Page 120 - SAIT Compendium 2016 Volume1

s 11 INCOME TAX ACT 58 OF 1962 s 11
(iii) in acquiring by assignment from any other person any such patent, design, trade mark or copyright or in acquiring any other property of a similar nature or any knowledge essential to the use of such patent, design, trade mark, copyright or other property or the right to have such knowledge imparted,
[Sub-para. (iii) substituted by s. 9 (1) (b) of Act 113 of 1993 and by s. 11 (1) (c) of Act 8 of 2007.]
if such invention, patent, design, trade mark, copyright, other property or knowledge, as the case may be, is used by the taxpayer in the production of his income: Provided that—
(aa) where such expenditure exceeds R5 000, and was incurred—
(A) before 29 October 1999, the allowance shall not exceed for any one year such portion of the amount of the expenditure as is equal to such amount divided by the number of years, which represents the probable duration of use of the invention, patent, design, trade mark, copyright, other property or knowledge, or four per cent of the said amount, whichever is the greater;
[Sub-para. (A) of para. (aa) of the proviso to para. (gA) substituted by s. 18 (1) (g) 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.]
(B) on or after 29 October 1999, the allowance shall not for any one year exceed an amount equal to—
(AA) ve percent of the amount of the
expenditure in the case of any invention, patent, trade mark, copyright or other property of a similar nature or any knowledge essential to the use of such invention, patent, trade mark, copyright or other property or the right to have such knowledge imparted; or
[Item (AA) substituted by s. 11 (1) (e) of Act 8 of 2007.] (BB) 10 per cent of the amount of the expenditure in the case of any design or other property of a similar nature or any knowledge essential to the use of such design or other property or the right to have such knowledge imparted;
[Item (BB) substituted by s. 11 (1) (e) of Act 8 of 2007.]
[Para. (aa) amended by s. 9 (1) of Act 36 of 1996, substituted by s. 20 (c) of Act 53 of 1999 and amended by s. 14 (1) (a) of Act 30 of 2002.]
(bb) where such expenditure was incurred before the commencement of the year of assessment in question the allowance shall be calculated on the amount of such expenditure, less an amount equivalent to the sum of the allowances to which the taxpayer was entitled under this paragraph and the allowances to which the taxpayer would have been entitled under this paragraph if this paragraph had been applicable, in respect of such expenditure in respect of previous years of assessment, including any year of assessment under any previous Income Tax Act;
[Para. (bb) of the proviso to para. (gA) substituted by s. 10 (1) (e) of Act 94 of 1983 and by s. 18 (1) (h) of Taxation Laws Amendment Act, 2015 (‘, in the opinion of the Commissioner,’ deleted after ‘the allowances to which’) – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
(cc) no allowance shall be made in respect of any such invention, patent, design, trade mark, copyright or other property or knowledge so acquired or obtained by the taxpayer on or after 24 June 1988, but prior to 1 July 1993 from any other person who is a resident of the Republic or who is ordinarily resident in a neighbouring country (or, in the case of a company, is incorporated or has its place of effective management in a neighbouring country), if—
(A) the taxpayer or such other person is a company and such other person or the taxpayer, as the case may be, is interested in more than 50 per cent of any class of shares issued by such company, whether directly as a holder of shares in that company or indirectly as a holder of shares in any other company; or
[Sub-para. (A) substituted by s. 27 (1) (e) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(B) both the taxpayer and such other person are companies and any third person is interested in more than 50 per cent of any class of shares issued by one of those companies and in more than 50 per cent of any class of shares issued by the other company, whether directly as a holder of shares in the company by which the shares in question were issued or indirectly as a holder of shares in any other company;
[Sub-para. (B) substituted by s. 27 (1) (e) of Act 31 of 2013 – date of commencement: 12 December 2013.]
[Para. (cc) added by s. 8 (1) (c) of Act 90 of 1988 and amended by s. 9 (1) (c) of Act 113 of 1993 and by s. 15 (e) of Act 59 of 2000.]
(dd) where any such invention, patent, design, trade mark, copyright or other property or knowledge was so acquired or obtained by the taxpayer on or after 1 July 1993 from any other person who is a resident of the Republic or who is ordinarily resident in a neighbouring country (or, in the case of a company, is incorporated or has its place of effective management in a neighbouring country), and who is a connected person in relation to the taxpayer, the allowance under this paragraph shall be calculated on an amount not exceeding the lesser of the cost of such invention, patent, design, trade mark, copyright or other property or knowledge to such connected person or the market value thereof as determined on the date upon which such invention, patent, design, trade mark, copyright or other property or knowledge was acquired or obtained by the taxpayer;
[Para. (dd) added by s. 9 (1) (d) of Act 113 of 1993 and substituted by s. 5 (1) (b) of Act 140 of 1993 and by s. 15 (f) of Act 59 of 2000.]
(ee) no allowance shall be made in respect of any expenditure incurred by such taxpayer on or after 29 October 1999, in respect of the acquisition from any other person of any trade mark or other property of a similar nature or any knowledge essential to the use of such trade mark or the right to have such knowledge imparted;
[Para. (ee) added by s. 20 (d) of Act 53 of 1999 and substituted by s. 11 (1) (f) of Act 8 of 2007.]
(ff) no deduction shall be allowed under this paragraph in respect of any expenditure incurred
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SAIT CompendIum oF TAx LegISLATIon VoLume 1