Page 119 - SAIT Compendium 2016 Volume1
P. 119
s 11
INCOME TAX ACT 58 OF 1962 s 11
purposes of this Act constitute income of the person to whom it is paid, unless such premium or consideration is paid in respect of a right of use of a line or cable—
(A) used for the transmission of electronic communications; and
(B) substantially the whole of which is located outside the territorial waters of the Republic, where the term of the right of use is 15 years or
more;
[Words following sub-para. (B) of para. (dd) of the proviso substituted by s. 18 (1) (e) of Taxation Laws Amendment Act, 2015 (‘20 years’ replaced by ‘15 years’) – date of commencement: 1 April 2016.]
[Para. (dd) added by s. 11 (1) (d) of Act 121 of 1984 and substituted by s. 14 (1) (e) of Act 17 of 2009.]
(g) an allowance in respect of any expenditure actually incurred by the taxpayer, in pursuance of an obligation to effect improvements on land or to buildings, incurred under an agreement whereby the right of use or occupation of the land or buildings is granted by any other person, where the land or buildings are used or occupied for the production of income or income is derived therefrom: Provided that—
(i) the aggregate of the allowances under this paragraph shall not exceed the amount stipulated in the agreement as the value of the improvements or as the amount to be expended on the improvements or, if no amount is so stipulated, an amount representing the fair and reasonable value of the improvements;
[Para. (i) of the proviso to para. (g) substituted by s. 18 (1) (f) of Taxation Laws Amendment Act, 2015 (‘in the opinion of the Commissioner’ deleted after ‘amount representing’) – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
(ii) any such allowance shall not exceed for any one year such portion of the aggregate of the allowances under this paragraph as is equal to the said aggregate divided by the number of years (calculated from the date on which the improvements are completed, but not more than 25 years) for which the taxpayer is entitled to the use or occupation;
[Para. (ii) substituted by s. 10 (1) (b) of Act 94 of 1983.]
27 (2) (b) shall not exceed the cost (after the deduction of any amount which has been set off against the cost of such building or improvements under section 13 (3) or section 27 (4)) to the taxpayer of such building or improvements less the aggregate of the allowances in respect of such building or improvements made to the taxpayer under the said section 13 (1) or 27 (2) (b) or the corresponding provisions of any previous Income Tax Act;
[Para. (iv) added by s. 9 (f) of Act 90 of 1962 and substituted by s. 9 (1) (c) of Act 113 of 1977 and by s. 14 (1) (f) of Act 17 of 2009.]
(v) . . .
[Sub-para. (v) added by s. 7 (1) (a) of Act 91 of 1982 and deleted by s. 19 (1) (e) of Act 7 of 2010.]
(vi) the provisions of this paragraph shall not apply in relation to any such expenditure incurred if the value of such improvements or the amount to be expended on such improvements, as contemplated in paragraph (h) of the de nition of ‘gross income’ in section 1, does not for the purposes of this Act constitute income of the person to whom the right to have such improvements effected has accrued;
[Para. (vi) added by s. 10 (1) (c) of Act 94 of 1983 and substituted by s. 16 (1) (b) of Act 32 of 2004, by s. 14 (1) (g) of Act 17 of 2009 and by s. 19 (1) (f) of Act 7 of 2010.]
(vii) if during any year of assessment the agreement whereby the right of use or occupation of the land or buildings is granted is terminated before expiry of the period to which that taxpayer was entitled to the use or occupation, as contemplated in paragraph (ii) or (iii), so much of the allowance which may be allowed under this paragraph, which has not yet been allowed in that year or any previous year of assessment, shall be allowable as a deduction in that year of assessment;
[Para. (vii) added by s. 16 (1) (c) of Act 32 of 2004 and substituted by s. 19 (1) (g) of Act 7 of 2010.]
(iii) if—
(aa) (bb)
the taxpayer is entitled to such use or occupation for an inde nite period; or
the taxpayer or the person by whom such right of use or occupation was granted holds a right or option to extend or renew the original period of such use or occupation,*
the taxpayer shall for the purposes of this paragraph be deemed to be entitled to such use or occupation for such period as represents the probable duration of such use or occupation;
[Para. (iii) of the proviso to para. (g) substituted by s. 19 (1) (d) of Act 7 of 2010 and by s. 18 (1) (f) of Taxation Laws Amendment Act, 2015 (‘in the opinion of the Commissioner’ deleted before ‘represents’) – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
(iv) the aggregate of the allowances under this paragraph in respect of any building or improvements referred to in section 13 (1) or
[Sub-para. (i) substituted by s. 13 (c) of Act 129 of 1991, by s. 20 (b) of Act 53 of 1999 and by s. 27 (1) (d) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(ii) in obtaining any patent or the restoration of any patent under the Patents Act or the registration of any design under the Designs Act or the registration of any trade mark under the Trade Marks Act or under similar laws of any other country; or
[Sub-para. (ii) substituted by s. 20 (b) of Act 53 of 1999, by s. 15 (d) of Act 59 of 2000 and by s. 27 (1) (d) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(gA)
an allowance in respect of any expenditure (other than expenditure which has quali ed in whole or part for deduction or allowance under any of the other provisions of this section or the corresponding provisions of any previous Income Tax Act) actually incurred by the taxpayer—
(i) in devising or developing any invention as de ned in the Patents Act or in creating or producing any design as de ned in the Designs Act or any trade mark as de ned in the Trade Marks Act or any copyright as de ned in the Copyright Act or any other property which is of a similar nature;
* In para. 18 (1) (f) of Taxation Laws Amendment Act, 2015 the words following ‘occupation,’ (ie ‘the taxpayer shall’) formed part of sub-para. (bb). It is submitted that this was an oversight by the legislature and that those words should be outdented so that they refer back to and align with both sub-paras. (aa) and (bb), the way it was before the substitution.
SAIT CompendIum oF TAx LegISLATIon VoLume 1 111
INCOME TAX ACT – SECTIONS