Page 366 - SAIT Compendium 2016 Volume2

IN 24 (3) Income Tax acT: InTeRPReTaTIon noTes IN 24 (3) INTERPRETATION NOTE: NO. 24 (Issue 3)
DATE:
ACT: SECTION: SUBJECT: CONTENTS
Preamble
4 February 2014
INCOME TAX ACT 58 OF 1962
Section 10(1)(cN)
Income Tax: Public Bene t Organisations: Trading Rules – Partial Taxation Of Trading Receipts
1. Purpose
2. Background
3. The law
4. General meaning of certain terminology in the context of section 10(1)(cN)
4.1 Basic exemption
4.2 Business undertaking
4.3 Integral and directly related
4.4 Occasional nature
4.5 Recovery of cost
4.6 Sole or principal object
4.7 Substantially the whole
4.8 Substantially with assistance on a voluntary basis 4.9 Total receipts and accruals
4.10 Trading activity
4.11 Unfair competition
5. Application of the law
6. Categories of business undertakings or trading activities
6.1 Integral and directly related trade [section 10(1)(cN)(ii)(aa)] 6.2 Occasional trade [section 10(1)(cN)(ii)(bb)]
6.3 Ministerial approval [section 10(1)(cN)(ii)(cc)]
6.4 Basic exemption [section 10(1)(cN)(ii)(dd)]
7. Practical application of the basic exemption
7.1 Determination of the basic exemption threshold 7.2 Apportionment of expenditure
7.3 Allowable deductions
8. Income from a trust of which a PBO is a bene ciary
9. Losses incurred
10. Wear-and-tear or depreciation allowance on assets
11. Period for which accounts are to be submitted
12. Rate of tax
13. Provisional tax
14. Capital gains tax (CGT)
15. Transfer duty
16. Reporting requirements and compliance
16.1 Record-keeping
16.2 Income tax returns
17. Objection and appeal
18. Conclusion
Annexure – Calculation of taxable income
Preamble
In this Note unless the context indicates otherwise –
• ‘Minister’ means the Minister of Finance;
• ‘PBA’ means any public bene t activity listed in Part I of the Ninth Schedule;
• ‘PBO’ means a public bene t organisation as de ned in section 30(1) and approved under section 30(3); • ‘Schedule’ means a Schedule to the Act;
• ‘section’ means a section of the Act;
• ‘the Act’ means the Income Tax Act No. 58 of 1962; and
• any word or expression bears the meaning ascribed to it in the Act.
1. Purpose
This Note provides guidance on the interpretation and application of section 10(1)(cN), which provides for the exemption from income tax of the receipts and accruals of a PBO other than receipts and accruals derived from certain business undertakings or trading activities.
358 saIT comPendIum oF Tax LegIsLaTIon VoLume 2