Page 456 - SAIT Compendium 2016 Volume2

IN 47 (3) Income Tax acT: InTeRPReTaTIon noTes IN 47 (3)
A taxpayer will be entitled to a pro rata portion of the allowance, that is, the allowance calculated from the commencement of the year of assessment or date of commencement during the year of assessment up to and including the date of death.* Unlike an insolvent estate, section 25 does not deem the deceased person and the deceased estate to be ‘one and the same person’.
After date of death
If there is no ascertainable heir or legatee and the estate continues to use the asset in a trade, the allowance will be based on the market value of the asset on the day following the date of death and must be calculated from that date until the end of the estate’s rst year of assessment (or up to the date of disposal of the asset to a third party if earlier). An heir who continues to use the asset in a trade will be entitled to a pro rata portion of the allowance in the year of acquisition based on its market value calculated from the date of death or, if later, the date on which the asset is rst used by the heir for the purposes of trade. If the executor carries on the trade for the bene t of the heir, the heir will claim the allowance [section 25(2)]. See also Interpretation Note No.12 ‘Recoupments: Assets in a Deceased Estate’ (27 March 2003).
4.3.9 Qualifying assets not yet brought into use for purposes of trade
A taxpayer that acquires an asset in one year of assessment and only brings it into use for the purposes of trade in a subsequent year of assessment will only be entitled to claim the wear-and-tear allowance from the date on which the asset is brought into use in that subsequent year of assessment.
5. Record-keeping
Section 29(1) of the Tax Administration Act provides that a person must keep the records, books of account or documents that—
• enable the person to observe the requirements of a tax Act;
• are speci cally required under a tax Act; and
• enable SARS to be satis ed that the person has observed these requirements.
The records should be retained by the person for a period of ve years from the date of submission of the return.† Section 30(1) of the Tax Administration Act provides that the records referred to in section 29 must be kept or retained in—
• their original form in an orderly fashion and in a safe place;
• the form, including electronic form, as may be prescribed by the Commissioner in a public notice;‡ or
• a form speci cally authorised by a senior SARS of cial.
These records should be available for inspection purposes by a SARS of cial to verify compliance with the requirements as explained above, or for purposes of an inspection, audit or investigation.§
Records which are relevant to an audit or investigation or an objection or appeal must be retained until the audit or investigation is concluded or until the assessment or the decision becomes nal in the case of an objection or appeal (in case the ve year retention period is exceeded).¶
The following information and documentation for any qualifying asset on which an allowance was claimed, must be available:
• The date of acquisition, the date on which it was brought into use and if disposed of, the date on which it was disposed of.
• The value of the asset as discussed in 4.2.
• The write-off period of the asset and any information or documentation used in determining its write-off period
(see 4.3.3).
• The income tax value of the asset at the end of the immediately preceding year of assessment (any asset written off
in full must be brought into account at a residual value of R1 for record purposes).
• If the asset is disposed of or scrapped, the price realised on disposal or scrapping of the asset, as well as the income
tax value at the end of the immediately preceding year of assessment.
6. Objection and appeal
A person claiming an allowance in a return of income and who is not satis ed with an adjustment to the allowance made by the Commissioner, may object to the assessment.**
A person entitled to object to an assessment must lodge an objection in the manner, under the terms, and within the period prescribed in the rules made by the Minister of Finance. The rules include the following:
• The prescribed ADR 1 form must be completed.
• The objection must be in writing, specifying in detail the grounds on which it is made.
• The objection must reach the Commissioner within a period of 30 business days after the date of the assessment. Further information on the objection and appeal procedure is available in the Guide on Tax Dispute Resolution which can
be found on the SARS website www.sars.gov.za. Information can also be obtained from SARS branches. Legal and Policy Division
* Under section 66(13)(a) a person who dies is required to submit a return of income for the period commencing on the rst day of the relevant year of assessment and ending on the date of death.
† Section 29(3)(a) of the Tax Administration Act. ‡ See GN 787 in GG 35733 of 1 October 2012.
§ Section 31 of the Tax Administration Act.
¶ Section 32 of the Tax Administration Act.
** Section 104(3) of the Tax Administration Act.
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