Page 394 - SAIT Compendium 2016 Volume2

IN 28 (2) Income Tax acT: InTeRPReTaTIon noTes IN 29 (2) Sections 23(b) and 23(m)
23. Deductions not allowed in determination of taxable income.—No deductions shall in any case be made in respect of the following matters, namely—
(a) ......
(b) domestic or private expenses, including the rent of or cost of repairs of or expenses in connection with any
premises not occupied for the purposes of trade or of any dwelling-house or domestic premises except in respect of such part as may be occupied for the purposes of trade: Provided that—
(a) such part shall not be deemed to have been occupied for the purposes of trade, unless such part is
speci cally equipped for purposes of the taxpayer’s trade and regularly and exclusively used for such
purposes; and
(b) no deduction shall in any event be granted where the taxpayer’s trade constitutes any employment or
of ce unless—
(ii) (c) – (l)
(i)
to any employment of, or of ce held by, any person (other than an agent or representative whose remuneration is normally derived mainly in the form of commissions based on his or her sales or the turnover attributable to him or her) in respect of which he or she derives any remuneration, as de ned in paragraph 1 of the Fourth Schedule, other than—
(i) any contributions to a pension or retirement annuity fund as may be deducted from the income of that person in terms of section 11(k) or (n);
(ii) any allowance or expense which may be deducted from the income of that person in terms of section 11(c), (e), (i) or (j);
(iiA) any deduction which is allowable under section 11(nA) or (nB);
(iii) any deduction which is allowable under section 11(a) in respect of any premium paid by that
person in terms of an insurance policy, to the extent that—
(aa) it covers that person against the loss of income as a result of illness, injury, disability or
unemployment; and
(bb) the amounts payable in terms of that policy as contemplated in item (aa) constitutes or
will constitute income as de ned; and
(iv) any deduction which is allowable under section 11(a) or (d) in respect of any rent of, cost of
repairs of or expenses in connection with any dwelling house or domestic premises, to the extent that the deduction is not prohibited under paragraph (b);
his income from such employment or of ce is derived mainly from commission or other variable payments which are based on the taxpayer’s work performance and his duties are mainly performed otherwise than in an of ce which is provided to him by his employer; or
his duties are mainly performed in such part;
. . . . .
(m) subject to paragraph (k), any expenditure, loss or allowance, contemplated in section 11, which relates
INTERPRETATION NOTE 29 (Issue 2)
DATE: ACT: SECTION: SUBJECT:
Preamble
19 February 2013
INCOME TAX ACT 58 of 1962 (the Act)
Section 5(10) and paragraph 19 of the First Schedule to the Act Farming operations: Equalised rates of tax
In this Note unless the context indicates otherwise—
• "paragraph" means a paragraph of the First Schedule to the Act;
• "section" means a section of the Act;
• the terms "taxpayer" and "farmer" are used interchangeably; and • any word or expression bears the meaning ascribed to it in the Act.
1. Purpose
This Note provides guidelines with regard to the method applied in the calculation of the rating amount applicable to farmers who elected that their tax be calculated at equalised rates of tax under paragraph 19(5) of the First Schedule to the Act.
Issue 1 of this Note, issued on 30 March 2005, is hereby replaced.
2. Background
A person, deriving income from farming operations may, under paragraph 19(5), elect to be subject to tax according to the rating formula set out in section 5(10). The rating concession is applied due to the abnormal accrual of income occurring in one year of assessment in comparison with another year. Farming income may uctuate on an annual basis because of, for example, an extended period between sowing and eventual crop yields—in other words, periods of little or no income followed by periods of in ated income.
This rating concession applies only to individuals (natural persons), executors of deceased estates and trustees of insolvent estates. Once the option has been exercised to adopt the equalised rates, this election will be binding on the
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