Page 51 - SAIT Compendium 2016 Volume2

S 12I regs INCOME TAX ACT: REGULATIONS ANd NOTICES S 12I regs
‘small, medium or micro enterprise’ means a business—
(a) which formally employs not more than 200 full-time employees; and (b) of which the annual turnover does not exceed R50 million;
‘South African National Energy Development Institute’ means the organisation as contemplated in section 7 of the National Energy Act, 2008 (Act 34 of 2008);
‘the Act’ means the Income Tax Act, 1962 (Act 58 of 1962);
‘wage bill’ bears the meaning assigned to the expression ‘leviable amount’ in section 3(4) and (5) of the Skills Development Levies Act, 1999 (Act 9 of 1999).
2 Prerequisites for industrial policy projects
Skills development
2.1 For the purposes of determining whether a project will upgrade an industry by providing skills development in accordance with section[s] 12I(7)(a)(iv)(aa) and 12I(10)(e), the Minister of Trade and Industry, after taking into consideration the recommendations of the adjudication committee, must be satis ed that—
(a) the industrial project will incur expenditure in respect of the cost of training (including the cost of implements,
utensils, articles and materials utilised exclusively in respect of that training) that is at least equal to an average of
two per cent of the annual wage bill of the project during the additional training allowance bene t period; and
(b) the expenditure contemplated in paragraph (a) is likely to result in the upgrading of industrial skills, taking into account only training that is accredited by the South African Quali cations Authority (SAQA) or training that the
adjudication committee determines to be equivalent to training accredited by SAQA.
[Reg. 2.1 amended by GN R633 of 20 August 2012.]
Energy ef ciency
2.2 For the purposes of determining whether a project will upgrade the industry by utilising new technology that results in improved energy ef ciency as contemplated in section[s] 12I(7)(a)(iv)(bb) and 12I(10)(g), the Minister of Trade and Industry, after taking into consideration the recommendations of the adjudication committee, must be satis ed that—
(a) in the case of a brown eld project, the project will attain an energy ef ciency improvement of at least 10 per cent
from a baseline, as determined for the 12 month period prior to the application, as certi ed by the South African
National Energy Development Institute, by the end of the additional investment allowance bene t period;
(b) in the case of a green eld project, the project will utilise modern, viable energy-ef cient equipment and processes, as compared to the industry sector relative to that industrial project, throughout the additional investment allowance bene t period (not taking into account any period before the month in which the industrial policy project reaches 50 per cent of its production capacity), as certi ed by the South African National Energy Development Institute, by the
end of the additional investment allowance bene t period.
[Reg. 2.2 amended by GN R633 of 20 August 2012.]
3 Limitations
Industrial participation project
3.1 For the purposes of section[s] 12I(7)(a)(ii) and 12I(10)(h), an industrial project of a company constitutes an
industrial participation project if that project at any time before the additional investment allowance bene t period received, or during the additional investment allowance bene t period receives, any credits or bene ts in terms of—
(a) the National Industry Participation Programme, which came into operation during September 1996 (unless the
credits or bene ts are limited to assistance in respect of access to markets for goods and services outside the
Republic);
(b) the Defence Industrial Participation Programme, which came into operation during September 1996; or
(c) the Competitive Supplier Development Programme, which came into operation during January 2007.
Concurrent bene ts
3.2 For the purposes of section[s] 12I(7)(a)(ii) and 12I(10)(h), a project will receive a concurrent industrial incentive
if any credit or bene t is received during the additional investment allowance bene t period by virtue of—
(a) the Motor Industry Development Programme, which came into operation during September 1995, or its successor, the Automotive Production and Development Programme, except to the extent that the credit or bene t is received
by any motor vehicle component manufacturer by virtue of any Motor Industry Development Programme;
(b) the Small Medium Manufacturing Development Programme, which came into operation during October 1996, or its
successor, the Enterprise Investment Programme, which came into operation during July 2008;
(c) the Productivity Asset Allowance, which came into operation during July 2000;
(d) the Small Medium Enterprise Development Programme, which came into operation during September 2000, or its
successor, the Enterprise Investment Programme, which came into operation during July 2008; or
(e) any other programme of any national sphere of government that provides grants, subsidies, rebates or interest-free loans, unless the adjudication committee is satis ed that those grants, subsidies, rebates or interest-free loans are
immaterial in relation to the monetary bene t provided by section 12I.
[Reg. 3.2 amended by GN R633 of 20 August 2012.]
4 Point system for qualifying as an industrial policy project
Points system
In terms of section 12I(8), the Minister of Trade and Industry must, after taking into account the recommendations of the adjudication committee, approve an industrial project as—
(a) an industrial policy project where that industrial project achieves at least—
(i) ve out of the 10 potential points in terms of the criteria contemplated in section 12I(8); and
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