Page 401 - SAIT Compendium 2016 Volume2

IN 29 (2) Income Tax acT: InTeRPReTaTIon noTes IN 29 (2) Annexure—The law
Section 5(10)
(10) Where any taxpayer’s income includes any special remuneration, or where the provisions of paragraph 15(3), 17 or 19 (1) of the First Schedule are applicable in the case of the taxpayer in respect of any year of assessment, the normal tax (excluding tax on any lump sum bene t or severance bene t) payable by the taxpayer in respect of such year (as determined before the deduction of any rebate) shall be determined in accordance with the formula—
Y = [____A____]× B B + D –C
in which formula—
(a) "Y" represents the amount of normal tax to be determined;
(b) "A" represents the amount of normal tax (as determined before the deduction of any rebate) calculated at the
full rate of tax chargeable for the said year in respect of taxable income equal to the amount represented by
the expression "B + D – C" in the formula;
(c) "B" represents the taxpayer’s taxable income (excluding any lump sum bene t) for the said year; (d) "C" represents an amount equal to the sum of—
(i) the amount of any special remuneration (as de ned in subsection (9)) which is included in the taxpayer’s income for the said year;
(ii) where the provisions of paragraph 15(3) of the First Schedule are in the case of the taxpayer applicable in respect of the said year, an amount determined in accordance with those provisions as being the amount, if any, by which the taxable income derived by the taxpayer during the said year from the disposal of plantations and forest produce exceeds the annual average taxable income derived by the taxpayer from that source over the three years of assessment immediately preceding the said year;
(iii) where the provisions of paragraph 17 of the First Schedule are in the case of the taxpayer applicable in respect of the said year, an amount equal to so much of the taxable income of the taxpayer for such year as has been derived from the disposal of sugar cane as a result of re in the taxpayer’s cane elds and but for such re would not have been derived by the taxpayer in that year; and
(iv) where the provisions of subparagraph (1) of paragraph 19 of the First Schedule are in the case of the taxpayer applicable in respect of the said year, the amount by which the taxpayer’s taxable income derived from farming for that year exceeds the taxpayer’s average taxable income from farming as determined in relation to that year in accordance with subparagraph (2) of the said paragraph; and
(e) "D" represents an amount equal to so much of any current contribution to a retirement annuity fund as is allowable as a deduction in terms of section 11(n)(i)(aa)(A) solely by reason of the inclusion in the taxpayer’s income of any amount contemplated in paragraph (d)(i), (ii), (iii) or (iv):
Provided that in no case shall the amount of normal tax so payable be less than the amount of normal tax which would be chargeable at the relevant rate xed in terms of subsection (2) in respect of the rst rand of taxable income, and nothing in this section contained shall be construed as relieving any person from liability for taxation under this Act upon any portion of that person’s taxable income.
Paragraph 19 of the First Schedule to the Act
19. (1)
If any taxpayer has made an election as provided in subparagraph (5) which is binding upon him in respect of any period of assessment (hereinafter referred to as the relevant period) during which he or his spouse has carried on farming operations or has derived income from farming operations, and his taxable income derived during the relevant period from farming exceeds his average taxable income from farming as determined in relation to the relevant period in accordance with subparagraph (2), the normal tax chargeable in respect of his taxable income for the relevant period shall, subject to the provisions of section 5 of this Act, be determined in accordance with section 5(10).
(2) For the purposes of subparagraph (1) the taxpayer’s average taxable income from farming in relation to the relevant period shall be deemed to be—
(a) where the taxpayer or his spouse carried on farming operations before the commencement of the
relevant period, such amount as the Commissioner may determine as representing the taxpayer’s annual average taxable income (if any) from farming in respect of the periods of assessment— (aa) for which the taxpayer was assessable under this Act and which fall within the period of
ve years ending on the last day of the relevant period; and
(bb) during which such farming operations were carried on or farming income was derived by
the taxpayer:
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