Page 150 - SAIT Compendium 2016 Volume1

s 12N INCOME TAX ACT 58 OF 1962 s 12O
(b) effects an improvement on the land or to the building in terms of—
[Words in para. (b) preceding sub-para. (i) substituted by s. 40 (1) (a) of Act 31 of 2013 – date of commencement deemed to have been 4 July 2013; the substitution applies in respect of improvements completed on or after that date.]
(i) a Public Private Partnership;
(ii) an agreement in terms of which the right of use
or occupation is granted, if the land or building is owned by—
(aa)the government of the Republic in the
national, provincial or local sphere; or
(bb) any entity of which the receipts and accruals are exempt from tax in terms of section 10
(1) (cA) or (t); or
(iii) the Independent Power Producer Procurement
Programme administered by the Department of
Energy;
[Sub-para. (iii) added by s. 31 (1) (c) of Act 22 of 2012 – date of commencement: 1 January 2013. This subparagraph applies in respect of an obligation incurred on or after that date.]
(c) incurs expenditure to effect the improvement contemplated in paragraph (b); and
(d) . . .
[Para. (d) deleted by s. 40 (1) (b) of Act 31 of 2013 – date
of commencement deemed to have been 4 July 2013; the deletion applies in respect of improvements completed on or after that date.]
(e) uses or occupies the land or building for the production of income or derives income from the land or building,
the taxpayer must, for the purposes of any deduction contemplated in section 11D, 12B, 12C, 12D, 12F, 12I, 12S, 13, 13bis, 13ter, 13quat, 13quin, 13sex or 36, and for the purposes of the Eighth Schedule, be deemed to be the owner of the improvement so completed.
[Words in sub-s. (1) following para. (e) substituted by
s. 31 (1) (d) of Act 22 of 2012, by s. 40 (1) (d) of Act 31 of 2013 (substitution deemed to have come into operation on 4 July 2013 and applies in respect of improvements completed on or after that date) and by s. 24 (1) of Act 43 of 2014 – date of commencement deemed to have been 1 January 2013; the substitution applies iro expenditure incurred to effect improvements during any year of assessment commencing on or after that date.]
(2) (a) When the right of use or occupation terminates, the taxpayer must be deemed to have disposed of the improvement to the owner of the land or building on the later of the date when—
(i) the right of use or occupation terminated; or (ii) the use or occupation ended.
(b) If the right of use or occupation terminates and the taxpayer—
(i) continues to use or occupy the land or building; or (ii) renews the right of use or occupation,
the renewed right of use or occupation must be deemed to be the same right of use or occupation as the right of use or occupation previously held by the taxpayer.
(3) This section does not apply if the taxpayer—
(ii) the cost of maintaining the land or building and of carrying out repairs thereto required in consequence of normal wear and tear is borne by the taxpayer; and
(iii) subject to any claim that the taxpayer may have against the other person by reason of the other person’s failure to take proper care of the land or building, the risk of destruction or loss of or other disadvantage to the land or building is not assumed by that other person.
[S. 12N inserted by s. 29 (1) of Act 7 of 2010.]
12NADeductions in respect of improvements on property in respect of which government holds a right of use or occupation
(1) There shall be allowed to be deducted from the income of a person, expenditure actually incurred by that person to effect an improvement to land or to a building in terms of an obligation to effect those improvements to that land or to that building in terms of a Public Private Partnership if the government of the Republic in the national, provincial or local sphere holds the right of use or occupation of that land or building.
(2) The amount allowed to be deducted in terms of this section in respect of any year of assessment shall be equal to the amount of expenditure contemplated in subsection (1) that has not been allowed to be deducted in terms of this section, divided by the number of years (including that year of assessment) for which the taxpayer will derive income in respect of the Public Private Partnership in terms of the agreement or 25 years, whichever is the lesser.
(3) Where any amount as contemplated in section (10) (1) (zI) is received by or accrues to a person from the government of the Republic in the national, provincial or local sphere for the purpose of effecting an improvement to land or a building or in respect of the defraying of the cost of any improvements in terms of the Public Private Partnership contemplated in subsection (1), the expenditure to be deducted in terms of this section shall be reduced in an amount equal to an amount that is exempt in terms of that section.
(4) This section shall not apply if the person effecting an improvement to land or to a building is a person carrying on any banking, nancial services or insurance business.
[S. 12NA inserted by s. 25 (1) of Act 43 of 2014 – date of commencement deemed to have been 1 January 2013; the inserted section applies iro expenditure incurred to effect improvements during any year of assessment commencing on or after that date.]
12O Exemption in respect of lms
(1) For the purposes of this section—
‘completion date’ means the date on which a qualifying lm is for the rst time in a form in which it can be regarded as ready for copies of it to be made and distributed, for presentation to the general public;
‘exploitation rights’ means the right to any receipts and accruals in respect of—
(a) the use of;
(b) the right of use of; or
(c) the granting of permission to use,
any lm to the extent that those receipts and accruals are wholly dependent on pro ts and losses in respect of the lm;
‘ lm’ means—
(a) a feature lm;
(b) a documentary or documentary series; or
(c) an animation,
conforming to the requirements stipulated by the Department of Trade and Industry in the Programme
(a) (b)
is a person carrying on any banking, nancial services or insurance business; or
enters into an agreement whereby the right of use or occupation of the land or building is granted to any other person, unless—
(i) the land or building is occupied by that other person and that other person is a company that is a member of the same group of companies as that taxpayer in terms of such an agreement;
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SAIT CompendIum oF TAx LegISLATIon VoLume 1