Page 461 - SAIT Compendium 2016 Volume2

IN 47 (3) Income Tax acT: InTeRPReTaTIon noTes IN 48 (2)
Asset
Proposed write-off period (in years)
Vending machines (including video game machines)
6
Video cassettes
2
Warehouse racking
10
Washing machines
5
Water distillation and puri cation plant
12
Water tankers
4
Water tanks
6
Weighbridges (movable parts)
10
Wire line rods
1
Workshop equipment
5
X-ray equipment
5
Interpretation Note: No. 48 (Issue 2)
Instalment Credit Agreements And Debtors’ Allowance
DATE: ACT: SECTION: SUBJECT:
Preamble
19 December 2014
INCOME TAX ACT 58 of 1962
Section 24
Instalment Credit Agreements And Debtors’ Allowance
CONTENTS
1. Purpose
2. Background
3. The law
4. Application of the law
4.1 The meaning of ‘the whole of that amount’
4.2 Treatment of nance charges
4.3 VAT implications
4.4 Debtors’ allowance
4.5 Amount of the debtors’ allowance
4.6 Commissioner’s discretion
4.7 Calculation of debtors’ allowance on an individual debtor-by-debtor basis
4.8 Calculation of gross pro t percentage on a globular basis
4.8.1 Introduction
4.8.2 The aged-debtors’ basis using applicable average gross pro t percentages
4.8.3 The moving-weighted-average method
4.8.4 Use of the current year’s gross pro t percentage
5. Conclusion
Preamble
In this Note unless the context indicates otherwise –
• ‘debtors’ allowance’ means the allowance granted under section 24(2); • ‘section’ means a section of the Act;
• ‘the Act’ means the Income Tax Act 58 of 1962;
• ‘VAT’ means value-added tax levied under the VAT Act;
• ‘VAT Act’ means the Value-Added Tax Act 89 of 1991; and
• any other word or expression bears the meaning ascribed to it in the Act.
1. Purpose
This Note provides guidance on the application and determination of the debtors’ allowance granted under section 24(2), as it applies to instalment credit agreements.
2. Background
Section 24 has two main purposes.
saIT comPendIum oF Tax LegIsLaTIon VoLume 2 453