Page 19 - SAIT Compendium 2016 Volume2

Tax holiday
INCOME TAX ACT: REGULATIONS ANd NOTICES
TAX HOLIDAY REGULATIONS
Promulgated under
GN R1989 in GG 17650 of 29 November 1996 as amended by
GN R1067 in GG 19174 of 28 August 1998
Regulations under section 37H (14) of the Income Tax Act 58 of 1962
Tax holiday
1 De nitions
In these Regulations any word or expression to which a meaning has been assigned in the Act bears the meaning so assigned and, unless the context otherwise indicates—
‘auditor’ means an auditor quali ed to act as such under the Public Accountants’ and Auditors Act, 1991 (Act 80 of 1991);
‘commencement of the carrying on of a project’ means the commissioning of machinery and plant after the commencement date;
‘GAAP’ means general accounting practices which are in accordance with statements of Generally Accepted Accounting Practice or, in the absence of any statement, accounting practices which are generally accepted in South Africa;
‘machinery and plant’ means machinery, plant, implements, utensils or articles, excluding any of ce furniture and equipment and any motor vehicle (excluding any vehicle constructed for a special purpose other than the carriage of persons and having no accommodation for carrying persons other than such as is incidental to that purpose), of a kind normally used on public roads which has two or more wheels and is constructed or adapted wholly or mainly for the carriage of passengers, which are to be brought into use by a company and are to be used directly in a qualifying project;
‘magisterial district’ means a district created in terms of section 2 of the Magistrates’ Courts Act, 1944 (Act 32 of 1944);
‘SAICA’ means the South African Institute of Chartered Accountants;
‘the Act’ means the Income Tax Act 1962 (Act 58 of 1962);
‘TLC’ means a Transitional Local Council as de ned in the Transitional Local Government Act, 1993 (Act 209 of
1993);
‘TMC’ means a Transitional Metropolitan Council as de ned in the Transitional Local Government Act, 1993 (Act
209 of 1993);
‘TMS’ means a Transitional Metropolitan Substructure as de ned in the Transitional Local Government Act, 1993
(Act 209 of 1993);
‘TREPC’ means a Transitional Representative Council as de ned in the Transitional Local Government Act, 1993
(Act 209 of 1993).
2 Investment requirements
(1) The amount of capital invested in—
(a) land whereon and buildings wherein the process of manufacture is to be carried on; and (b) machinery and plant to be used directly in the process of manufacture,
must exceed R3 million.
(2) The amount of capital invested in land and buildings is calculated by adding—
(a) the cost of land and buildings owned or to be owned by a company; and
(b) the capitalised value of land and buildings leased or to be leased, capitalised by that company at 15 per cent per
annum.
(3) The amount of capital invested in machinery and plant is calculated by adding—
(a) the cost of machinery and plant owned or to be owned by a company; and
(b) the capitalised value of machinery and plant leased or to be leased to be re ected in the balance sheet of that
company.
3 Locations for spatial component
The following locations have been demarcated as locations qualifying for purposes of the spatial component:
(1) Eastern Cape
The following TLC areas: (a) Butterworth;
(b) Despatch;
(c) East London;
(d) King William’s Town; (e) Port Elizabeth;
(f) Queenstown; and
(g) Uitenhage.
(2) Free State
The following TLC areas: (a) Bloemfontein;
(b) Botshabelo;
(c) Harrismith;
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