Page 400 - SAIT Compendium 2016 Volume2

IN 29 (2) Income Tax acT: InTeRPReTaTIon noTes IN 29 (2)
Step 2
Determine the value of symbol "D"
The deduction for retirement annuity contributions has already been determined above. The claim of R65 000 would be limited to a maximum of R63 000.
"D" would be determined on all non-retirement funding income, as follows:
15% of R63 400 (Average taxable farming income) 15% of R150 000 (Annuity)
15% of R20 000 (Taxable interest)
The portion affected by the formula is therefore equal to R63 000 less R35 010 = R27 990. "D" = R27 990
Step 3
Determine the rating amount
B + D – C = R357 000 + R27 990 – R186 600
= R198 390
Step 4
Determine the normal tax payable on the rating amount
A = Normal tax (before any rebate) on B + D – C
= Normal tax on R198 390
= R28 800 + 25% of (R198 390 – R160 000) = R28 800 + R9 597,50
= R38 397,50
Step 5
Calculate "Y" which is the normal tax based on the formula
Y = [____A____]× B B +D – C
= R69 095,74
Normal tax payable Less: Rebates
Net normal tax
5. Revision of assessments [Paragraph 19(3)]
R
9 510
22 500
3 000
35 010
R38 397,50
_________
Y = [ R198 390 ]× R357 000
R
69 095,74
(11 440,00)
57 655,74
Note that, where the taxpayer’s assessment for a relevant period has, under section 100 of the Tax Administration Act 28 of 2011 become nal and conclusive, the Commissioner shall not, merely by reason of the fact that the average taxable income from farming [as determined under paragraph 19(2)(a)] is incorrect, be required to make any further assessment upon the taxpayer for such period under section 99 of that Act or to authorise a refund under section 190 of that Act of any tax overpaid during such period, unless it appears that such annual average taxable income from farming should be increased or reduced by at least R600. This means, for example, that if the assessment has become nal and conclusive, but it can be proven that the annual average taxable income from farming should be increased or reduced by at least R600, only then will that particular assessment be considered for revision and any subsequent taxes recovered or refunded.
6 Conclusion
The rating concession is available to certain taxpayers engaged in farming operations, and is designed to provide some relief to taxpayers who experience abnormal accruals of income from one year to the next. Once the concession is elected by that taxpayer, it is binding from that current year of assessment and any subsequent year thereafter.
Legal and Policy Division
SOUTH AFRICAN REVENUE SERVICE
392 saIT comPendIum oF Tax LegIsLaTIon VoLume 2