Page 154 - SAIT Compendium 2016 Volume1

s 12R INCOME TAX ACT 58 OF 1962 s 12T
(i) more than 20 per cent of expenditure that is deductible under this Act is incurred; or
(ii) more than 20 per cent of the income of that company is received or accrued,
in respect of transactions with any connected person in relation to that company if that connected person—
(aa) is a resident; or
(bb) is not a resident and those transactions are attributable to a permanent establishment of that connected person in the Republic.
[Para. (c) added by s. 28 (1) (c) of Taxation Laws Amendment Act, 2015.]
(5) This provision ceases to apply in respect of any year of assessment commencing the later of—
(a) on or after 1 January 2024;
(b) 10 years after the commencement of the carrying
on of business in a special economic zone.
[Sub-s. (5) substituted by s. 26 (1) (i) of Act 43 of 2014.]
[S. 12R inserted by s. 43 (1) of Act 31 of 2013 and amended by s. 26 (1) of Act 43 of 2014 and by s. 28 (1) (c) of Taxation Laws Amendment Act, 2015 – s. 12R, as amended, is to come into operation on the date on which the Special Economic Zones Act 16 of 2014 comes into operation.]
(5) No deduction may be allowed under this subsection in respect of any building that has been disposed of by the qualifying company during any previous year of assessment.
(6) A deduction may not be allowed under any other section of this Act in respect of the cost of a building or improvement if any of that cost has quali ed or will qualify for deduction from the qualifying company’s income as a deduction of expenditure or an allowance in respect of expenditure under this section.
(7) 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 building or improvement may not in the aggregate exceed the amount of such cost.
(8) The Commissioner may, notwithstanding the provisions of Chapter 6 of the Tax Administration Act disallow all deductions otherwise provided for under this section if a qualifying company is guilty of fraud or misrepresentation or non-disclosure of material facts with regard to any tax, duty or levy administered by the Commissioner.
(9) The Commissioner may, notwithstanding the provisions of sections 99 and 100 of the Tax Administration Act, raise an additional assessment for any year of assessment where a deduction that has been allowed in any previous year must be disallowed in terms of subsection (8).
(10) This provision ceases to apply in respect of any year of assessment commencing on or after 1 January 2024.
[S. 12S inserted by s. 44 (1) of Act 31 of 2013 and amended by s. 27 (1) of Act 43 of 2014 – s. 12s, as amended, is to come into operation on the date on which the Special Economic Zones Act 16 of 2014 comes into operation.]
[NB: A s. 12S has been inserted by s. 44 (1) of Act 31 of 2013 and amended by s. 27 (1) of Act 43 of 2014; s. 12S, as amended, is to come into operation on the date that the Special Economic Zones Act 16 of 2014 comes into operation and is to apply in respect of years of assessment commencing on or after that date. See Pendlex below.]
Pendlex (to come into operation on the date on which the Special Economic Zones Act 16 of 2014 comes into operation)
12S Deduction in respect of buildings in special economic zones
(1) For the purposes of this section, ‘qualifying company’ means a qualifying company as de ned in section 12R.
(2) A qualifying company may deduct from the income of that qualifying company an allowance equal to ten per cent of the cost to the qualifying company of any new and unused building owned by the qualifying company, or any new and unused improvement to any building owned by the qualifying company, if that building or improvement is wholly or mainly used by the qualifying company during the year of assessment for purposes of producing income within a special economic zone, as de ned in section 12R (1), in the course of the taxpayer’s trade, other than the provision of residential accommodation.
[Sub-s. (2) substituted by s. 27 (1) of Act 43 of 2014.]
(3) If a qualifying company completes an improvement as contemplated in section 12N, the expenditure incurred by the qualifying company to complete the improvement must be deemed to be the cost to the qualifying company of any new and unused building or of any new and unused improvement to a building contemplated in subsection (2).
(4) For the purposes of this section the cost to a qualifying company of any building or improvement must be deemed to be the lesser of the actual cost to the qualifying company or the cost which a person would, if that person had acquired, erected or improved the building under a cash transaction concluded at arm’s length on the date on which the transaction for the acquisition, erection or improvement of the building was in fact concluded, have incurred in respect of the direct cost of the acquisition, erection or improvement of the building.
12T Exemption of amounts received or accrued in respect of tax free investments
(1) For the purposes of this section—
‘tax free investment’ means any nancial instrument or policy as de ned in section 29A—
(a) administered by a person or entity designated by
notice by the Minister in the Gazette;
(b) owned by—
(i) a natural person; or
(ii) the deceased estate or insolvent estate of a
natural person that is deemed to be one and the same person as that natural person in respect of the contributions made by that person; and
(c) that complies with the requirements of the Regulations contemplated in subsection (8).
(2) There shall be exempt from normal tax any amount received by or accrued to a natural person or deceased estate or insolvent estate of that person in respect of a tax free investment.
[Sub-s. (2) substituted by s. 29 (1) (a) of Taxation Laws Amendment Act, 2015 – date of commencement deemed to have been 1 March 2015, the date on which the original s. 12T came into operation.]
Prelex
Wording of sub-s. (2) in force until its retrospective substitution, wef 1 March 2015, by s. 29 (1) (a) of Taxation Laws Amendment Act, 2015
(2) There shall be exempt from normal tax any amount received by or accrued to a natural person in respect of a tax free investment.
146 SAIT CompendIum oF TAx LegISLATIon VoLume 1