beginning of the nancial year which is one year prior to the assets being brought into use.
B. Extending the window period for IPP
Any application for approval of a project must be made before 31 December 2015. Despite this cut-off period, the programme will be extended given the impact it has had since its inception. It is therefore proposed that the window period for IPP should be extended from 31 December 2015 to 31 December 2017.
IV. Effective date
1. The proposed amendments regarding the ‘Compliance Period’ will be deemed to have come into operation on 8 January 2009.
2. The proposed amendments regarding the ‘Training Allowance Bene t Period’ will come into operation on 1 January 2016.
3. The proposed amendment regarding the extension of section 12I window period will come into operation on 1 January 2016.
4.3 FURTHER ALIGNMENT OF THE TAX TREATMENT OF GOVERNMENT GRANTS
[Applicable provisions: Sections 10(1)(zI) and 12P]
I. Background
In 2013, a uni ed system for the tax treatment of government grants was introduced. Under this uni ed system, a list of government grants was included in the Act under the Eleventh Schedule. This list includes grants provide at the national level as well as those provided at the provincial level pursuant to a provincial budget process. In addition, a speci c provision setting out the tax treatment of government grants was introduced in section 12P with reference to the list of government grants in the Eleventh Schedule.
1124 SAIT CompendIum oF TAx LegISLATIon VoLume 2