Page 354 - SAIT Compendium 2016 Volume2

IN 19 (3) Income Tax acT: InTeRPReTaTIon noTes IN 19 (3)
Payments for provisional tax for the 2013 and subsequent years of assessment will be payable as follows (see second paragraph of 4.4 below):
• 1st payment – 31 August
• •
4.4
2nd payment – 28 February 3rd payment – 30 September
Interest on underpayments and overpayments of provisional tax
Under paragraph 23A of the fourth Schedule a provisional taxpayer may reduce the interest payable under section 89quat by making an additional payment before the effective date as de ned in section 89quat (1). Under paragraph (b) of that de nition read with paragraph 21 (2) of the Fourth Schedule the effective date for an accounting period falling after the end of the year of assessment will be six months after the closing date of the accounts. In practice this will usually apply to accounting periods falling in the months ending March to September. The effective date for accounts ending during October to January fall within the year of assessment and in these cases the effective date will be accepted as 30 September.* Section 89quat is to be repealed by paragraph 66 of Schedule 1 to the TA Act on a date to be proclaimed by the President in the Government Gazette.†
4.5 Trading stock and livestock
4.5.1 Trading stock
Section 22 speci es how trading stock held and not disposed of at the beginning and end of a year of assessment must be accounted for. Section 22 (6) (b) provides that any reference in section 22 to the beginning or end of a year of assessment includes a reference to the beginning or end of an accounting period accepted by the Commissioner under section 66 (13A).
It follows that when accounts are accepted by the Commissioner to a date other than the last day of the year of assessment, section 22 (6) (b) requires that trading stock must be accounted for at the beginning and end of the accounting period.
4.5.2 Livestock
Paragraph 1 (a) of the First Schedule contains a provision similar to section 22 (6) for the purposes of determining the dates when opening and closing stock of livestock and produce on hand must be accounted for.
4.6 Effective dates of legislation
When applying section 66 (13A) taxpayers need to be aware of changes in legislation that occur outside a year of assessment but during the accounting period. Exactly how such changes will affect a particular transaction will depend on the wording of the relevant effective date provision and it is not possible to lay down hard and fast rules for dealing with such changes. Generally, effective dates of income tax legislation take two forms, namely –
• an effective date that Is linked to the timing of a transaction (for example, the timing of a receipt or accrual, incurral of expenditure or disposal of an asset); or
• an effective date that applies to a year of assessment.
Effective dates applicable to a transaction date are unaffected by the fact that the results for an accounting period are taken back to an earlier year of assessment or carried forward to a future year of assessment.
An effective date that applies to a year of assessment can, however, apply to a transaction conducted before or after the year of assessment if it falls within the accounting period and the results for that period are carried forward or back to the year of assessment in question.
* The law is unclear on this point because paragraph (a) of the de nition of the term ‘effective date’ which speci es 30 September applies when the Commissioner has not approved a closing date under section 66 (13A) to a date other than February. On the other hand, paragraph (b) of the de nition refers to paragraph 21 of the Fourth Schedule which applies when the accounting period falls after the end of the year of assessment. The Act is therefore silent on what effective date should be used when the accounting period falls within a year of assessment on a date other than the last day of February.
† See Interpretation Note 68 (Issue 2) (7 February 2013) which sets out the provisions of the TA Act that did not come into effect on 1 October 2012. Under Proclamation No. 51 of 14 September 2012 published in GG 35687 the President proclaimed that the TA Act would commence on 1 October 2012 except for any provision of Schedule 1 to the Act that amends or repeals a provision of a tax Act relating to interest under that tax Act, to the extent of that amendment or repeal.
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