Page 230 - SAIT Compendium 2016 Volume2

IN 13 (3)
(i)
(ii)
(iiA) (iii)
(iv)
Income Tax acT: InTeRPReTaTIon noTes IN 13 (3) any contributions to a pension or retirement annuity fund as may be deducted from the income of that person
in terms of sections 11 (k) or (n);
any allowance or expense which may be deducted from the income of that person in terms of section 11 (c),
(e), (i) or (j);
any deduction which is allowable under section 11 (nA) or (nB);
any deduction which is allowable under section 11 (a) in respect of any premium paid by that person in terms of an insurance policy, to the extent that—
(aa) it covers that person against the loss of income as a result of illness, injury, disability or unemployment; and (bb) the amounts payable in terms of that policy as contemplated in item (aa) constitutes or will constitute
income as de ned; and
any deduction which is allowed under section 11 (a) or (d) in respect of any rent of, cost of repairs of or expenses in connection with any dwelling house or domestic premises, to the extent that the deduction is not prohibited under paragraph (b);’
4 Application of the law
The wording of section 23 (m) is analysed and interpreted below:
Wording
Interpretation
No deductions shall in any case be made in respect of the following matters, namely—
Section 23 contains a number of prohibitions on deductions. Paragraph (m) of section 23 is one of them.
subject to paragraph (k)
Paragraph (k) of section 23 prohibits certain deductions for labour brokers without an exemption certi cate and personal service providers. The application of paragraph (m) is subject to the application of paragraph (k), which means that a personal service provider or a labour broker that falls under the restrictions imposed by paragraph (k) will remain restricted under that paragraph despite the provisions of section 23 (m).
any expenditure, loss or allowance, contemplated in section 11
Before the introduction of section 23(m) an employee or holder of an of ce could under certain (in practice very limited) circumstances have been entitled to claim a deduction under section 11. With effect from 1 March 2002 this is, with a few exceptions, no longer possible. [See examples A and B of Annexure A]
The prohibition on the deduction of expenditure, losses and allowances only applies to expenditure, losses and allowances that would otherwise have been deductible under section 11. Deductions for medical expenditure under section 18 and donations to approved public bene t organisations under section 18A remain available. Subsistence and travelling expenses under section 8(1)(b) or (c), or the expenditure listed under section 8(1)(d) in respect of holders of a public of ce, are not expenditure, losses or allowances claimed under section 11, but are amounts taken into account in the determination of the amount to be included in taxable income, and are thus not affected by the limitation imposed by section 23(m). [See Example B of Annexure A]
which relates to any employment of, or of ce held by, any person
The prohibition on deductions applies to expenditure, loss or allowances which relate to the employment of any person or to an of ce held by any person.
The term “employment”, in this context, should be afforded its narrower meaning of an employer-employee (master- servant) relationship. An independent contractor is therefore not affected by the prohibition on deductions. [See Example B of Annexure A] The holding of an of ce generally ows from an appointment (such as the President of South Africa, Ministers in the Cabinet, and Judges, as well as directors of companies) whereas the holding of employment ows from a contract and is something in the nature of a post.
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