Page 355 - SAIT Compendium 2016 Volume2

IN 19 (3) Income Tax acT: InTeRPReTaTIon noTes IN 19 (3)
Example 12 – Change in legislation applicable to a year of assessment
Facts:
Y, an individual, carries on an auditing business with an accounting period ending on 30 June.
On 31 May 2012 Y disposed of an of ce building at a capital gain of R120 000. Y derived no other capital gains or losses during the accounting period ended 30 June 2012 or during the 2012 year of assessment.
Result:
Under section 66 (13A) the capital gain must be accounted for in the 2012 year of assessment ended on 29 February 2012.
Under paragraph 5 (1) of the Eighth Schedule the annual exclusion for an individual was increased from R20 000 to R30 000 with effect from years of assessment commencing on or after 1 March 2012.
Under paragraph 10 of the Eighth Schedule the inclusion rate changed from 25% to 33,3% with effect from years of assessment commencing on or after 1 March 2012, that is, the 2013 year of assessment.
Since the capital gain is accounted for in the 2012 year of assessment, Y’s capital gain must be reduced by the lower annual exclusion of R20 000 and will be subject to the lower inclusion rate of 25%. Y’s taxable capital gain is therefore (R120 000 – R20 000) x 25% = R25 000.
Example 13 – Change of legislation applicable to a transaction date
Facts:
Z, an individual, carries on a business with an accounting period that ends on 30 April.
On 31 March 2013 Z incurred an expense in relation to the business. The section governing the deductibility of the expense was withdrawn with effect from 1 March 2013 and applicable to any expenditure actually incurred on or after that date.
Result:
The expenditure will not be deductible because the transaction took place after the effective date of the amendment (1 March 2013) which applies to all transactions on or after that date. This result is not altered by the fact that the deduction is carried back to the 2013 year of assessment which ends before 1 March 2013.
5. Conclusion
Under section 66 (13A) a taxpayer who cannot conveniently return income from a business or profession to the last day of February may apply to the SARS branch of ce at which that taxpayer is on register for permission to draw up accounts to another closing date. Any request of this nature is subject to conditions that the Commissioner may impose. Generally the closing date so approved will determine into which year of assessment the results for the accounting period must be included and the dates on which provisional tax payments must be made.
Legal and Policy Division
SOUTH AFRICAN REVENUE SERVICE Date of rst issue: 5 August 2003 Date of second issue:18 January 2006
Annexure – The law
Section 1(1) – de nition of the term ‘year of assessment’
Section 5
‘year of assessment’ means any year or other period in respect of which any tax or duty leviable under this Act is chargeable, and any reference in this Act to any year of assessment ending the last or the twenty-eighth or the twenty-ninth day of February shall, unless the context otherwise indicates, in the case of a company or a portfolio of a collective investment scheme in securities be construed as a reference to any nancial year of that company or portfolio ending during the calendar year in question.
5. Levy of normal tax and rates thereof.—(1) Subject to the provisions of the Fourth Schedule there shall be paid annually for the bene t of the National Revenue Fund, an income tax (in this Act referred to as the normal tax) in respect of the taxable income received by or accrued to or in favour of—
(a) ......
(b) ......
(c) any person (other than a company) during the year of assessment ended the last day of February each year; and (d) ......
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