Page 168 - SAIT Compendium 2016 Volume1

s 18A INCOME TAX ACT 58 OF 1962 s 18A
(b) an employees’ tax certi cate as de ned in the Fourth Schedule on which the amount of donations contemplated in paragraph 2 (4) (f) of that Schedule, for which the employer has received a receipt contemplated in paragraph (a), is given.
[Sub-s. (2) amended by s. 34 (1) of Act 45 of 2003 and by s. 16 of Act 20 of 2006 and substituted by s. 34 (1) (c) of Act 60 of 2008.]
(2A) A public bene t organisation, institution, board, body or department may only issue a receipt contemplated in subsection (2) in respect of any donation to the extent that—
(a) in the case of a public bene t organisation, institution, board or body contemplated in subsection (1) (a) which carries on activities contemplated in Parts I and II of the Ninth Schedule, that donation will be utilised solely in carrying on activities contemplated in Part II of the Ninth Schedule;
[Para. (a) substituted by s. 26 (1) (d) of Act 31 of 2005.] (b) in the case of a public bene t organisation
contemplated in subsection (1) (b)—
(i) that organisation will within 12 months after the
end of the relevant year of assessment distribute or incur the obligation to distribute at least 50 per cent of all funds received by way of donation during that year in respect of which receipts were issued: Provided that the Commissioner may, upon good cause shown and subject to such conditions as he or she may determine, either generally or in a particular instance, waive, defer or reduce the obligation to distribute any funds, having regard to the public interest and the purpose for which the relevant organisation wishes to accumulate those funds; and
[Words preceding the proviso in sub-para. (i) substituted by s. 29 (1) (a) of Act 43 of 2014 – date of commencement: 1 March 2015.]
(ii) if that public bene t organisation provides funds to public bene t organisations, institutions, boards or bodies that carry on public bene t activities contemplated in Part II of the Ninth Schedule and to other entities, that donation will be utilised solely to provide funds to a public bene t organisation, institution, board or body contemplated in subsection (1) (a), which will utilise those funds solely in carrying on activities contemplated in Part II of the Ninth Schedule; or
[Para. (b) substituted by s. 26 (1) (d) of Act 31 of 2005.] (c) in the case of a department, that donation will be utilised solely in carrying on activities contemplated
in Part II of the Ninth Schedule.
[Para. (c) substituted by s. 16 (j) of Act 20 of 2006 and by s. 37 (1) (f) of Act 7 of 2010.]
[Sub-s. (2A) inserted by s. 34 (1) (k) of Act 45 of 2003 and amended by s. 16 (i) of Act 20 of 2006 and by s. 37 (1) (e) of Act 7 of 2010.]
(2B) A public bene t organisation, institution, board or body contemplated in subsection (2A), must obtain and retain an audit certi cate con rming that all donations received or accrued in that year in respect of which receipts were issued in terms of subsection (2), were utilised in the manner contemplated in subsection (2A).
[Sub-s. (2B) inserted by s. 34 (1) (k) of Act 45 of 2003 and substituted by s. 6 (1) of Act 4 of 2008.]
(2C) The Accounting Authority contemplated in the Public Finance Management Act for the department which issued any receipts in terms of subsection (2),
must on an annual basis submit an audit certi cate to the Commissioner con rming that all donations received or accrued in the year in respect of which receipts were so issued were utilised in the manner contemplated in sub- section (2A).
[Sub-s. (2C) inserted by s. 34 (1) (k) of Act 45 of 2003 and substituted by s. 16 (k) of Act 20 of 2006, by s. 37 (1) (g) of Act 7 of 2010 and by s. 52 (1) (d) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(2D) Any public bene t organisation contemplated in subsection (1) (b), in respect of any amount that is not distributed referred to in subsection (2A) (b) (i), shall distribute or incur the obligation to distribute all amounts received in respect of investment assets held by it, other than amounts received in respect of disposals of those investment assets to any public bene t organisation, institution, board or body contemplated in subsection (1) (a), no later than six months after—
(a) every ve years from the date on which the
Commissioner issued a reference number referred to in subsection (2) (a) (i) to that public bene t organisation referred to in subsection (1) (b), if that public bene t organisation is incorporated, formed or established on or after 1 March 2015; or
(b) every ve years from 1 March 2015, if that public bene t organisation referred to in subsection (1) (b) was incorporated, formed or established and issued with a reference number referred to in subsection (2) (a) (i) prior to 1 March 2015.
[Sub-s. (2D) inserted by s. 29 (1) (b) of Act 43 of 2014 – date of commencement: 1 March 2015.]
(3) If any deduction is claimed by any taxpayer under the provisions of subsection (1) in respect of any donation of property in kind, other than immovable property of a capital nature where the lower of market value or municipal value exceeds cost, the amount of such deduction shall be deemed to be an amount equal to—
[Words preceding para. (a) substituted by s. 52 (1) (e) of Act 31 of 2013 – date of commencement: 1 March 2014; the substituted wording applies in respect of amounts paid or transferred during years of assessment commencing on or after that date.]
(a)
where such property constitutes—
(i) a nancial instrument which is trading stock of
the taxpayer, the lower of fair market value of that nancial instrument on the date of that donation or the amount which has been taken into account for the purposes of section 22 (8) (C); or
[Sub-para. (i) substituted by s. 37 (1) (h) of Act 7 of 2010.] (ii) any other trading stock of the taxpayer (including any livestock or produce in respect of which the provisions of paragraph 11 of the First Schedule are applicable), the amount which has been taken into account for the purposes of section 22 (8) (C) or, in the case of such livestock or produce, the said paragraph 11, in relation to the donation
of such property; or
[Sub-para. (ii) substituted by s. 37 (1) (h) of Act 7 of 2010.] [Para. (a) substituted by s. 34 (1) (l) of Act 45 of 2003.] (b) where such property (other than trading stock)
constitutes an asset used by the taxpayer for the purposes of his trade, the lower of—
(i) the fair market value of that property on the date of that donation; or
(ii) the cost to the taxpayer of such property less any allowance (other than any investment allowance) allowed to be deducted from the income of the
160 SAIT CompendIum oF TAx LegISLATIon VoLume 1