Page 444 - SAIT Compendium 2016 Volume2

IN 44 (2) Income Tax acT: InTeRPReTaTIon noTes IN 45 (2) on one or more PBAs.* For further information in this regard see Interpretation Note 22 (Issue 2) ‘Exemption: Public
Bene t Organisations and Statutory Bodies’ dated 9 December 2008.
9. General
Detailed information relating to CGT can be found in the various CGT guides available on the SARS website.
10. Conclusion
This Note applies broad principles in interpreting the legislation. Since the facts and circumstances pertaining to speci c PBOs may differ, each case must be considered on its own merits.
INTERPRETATION NOTE: NO. 45 (Issue 2) Deduction of Security Expenditure
DATE: ACT: SECTION:
SUBJECT:
Preamble
10 December 2014
INCOME TAX ACT NO. 58 OF 1962
Sections 11(a) and (e), 18a, 22(8), 23(b) and (g), 24d, paragraphs 20 and 53 of the Eighth Schedule and Part II of the Ninth Schedule
Deduction of Security Expenditure CONTENTS
1. Purpose
2. Background
3. The law
4. Application of the law
4.1 Expenditure of a domestic or private nature 4.2 Donations
4.3 Business-related expenditure
4.3.1 Own business expenditure of a revenue nature 4.3.2 Contributions to anti-crime initiatives
(a) Cash contributions
(b) Contributions of trading stock (c) Provision of services
4.3.3 Dual-purpose expenditure
4.3.4 Costs incurred in providing security to employees
(a) Employer
(b) Employee
4.3.5 Wear-and-tear or depreciation allowance 4.3.6 Security expenditure under section 24D
5. Conclusion
Preamble
In this Note unless the context indicates otherwise –
• ‘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 other word or expression bears the meaning ascribed to it in the Act.
1. Purpose
This Note provides guidance on whether security expenditure incurred by a taxpayer is deductible for income tax purposes.
2. Background
Taxpayers incur a variety of expenditure for the purpose of preventing and combating crime in South Africa. Such security expenditure usually falls into one of the following categories:
• Expenditure of a domestic or private nature
• Donations
• Business-related expenditure
This Note examines each of these categories of expenditure.
3. The law
The following provisions of the Act are relevant to this Note: • Section 11(a) – general deduction formula
• Section 11(e) – wear-and-tear or depreciation allowance
• Section 18A – deductible donations
• Section 22(8) – deemed inclusion in income of trading stock
* Section 9(1)(c) of the Transfer Duty Act No. 40 of 1949.
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