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IN 53 (2) Income Tax acT: InTeRPReTaTIon noTes IN 54
Example 5 – Assessed losses
This example illustrates the carry-forward of an assessed loss calculated under section 20, as well as the carry- forward of capital allowances subject to the limitation in section23A(2).
Year 1
Year 2
Year 3
Year 4
Rental income
Other income
Rental income
Other income
Rental income
Other income
Rental income
Other income
Net income after deductions, but before section 11(e), (o), 12, 12B, 12C, 12DA, 14bis or 37B(2)(a)
(7 000)
3 000
9 000
(2 000)
(2 000)
(1 500)
18 000
1 000
Speci ed capital allowances subject to limitation in current year
(1 200)
(9 900)
(5 000)
(6 000)
Section 23A limitation brought forward
Nil
(1 200)
(2 100)
(7 100)
Section 23A limitation carried forward1
(1 200)
(2 100)2
(7 100)3
Nil
Taxable income / (assessed loss) for current year
(7 000)
3 000
-
(2 000)
(2 000)
(1 500)
4 900
1 000
Assessed loss brought forward
-
(4 000)
(6 000)
(9 500)
Assessed loss carried forward
(4 000)
(6 000)
(9 500)
(3 600)4
Note: Assessed loss – year 5
1. Capital allowances carried forward due to section 23A(2) limitations cannot create or increase an assessed loss.
2. R9 900 – R9 000 + R1 200 = R2 100
3. R5 000 + R2 100 = R7 100
4. R18 000 – R6 000 – R7 100 = R4 900 + R1 000 = R5 900 – R9 500 = R3600
Income Tax Interpretation Note 54
Deductions – Corrupt Activities, Fines and Penalties
DATE: ACT: SECTION: SUBJECT:
26 February 2010
INCOME TAX ACT, 58 OF 1962 (the Act)
Section 23 (o) (i) and (ii)
Deductions – Corrupt Activities, Fines and Penalties
Preamble
In this Note—
• references to sections are to sections of the Act unless otherwise stated;
• unless the context otherwise indicates, any word or expression in this Note bears the meaning ascribed to it in the
Act; and
• ‘the PCCA Act’ means the Prevention and Combating of Corrupt Activities Act, No. 12 of 2004.
1. Purpose
Section 23(o) prohibits the deduction for income tax purposes of expenditure incurred in respect of— • corruption or a corrupt activity; or
• a ne or penalty imposed as a result of an unlawful activity.
This Note examines the meaning and scope of section 23(o).
2. Background
Corruption and corrupt activities hamper democratic processes, good governance, sustainable development and fair business practices. According to its long title, the PCCA Act provides, amongst others, for—
‘the strengthening of measures to prevent and combat corruption and corrupt activities; . . . [and] for the offence
of corruption and offences relating to corrupt activities’.
Its preamble notes, amongst others, the following:
• The Constitution enshrines the rights of all people in the Republic and af rms the democratic values of human
dignity, equality and freedom.
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