Page 142 - SAIT Compendium 2016 Volume1

s 12I INCOME TAX ACT 58 OF 1962 s 12I
are employed exclusively to provide training to the
taxpayer’s employees and the cost of training materials;
(b) in the case of training provided by a person that is a connected person in relation to the taxpayer, so much of the cost charged by the connected person as is incurred in respect of the remuneration of employees who are employed to provide training to the taxpayer’s employees and the cost of materials used by the
connected person to provide the training; and
(c) in any other case, the cost to the taxpayer of the training charged by the person providing the training;
‘date of approval’ means the date of the approval
contemplated in subsection (8);
‘green eld project’ means a project that represents a
wholly new industrial project which does not utilise any manufacturing assets other than wholly new and unused manufacturing assets;
‘industrial project’ means a trade solely or mainly for the manufacture of products, goods, articles, or other things within the Republic that—
(a) is classi ed under ‘Section C: Manufacturing’ in
version 7 of the Standard Industrial Classi cation Code (referred to as the ‘SIC Code’) issued by Statistics South Africa; or
[Para. (a) substituted by s. 22 (1) (a) of Act 43 of 2014 – date of commencement: 20 January 2015.]
(b) in the case of products, goods, articles or things which are not yet classi ed, the adjudication committee is of the view will be classi ed as contemplated in paragraph (a), but does not include—
(i) distilling, rectifying and blending of spirits (SIC Code 1101);
(ii) manufacture of wines (SIC Code 1102);
(iii) manufacture of malt liquors and malt (SIC Code
103);
(iv) manufacture of tobacco products (SIC Code 12);
(v) manufacture of weapons and ammunition (SIC Code 252);
(vi) manufacture of bio-fuels if that manufacture negatively impacts on food security in the Republic;
[Para. (b), as well as the words following para. (b) and paras. (i) to (v) after those words, substituted by s. 22 (1) (a) of Act 43 of 2014 (as amended by s. 151 (1) of Taxation Laws Amendment Act, 2015) – date of commencement: 20 January 2015.]
‘manufacturing asset’ means any building, plant or machinery acquired, contracted for or brought into use by a company, which—
(a) will mainly be used by that company in the Republic
for the purposes of carrying on an industrial project of
that company within the Republic; and
(b) will qualify for a deduction in terms of section 12C
(1) (a), 13 or 13quat,
and includes any improvement to such building, plant or machinery.
[De nition of ‘manufacturing asset’ substituted by s. 24 (1)
(a) of Act 17 of 2009.]
(1A) For the purposes of this section, if a taxpayer
completes an improvement as contemplated in section 12N, the improvement shall be deemed to be a new and unused manufacturing asset and the expenditure incurred by the taxpayer to complete the improvement shall be deemed to be the cost of that new and unused manufacturing asset contemplated in subsection (2). [Sub-s. (1A) inserted by s. 26 (1) (a) of Act 7 of 2010.]
(1B) For the purposes of this section, if a taxpayer completes an improvement on any land not owned by that taxpayer and that improvement consists of machinery or plant as contemplated in section 12C (1) (a), that taxpayer shall be deemed to be the owner of that improvement.
[Sub-s. (1B) inserted by s. 22 (1) (b) of Act 43 of 2014 – date of commencement: 1 January 2015.]
(2) In addition to any other deductions allowable in terms of this Act, a company may, subject to subsection (3), deduct an amount (hereinafter referred to as an additional investment allowance) equal to—
(a)
(i) 55 per cent of the cost of any new and unused manufacturing asset used in an industrial policy project with preferred status; or
(ii) 100 per cent of the cost of any new and unused manufacturing asset used in an industrial policy project with preferred status that is located within an industrial development zone; or
[NB: Sub-para. (ii) has been substituted by s. 22 (1) (c) of Act 43 of 2014, a provision that will come into operation on the date on which the Special Economic Zones Act 16 of 2014 comes into operation. See Pendlex below.]
[Para. (a) substituted by s. 24 (1) (b) of Act 17 of 2009 and by s. 37 (1) (a) of Act 24 of 2011 – date of commencement: 1 January 2012. This substituted paragraph applies in respect of projects approved on or after that date.]
Pendlex (to come into operation on the date on which the Special Economic Zones Act 16 of 2014 comes into operation)
(ii) 100 per cent of the cost of any new and unused manufacturing asset used in an industrial policy project with preferred status that is located within a special economic zone; or
Prelex
Wording of paras. (a) and (b), as well as the words following para. (b) and paras. (i) to (v), in force until 20 January 2015
(a) is classi ed under ‘Major Division 3:
Manufacturing’ in the most recent Standard Industrial Classi cation Code (referred to as the ‘SIC Code’) issued by Statistics South Africa; or
(b) in the case of products, goods, articles or things which are not yet classi ed, the adjudication committee is of the view will be classi ed as contemplated in paragraph (a),
but does not include the manufacture of—
(i) spirits and ethyl alcohol from fermented products
and wine (SIC Code 3051);
(ii) beer and other malt liquors and malt (SIC Code
3052);
(iii) tobacco products (SIC Code 3060);
(iv) arms and ammunition (SIC Code 3577); and
(v) bio-fuels if that manufacture negatively impacts on food security in the Republic;
(b) (i)
35 per cent of the cost of any new and unused manufacturing asset used in any industrial policy project other than an industrial policy project with preferred status; or
(ii) 75 per cent of the cost of any new and unused manufacturing asset used in any industrial policy project other than an industrial policy project with preferred status that is located within an industrial development zone,
[NB: Sub-para. (ii) has been substituted by s. 22 (1) (d) of Act 43 of 2014, a provision that will come into operation on the date on which the Special Economic Zones Act 16 of 2014 comes into operation. See Pendlex below.]
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SAIT CompendIum oF TAx LegISLATIon VoLume 1