Page 246 - SAIT Compendium 2016 Volume2

IN 14 (3) Income Tax acT: InTeRPReTaTIon noTes IN 14 (3) Annexure A – The law
8. Certain amounts to be included in income or taxable income.—(1) (a) (i) There shall be included in the taxable income of any person (hereinafter referred to as the ‘recipient’) for any year of assessment any amount which has been paid or granted during that year by his or her principal as an allowance or advance, excluding any portion of any allowance or advance actually expended by that recipient—
(aa) on travelling on business, as contemplated in paragraph (b), unless an allowance or advance has been granted by an employer in respect of the use of a motor vehicle as contemplated in paragraph 7 of the Seventh Schedule;
(bb) on any accommodation, meals and other incidental costs, as contemplated in paragraph (c), while such recipient is by reason of the duties of his or her of ce or employment obliged to spend at least one night away from his or her usual place of residence in the Republic; or
(cc) by reason of the duties attendant upon his or her of ce, as contemplated in paragraph (d).
(ii) There shall not be included in the taxable income of a person in terms of the provisions of paragraph (a) (i), any amount paid or granted by a principal in reimbursement of, or as an advance for, any
expenditure incurred or to be incurred by the recipient—
(aa) on the instruction of his or her principal in the furtherance of the trade of that principal; and
(bb) where that recipient must produce proof to that principal that such expenditure was wholly incurred as
aforesaid and must account to that principal for that expenditure:
Provided that where that expenditure was incurred to acquire any asset, the ownership in that asset must vest in that principal.
(iii) For the purposes of this paragraph, ‘principal’ in relation to a recipient includes his or her employer or the authority, company, body or other organisation in relation to which any of ce is held, or any associated institution, as de ned in the Seventh Schedule, in relation to such employer, authority, company, body or organisation.
(iv) The provisions of this paragraph shall not apply in respect of any amount paid or granted as an allowance or advance that is received by or accrued to a person in respect of—
(aa) the holding of a public of ce by that person as contemplated in section 9 (2) (g); or
(bb) services rendered or work or labour performed by that person as contemplated in section 9 (2) (h),
if that person is stationed outside the Republic and that amount is attributable to services rendered by that person outside the Republic.
(b) For the purposes of paragraph (a) (i) (aa)—
(i) any allowance or advance in respect of transport expenses shall, to the extent to which such
allowance or advance has been expended by the recipient on private travelling (including travelling between his place of residence and his place of employment or business or any other travelling done for his private or domestic purposes), be deemed not to have been actually expended on travelling on business;
(ii) subject to the provisions of subparagraph (iii), where such allowance or advance has been paid to the recipient in order that it may be utilized for defraying expenditure in respect of any motor vehicle used by the recipient, the portion of the allowance expended by the recipient during the year of assessment for business purposes shall, unless an acceptable calculation based on accurate data is furnished by the recipient, be deemed to be an amount calculated by applying the rate per kilometre determined in the manner prescribed by the Minister of Finance by notice in the Gazette for the category of vehicle used, on a distance travelled during the said year for business purposes (other than private travelling as contemplated in subparagraph (i));
(iii) where such allowance or advance is based on the actual distance travelled by the recipient in using a motor vehicle on business (excluding the said private travelling), or such actual distance is proved to the satisfaction of the Commissioner to have been travelled by the recipient, the amount expended by the recipient on such business travelling shall, unless the contrary appears, be deemed to be an amount determined on such actual distance at the rate per kilometre xed by the Minister of Finance by notice in the Gazette for the category of vehicle used;
(iiiA) where the portion of the allowance or advance which is claimed by the recipient to be actually expended is calculated based on accurate data furnished by the recipient in respect of any vehicle— (aa) in the case of a vehicle that is being leased, the total amount of payments in respect of that lease may not in any year of assessment exceed an amount of the xed cost determined by the Minister in the notice
contemplated in subparagraph (ii), for the category of vehicle used; (bb) in any other case—
(A) the wear and tear of that vehicle must be determined over a period of seven years from the date of original acquisition by that recipient and the cost of the vehicle must for this purpose be limited to R480 000, or such other amount determined by the Minister by notice in the Gazette; and
(B) the nance charges in respect of any debt incurred in respect of the purchase of that vehicle must be limited to an amount which would have been incurred had the original debt been R480 000, or such other amount determined by the Minister in terms of subitem (A);
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saIT comPendIum oF Tax LegIsLaTIon VoLume 2