Page 161 - SAIT Compendium 2016 Volume1

s 13quat INCOME TAX ACT 58 OF 1962 s 13quat
‘urban development zone’ means an area demarcated by a municipality in terms of subsection (6), the particulars of which were published in the Gazette in terms of subsection (8).
(2) There must be allowed to be deducted from the income of the taxpayer an allowance determined in terms of subsection (3) or (3A), in respect of the cost of the erection, extension, addition or improvement of any commercial or residential building or part of a building which is owned by the taxpayer and is used solely for purposes of that taxpayer’s trade, if—
(a) that building is situated within an urban development zone;
(b) the erection, extension, addition or improvement was commenced by the taxpayer or the developer, as the case may be, on or after the date of publication of the notice contemplated in subsection (8) in respect of that urban development zone, in terms of a contract formally and nally signed by all parties thereto on or after that date;
(c) the erection, extension, addition to or improvement by the taxpayer or developer covers either the entire building or a oor area of at least 1 000m2 of that building; and
(d) in the case where the taxpayer purchased that building or part from a developer—
(i) the agreement to purchase was concluded on or after 8 November 2005;
(ii) that developer has not claimed any allowance under this section in respect of that building or part; and
(iii) if the developer improved the building or part as contemplated in subsection (3) (b) or (3A) (b), that developer has incurred expenditure in respect of those improvements which is equal to at least 20 per cent of the purchase price paid by the taxpayer in respect of that building or part.
[Sub-para. (iii) substituted by s. 29 (1) (b) of Act 60 of 2008.]
(e) . . .
[Para. (e) deleted by s. 29 (1) (c) of Act 60 of 2008.]
[Sub-s. (2) substituted by s. 23 (d) of Act 31 of 2005 and amended by s. 29 (1) (a) of Act 60 of 2008, by s. 29 (1) (b) of Act 17 of 2009 and by s. 48 (a) and (b) of Act 31 of 2013.]
(2A) For the purposes of this section, if a taxpayer completes an improvement as contemplated in section 12N, the expenditure incurred by the taxpayer to complete the improvement shall be deemed to be the cost of the erection, extension, addition or improvement contemplated in subsection (2).
[Sub-s. (2A) inserted by s. 33 (1) (a) of Act 7 of 2010.]
(3) The amount of the allowance contemplated in subsection (2)—
(b) in the case of the improvement of any existing building or part of a building (including any extension or addition which is incidental to that improvement) where the existing structural or exterior framework thereof is preserved, is equal to—
(i) 20 per cent of the cost to the taxpayer of the improvement, extension or addition which is deductible in the year of assessment during which the part of the building so improved, extended or added is brought into use by the taxpayer solely for the purposes of that taxpayer’s trade; and
(ii) 20 per cent of that cost in each of the four succeeding years of assessment.
(3A) The amount of the allowance contemplated in subsection (2)—
(a) in the case of the erection of any new building or the
extension of or addition to any building, to the extent that it relates to a low-cost residential unit (other than any improvement in respect of which paragraph (b) applies), is equal to—
(i) 25 per cent of the cost to the taxpayer of the erection or extension of or addition to that building, which is deductible in the year of assessment during which that building is brought into use by that taxpayer;
(ii) 13 per cent of that cost in each of the ve succeeding years of assessment; and
(iii) 10 per cent of that cost in the year of assessment following the last year contemplated in subparagraph (ii);
(b) in the case of the improvement of any existing building or part of a building, to the extent that it relates to a low-cost residential unit (including any extension or addition which is incidental to that improvement) where the existing structural or exterior framework thereof is preserved, is equal to—
(i) 25 per cent of the cost to the taxpayer of the improvement, which is deductible in the year of assessment during which the part of the building so improved, is brought into use by the taxpayer; and
(ii) 25 per cent of that cost in each of the three succeeding years of assessment.
[Sub-s. (3A) inserted by s. 23 (e) of Act 31 of 2005 and substituted by s. 29 (1) (e) of Act 60 of 2008.]
(3B) For purposes of subsection (3) or (3A), where the taxpayer purchased a building or part of a building from a developer—
(a) 55 per cent of the purchase price of that building
or part of a building, in the case of a new building erected, extended or added to by that developer as contemplated in subsection (3) (a) or (3A) (a); and
(b) 30 per cent of the purchase price of that building or part of a building, in the case of a building improved by that developer as contemplated in subsection (3) (b) or (3A) (b),
is deemed to be costs incurred by that taxpayer in respect of the erection, extension, addition to or improvement of that building or part of a building.
[Sub-s. (3B) inserted by s. 29 (1) (e) of Act 60 of 2008 and substituted by s. 41 (b) of Act 24 of 2011 – date of commencement: 10 January 2012.]
(4) No deduction shall be allowed under this section, unless the taxpayer has obtained or determined the following for submission to the Commissioner in such form and within such time as may be prescribed by the Commissioner—
(a) a certi cate issued by the municipality to the taxpayer con rming that the building is located within an urban development zone within that municipality;
(a)
in the case of the erection of any new building or the extension of or addition to any building (other than a building in respect of which paragraph (b) applies), is equal to—
(i) 20 per cent of the cost to the taxpayer of the erection or extension of or addition to that building, which is deductible in the year of assessment during which that building is brought into use by that taxpayer solely for the purposes of that taxpayer’s trade; and
(ii) eight per cent of that cost in each of the 10 succeeding years of assessment;
[Sub-para. (ii) substituted by s. 29 (1) (d) of Act 60 of 2008.]
SAIT CompendIum oF TAx LegISLATIon VoLume 1
153
INCOME TAX ACT – SECTIONS