Page 152 - SAIT Compendium 2016 Volume1

s 12P INCOME TAX ACT 58 OF 1962 s 12Q
allowable in terms of this Act for purposes other than the determination of any capital gain or capital loss;
‘base cost’ means base cost as de ned in paragraph 1 of the Eighth Schedule;
‘government grant’ means a grant-in-aid, subsidy or contribution by the government of the Republic in the national or provincial sphere.
(2) There must be exempt from normal tax any amount received by or accrued to a person as a bene ciary of a government grant if that government grant—
(a) is listed in the Eleventh Schedule; or
(b) is identi ed by the Minister by notice in the Gazette for the purpose of exempting that government grant with effect from a date speci ed by the Minister in that notice (including any date that precedes the date of that notice), after having regard to—
(i) the implications of the exemption for the National Revenue Fund; and
(ii) whether the tax implications were taken into account in allocating that grant.
(2A) Notwithstanding subsection (2), there must be exempt from normal tax any amount received by or accrued to or in favour of any person from the Government in the national, provincial or local sphere, where—
(a) that amount is granted for the performance by that
person of its obligations pursuant to a Public Private
Partnership; and
(b) to the extent that person is required in terms of that
Public Private Partnership to expend an amount at least equal to that amount in respect of any improvements on land or to buildings owned by any sphere of government or over which any sphere of government holds a servitude.
[Sub-s. (2A) inserted by s. 26 (1) (a) of Taxation Laws Amendment Act, 2015 – date of commencement: 1 January 2016; the inserted subsection applies iro grants received or expenditure incurred on or after that date.]
(3) Where during any year of assessment any amount is received by or accrues to a person by way of a government grant as contemplated in subsection (2) or (2A), other than a government grant in kind, for the acquisition, creation or improvement, or as a reimbursement for expenditure incurred in respect of the acquisition, creation or improvement of—
[Words in sub-s. (3) preceding para. (a) substituted by s. 26 (1) (b) of Taxation Laws Amendment Act, 2015 (‘or (2A)’ inserted) – date of commencement: 1 January 2016; the substitution applies iro grants received or expenditure incurred on or after that date.]
(a) trading stock—
(i) any expenditure incurred in respect of that
trading stock allowed as a deduction in terms of
section 11 (a); or
(ii) any amount taken into account in respect of the
value of trading stock as contemplated in section
22 (1) or (2); or
(b) an allowance asset, the base cost of that allowance
asset,
must be reduced to the extent that the amount of that government grant is applied for that purpose.
(4) Where any amount is received by or accrues to a person by way of a government grant as contemplated in subsection (2) or (2A) for the acquisition, creation or improvement of an allowance asset or as a reimbursement for expenditure incurred in respect of that acquisition, creation or improvement, the aggregate amount of the deductions or allowances allowable to that person in respect of that allowance asset may
not exceed an amount equal to the aggregate of the expenditure incurred in the acquisition, creation or improvement of that allowance asset, reduced by an amount equal to the sum of—
[Words in sub-s. (4) preceding para. (a) substituted by s. 26 (1) (c) of Taxation Laws Amendment Act, 2015 (‘or (2A)’ inserted) – date of commencement: 1 January 2016; the substitution applies iro grants received or expenditure incurred on or after that date.]
(a) the amount of the government grant; and
(b) the aggregate amount of all deductions and allowances previously allowed to that person in respect of that
allowance asset.
(5) Where during any year of assessment any amount is
received by or accrues to a person by way of a government grant as contemplated in subsection (2) or (2A), other than a government grant in kind—
[Words in sub-s. (5) preceding para. (a) substituted by s. 26 (1) (d) of Taxation Laws Amendment Act, 2015 (‘or (2A)’ inserted) – date of commencement: 1 January 2016; the substitution applies iro grants received or expenditure incurred on or after that date.]
(a) for the purpose of the acquisition, creation or improvement of an asset other than an asset contemplated in subsection (3) or (4); or
(b) as a reimbursement for expenditure incurred for the acquisition, creation or improvement of an asset other than an asset contemplated in subsection (3) or (4),
the base cost of that asset must be reduced to the extent that the amount of the government grant is applied for that acquisition, creation or improvement.
(6) (a) Where during any year of assessment—
(i) any amount is received by or accrues to a person by way of a government grant as contemplated in subsection (2) or (2A), other than a government grant
in kind; and
[Sub-para. (i) substituted by s. 26 (1) (e) of Taxation Laws Amendment Act, 2015 (‘or (2A)’ inserted) – date of commencement: 1 January 2016; the substituted subparagraph applies iro grants received or expenditure incurred on or after that date.]
(ii) subsection (3), (4) or (5) does not apply to that amount,
any amount allowed to be deducted from that person’s income in terms of section 11 for that year of assessment must be reduced to the extent of the amount of that government grant.
(b) To the extent that the amount received or accrued by way of a government grant exceeds the amount allowed to be deducted as contemplated in paragraph (a), that excess is deemed to be an amount received or accrued in respect of that government grant during the following year of assessment for the purposes of paragraph (a).
[S. 12P inserted by s. 33 (1) of Act 22 of 2012 – date of commencement: 1 January 2013; this insertion applies in respect of years of assessment commencing on or after that date.]
12Q Exemption of income in respect of ships used in international shipping
(1) For the purposes of this section—
‘international shipping’ means the conveyance for compensation of passengers or goods by means of the operation of a South African ship mainly engaged in international traf c;
‘international shipping company’ means a company that is a resident that holds a share or shares in one or more South African ships that are utilised in international shipping;
144 SAIT CompendIum oF TAx LegISLATIon VoLume 1