Page 350 - SAIT Compendium 2016 Volume2

IN 19 (3)
Income Tax acT: InTeRPReTaTIon noTes IN 19 (3)
29 February 2012
In other words, by choosing an accounting date that falls within the period from March to September, the income accruing after the last day of February up to the date the accounting records are drawn up, will be taxed at the rates of tax and rebates applicable to the year ending February of that calendar year.
30 September 2012
Example 2 – Accounts rendered up to 30 September
Facts:
B was permitted to render nancial accounts for the 2013 year of assessment for farming income for the period 1 October 2012 to 30 September 2013.
Result:
The income from farming for the year ending 30 September 2013 must be included in the 2013 return of income and will be taxable at the rate of tax applicable to the year of assessment ended on 28 February 2013. The rebates for the 2013 year of assessment will also apply. Other income such as remuneration and interest must be returned for the 12 months ending 28 February 2013.
Example 3 – Business with a closing date of 31 December
Facts:
The Commissioner granted C permission to render nancial accounts for the 2013 year of assessment for C’s plumbing business for the period 1 January 2012 to 31 December 2012.
Result:
The income from the plumbing business for the year ended 31 December 2012 will be taxable in the year of assessment ended on 28 February 2013. The rate of tax chargeable and rebates allowable are those applicable to the 2013 year of assessment. Other income for the period 1 March 2012 to 28 February 2013 must be re ected in the annual return of income for the 2013 year of assessment. Payments for provisional tax will be in line with the year of assessment ended on 28 February 2013 (see 4.3).
A bene ciary of a trust who acquires a vested right to any income distributed by the trust will be taxable on the income in the same year of assessment as the trust.
Example 4 – Trusts and their bene ciaries
Facts:
The ABC Trust is permitted to render nancial accounts for its trading activities to 30 June of each year. Its pro ts from trading during the period 1 July 2012 to 30 June 2013 were R100 000. An amount of R80 000 was distributed to bene ciary D on 30 June 2013 out of those pro ts leaving R20 000 to be retained in the trust.
Result:
For the year of assessment ended on 28 February 2013 the trust will be taxable on taxable income of R20 000, while bene ciary D will be taxable on taxable income of R80 000.
Requests received from taxpayers will be considered individually, taking the speci c circumstances of the taxpayer into account. In the case of a partnership, all the partners must agree to the request to submit accounts to a date other than the last day of February.
Application for an accounting period must be in writing and reasons detailing the special circumstances to be taken into account must be furnished. Taxpayers must provide suf cient information and documentation in order to enable the Commissioner to make an informed decision.
4.1.3 Public bene t organisations (PBOs)
All PBOs approved under section 30 (3) are obliged to render annual income tax returns notwithstanding that some or all of their receipts and accruals may be exempt from income tax under section 10 (1) (cN).
Any PBO which is a trust may apply for permission to draw up nancial accounts for a period ending on a date other than the last day of February. The investment income of a PBO that is a trust must be returned to the date approved for submitting the nancial accounts of the PBO since it is inherently part of the PBO’s funds to be used in the ordinary course of its activities.
342 saIT comPendIum oF Tax LegIsLaTIon VoLume 2
28 February 2013