Page 151 - SAIT Compendium 2016 Volume1

s 12O INCOME TAX ACT 58 OF 1962 s 12P
Guidelines for the South African Film and Television Production and Co-production Incentive;
‘National Film and Video Foundation’ means the National Film and Video Foundation established by the National Film and Video Foundation Act, 1997 (Act 73 of 1997); and
‘special purpose corporate vehicle’ means a company responsible for the production of a lm as required by the Department of Trade and Industry in terms of the Programme Guidelines for the South African Film and Television Production and Co-production Incentive.
(2) There must be exempt from normal tax the receipts and accruals in respect of income derived from the exploitation rights of a lm—
(a) if the National Film and Video Foundation has
approved the lm in terms of section 3(c) read with section 4(1) of the National Film and Video Foundation Act, 1997 (Act 73 of 1997), as a local production or co-production whereby a lm is co- produced in terms of an international co-production agreement between the government of the Republic and the government of another country, which agreement must be subject to the Constitution;
(b) if income is derived from the exploitation rights of the lm—
(i) by a person who acquired the exploitation rights in respect of that lm prior to the date that the principal photography of that lm commenced; or
(ii) by a person who acquired the exploitation rights in respect of that lm after the date that THE principal photography of that lm commenced but before the completion date of that lm if consideration for those exploitation rights was not directly or indirectly paid or applied for the bene t of a person contemplated in subparagraph (i); and
(c) to the extent that the income is received or accrues within a period of 10 years after the completion date of that lm.
(3) No exemption shall be allowed under this section to a person that is a broadcaster as de ned in section 1 of the Broadcasting Act, 1999 (Act 4 of 1999), or any person that is a connected person in relation to that broadcaster.
(4) (a) Any—
(i) special purpose corporate vehicle; or
(ii) collection account manager that—
(aa) manages exploitation rights under a collection
account management agreement; and
(bb) is approved by the Minister for the purpose of
this section by notice in the Gazette,
must provide a report to the National Film and Video Foundation containing such information, within such time and in such manner as is prescribed by the Minister when income arising from exploitation rights of a lm is distributed to a person within a period of 10 years commencing from the completion date of the lm.
[Para. (a) substituted by s. 32 (1) of Act 22 of 2012 – date of commencement deemed to have been 1 January 2012. This paragraph applies in respect of receipts and accruals in respect of lms of which principal photography commences on or after that date but before 1 January 2022.]
(b) The National Film and Video Foundation must provide a report annually to the Minister in respect of all lms approved in terms of subsection (2) (a) containing such information, within such time and in such manner as is prescribed by the Minister for a period of 10 years commencing from the completion date of a lm if—
(i) any income is received or accrues in respect of the lm; and
(ii) the income is eligible for the exemption under subsection (2).
(5) (a) Notwithstanding section 23 (f), a taxpayer may deduct from the income of the taxpayer an amount in respect of any expenditure incurred to acquire exploitation rights in respect of a lm in accordance with paragraph (b).
[Para. (a) substituted by s. 25 (1) of Taxation Laws Amendment Act, 2015 – date of commencement deemed to have been 1 January 2012; the substituted paragraph applies iro receipts and accruals iro lms of which principal photography commences on or after that date but before 1 January 2022.]
(b) The amount of the deduction contemplated in paragraph (a) is equal to the amount of any expenditure incurred as contemplated in that paragraph less any amount received or accrued during any year of assessment in respect of that lm.
(c) No deduction may be made under this subsection to the extent that the expenditure was funded from a loan, credit or similar nancing.
(d) The deduction contemplated in paragraph (a) may only be made in any year of assessment commencing at least two years after the completion date of the lm to the extent that the amount of expenditure incurred exceeds the total amount received by or accrued to that taxpayer in respect of the exploitation rights.
(e) Subsection (2) and paragraph (a) of this subsection cease to apply to any income derived from a lm in any year of assessment subsequent to the date of a deduction made under paragraph (a) in respect of that lm.
(6) (a) In addition to the exemption under subsection (2), any amount received by or accrued to a special purpose corporate vehicle by way of a grant payable by the State under the South African Film and Television Production and Co-production Incentive administered by the Department of Trade and Industry shall be exempt from normal tax subject to section 8 (4).
(b) Where a special purpose corporate vehicle that received a grant contemplated in paragraph (a), or to whom such grant has accrued, pays the whole or any portion of the amount of the grant to another person pursuant to any exploitation rights in respect of that lm, the exemption under this paragraph must also apply to the amount received by or accrued to that other person to the extent that the amount does not exceed any amount that the other person contributed to the production of the lm.
[S. 12O inserted by s. 39 (1) of Act 24 of 2011 –
commencement date: 1 January 2012. This section applies in respect of all receipts and accruals in respect of lms of which principal photography commences on or after that date but before 1 January 2022.]
12P Exemption of amounts received or accrued in respect of government grants
(1) For the purposes of this section—
‘allowance asset’ means an asset as de ned in paragraph 1 of the Eighth Schedule, other than trading stock, in respect of which a deduction or allowance is
SAIT CompendIum oF TAx LegISLATIon VoLume 1 143
Prelex
Wording of para. (a) in force until its retrospective substitution, wef 1 January 2012, by s. 25 (1) of Taxation Laws Amendment Act, 2015
(5) (a) A taxpayer may deduct from the income of the taxpayer an amount in respect of any expenditure incurred to acquire exploitation rights in respect of a lm in accordance with paragraph (b).
INCOME TAX ACT – SECTIONS