Page 138 - SAIT Compendium 2016 Volume1

s 12DA INCOME TAX ACT 58 OF 1962 s 12E
previous year or years as if the receipts and accruals of such trade had been included in the income of such taxpayer.
[Sub-s. (4) substituted by s. 22 of Act 60 of 2008.]
(5) No deduction shall be allowed under this section in respect of any rolling stock that has been disposed of by the taxpayer during any previous year of assessment.
(6) The deductions which may be allowed or deemed to have been allowed in terms of this section and any other provision of this Act in respect of the cost of any rolling stock shall not in the aggregate exceed the amount of such cost.
[S. 12DA inserted by s. 24 (1) of Act 35 of 2007.]
12E Deductions in respect of small business corporations
(1) Where any plant or machinery (hereinafter referred to as an asset) owned by a taxpayer which quali es as a small business corporation or acquired by such a taxpayer as purchaser in terms of an agreement contemplated in paragraph (a) of the de nition of ‘instalment credit agreement’ in section 1 of the Value- Added Tax Act—
[Words preceding para. (a) substituted by s. 35 (a) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(a) is brought into use for the rst time by that taxpayer on or after 1April 2001 for the purpose of that taxpayer’s trade (other than mining or farming); and
(b) is used by that taxpayer directly in a process of manufacture (or any other process which is of a similar nature) carried on by that taxpayer,
[Para. (b) substituted by s. 21 of Taxation Laws Amendment Act, 2015 (‘in the opinion of the
Commissioner’ deleted before ‘is of a similar nature)’) – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
a deduction equal to the cost of such asset shall be allowed in the year that such asset is so brought into use.
[Sub-s. (1) amended by s. 21 (a) of Act 31 of 2005.] (1A) Subject to subsection (1), where any machinery, plant, implement, utensil, article, aircraft or ship in respect of which a deduction is allowable under section 11 (e) (‘the asset’) is acquired by a small business corporation under an agreement formally and nally signed by every party to the agreement on or after 1 April 2005, the amount allowed to be deducted in respect of the asset must, at the election of the small business corporation and subject to
the provisions of that section, be either—
(a) the amount allowable in terms of and subject to that
section; or
(b) an amount equal to 50 per cent of the cost of the
asset in the year of assessment during which it was rst brought into use, 30 per cent in the rst succeeding year and 20 per cent in the second succeeding year.
[Sub-s. (1A) inserted by s. 9 (1) (a) of Act 9 of 2005 and substituted by s. 13 of Act 3 of 2008.]
(2) For the purposes of this section the cost to a taxpayer of any asset shall be deemed to be the lesser of the actual cost to the taxpayer to acquire that asset or the cost which a person would, if he had acquired the said asset under a cash transaction concluded at arm’s length on the date on which the transaction for the acquisition of the said asset was in fact concluded, have incurred in respect of the direct cost of acquisition of the asset, including the direct cost of the installation or erection thereof or, where
the asset has been acquired to replace an asset which has been damaged or destroyed, such cost less any amount which has been recovered or recouped in respect of the damaged or destroyed asset and has been excluded from the taxpayer’s income in terms of section 8 (4) (e), whether in the current or any previous year of assessment.
[Sub-s. (2) substituted by s. 21 (b) of Act 31 of 2005.] (3) Any expenditure (other than expenditure referred to in section 11 (a)) incurred by a taxpayer during any year of assessment in moving an asset in respect of which a deduction was allowed or is allowable under this section
from one location to another must—
(a) where the taxpayer is or was entitled to a deduction in
respect of that asset under subsection (1A) in that year and one or more succeeding years, be allowed to be deducted from his or her income in equal instalments in that year and each succeeding year in which that deduction is allowable; or
(b) in any other case, be allowed to be deducted from that taxpayer’s income in that year.
[Sub-s. (3) substituted by s. 9 (1) (b) of Act 9 of 2005.]
(3A) . . .
[Sub-s. (3A) inserted by s. 31 (1) (d) of Act 45 of 2003 and deleted by s. 9 (1) (c) of Act 9 of 2005.]
(4) For the purposes of this section—
(a) ‘small business corporation’ means any close
corporation or co-operative or any private company as de ned in section 1 of the Companies Act if at all times during the year of assessment all the holders of shares in that company, co-operative or close corporation are natural persons, where—
[Words preceding sub-para. (i) substituted by s. 35 (b) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(i) the gross income for the year of assessment does not exceed an amount equal to R20 million: Provided that where the close corporation, co-operative or company during the relevant year of assessment carries on any trade, for purposes of which any asset contemplated in this section is used, for a period which is less than 12 months, that amount shall be reduced to an amount which bears to that amount, the same ratio as the number of months (in the determination of which a part of a month shall be reckoned as a full month), during which that company, co-operative or close corporation carried on that trade bears to 12 months;
[Words in sub-para. (i) preceding the proviso substituted by s. 7 (1) of Act 23 of 2013 – substitution deemed to have come into operation on 1 April 2013; it applies iro years of assessment ending during the period of 12 months ending on 31 March 2014 and of years of assessment ending after 31 March 2014.*]
[Sub-para. (i) amended by s. 17 (1) of Act 30 of 2002, by s. 37 (1) of Act 12 of 2003, by s. 9 (1) (d) of Act 9 of 2005, by s. 24 of Act 9 of 2006, by s. 2 (2) (b) and s. 15 (1) of Act 8 of 2007, by s. 1 (2) (c) of Act 3 of 2008 and substituted by s. 23 (1) (b) of Act 7 of 2010.]
(ii) at any time during the year of assessment, no holder of shares in the company or member of the close corporation or co-operative holds any shares or has any interest in the equity of any other company as de ned in section 1, other than—
[Words in sub-s. (4) (a) (ii) preceding item (aa) substituted by s. 20 of Act 43 of 2014 – date of commencement: 20 January 2015.]
* The words ‘and of years of assessment ending after 31 March 2014’ have been added, retrospectively, wef 2 December 2013 – in this regard, see s. 140 (1) of Taxation Laws Amendment Act, 2015, which amends s. 7 (2) of Act 23 of 2013.
130 SAIT CompendIum oF TAx LegISLATIon VoLume 1