Page 171 - SAIT Compendium 2016 Volume1

s 19
(a) (b)
(c)
INCOME TAX ACT 58 OF 1962 s 19
a debt owed by a person is reduced as contemplated in subsection (2);
the amount of that debt was used as contemplated in paragraph (a) of that subsection to fund expenditure incurred in the acquisition of trading stock that is held and not disposed of by that person at the time of the reduction of the debt; and
subsection (3) has been applied to reduce an amount taken into account by that person in respect of trading stock as contemplated in that subsection to the full extent of that amount so taken into account,
contemplated in paragraph 20 of that Schedule in respect of that allowance asset to the full extent of that expenditure,
[Sub-para. (ii) substituted by s. 53 (1) (h) of Act 31 of 2013 – substitution deemed to have come into operation on 1 January 2013 and applies in respect of years of assessment commencing on or after that date.]
be deemed, for the purposes of section 8 (4) (a), to be an amount that has been recovered or recouped by that person for the year of assessment in which the debt is reduced.
(7) Where a debt owed by a person that was used to fund expenditure incurred in respect of an allowance asset is reduced, the aggregate amount of the deductions and 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 of that allowance asset, reduced by an amount equal to the sum of—
[Words preceding sub-para. (a) substituted by s. 35
of Taxation Laws Amendment Act, 2015 – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
the reduction amount in respect of that debt must, to the extent that a deduction or allowance was granted in terms of this Act to that person in respect of that expenditure, be deemed, for the purposes of section 8 (4) (a), to be an amount that has been recovered or recouped by that person for the year of assessment in which the debt is reduced less any amount of that reduction amount that has been applied to reduce an amount as contemplated in subsection (3).
[Words following para. (c) substituted by s. 53 (1) (d) of Act 31 of 2013 – substitution deemed to have come into operation on 1 January 2013 and applies in respect of years of assessment commencing on or after that date.]
(5) Where—
(a) (b)
a debt owed by a person is reduced as contemplated in subsection (2); and
the amount of that debt was used as contemplated in paragraph (a) of that subsection to fund any expenditure other than expenditure incurred—
(i) in respect of trading stock that is held and not disposed of by that person at the time of the reduction of the debt; or
[Sub-para. (i) substituted by s. 53 (1) (e) of Act 31 of 2013 – substitution deemed to have come into operation on 1 January 2013 and applies in respect of years of assessment commencing on or after that date.]
(ii) in respect of an allowance asset,
[Sub-para. (ii) substituted by s. 53 (1) (e) of Act 31 of 2013 – substitution deemed to have come into operation on 1 January 2013 and applies in respect of years of assessment commencing on or after that date.]
the reduction amount in respect of that debt must, to the extent that a deduction or allowance was granted in terms of this Act to that person in respect of that expenditure, be deemed, for the purposes of section 8 (4) (a), to be an amount that has been recovered or recouped by that person for the year of assessment in which the debt is reduced.
[Words following sub-para. (ii) substituted by s. 53 (1) (f) of Act 31 of 2013 – substitution deemed to have come into operation on 1 January 2013 and applies in respect of years of assessment commencing on or after that date.]
(6) Where—
(a) a debt owed by a person is reduced as contemplated in
subsection (2); and
(b) the amount of that debt was used as contemplated in
paragraph (a) of that subsection to fund expenditure
incurred in respect of an allowance asset,
[Para. (b) substituted by s. 53 (1) (g) of Act 31 of 2013 – substitution deemed to have come into operation on 1 January 2013 and applies in respect of years of assessment commencing on or after that date.]
the reduction amount in respect of that debt must, to the extent that—
(i) a deduction or allowance was granted in terms of this
Act to that person in respect of that expenditure; and (ii) paragraph 12A of the Eighth Schedule has not been applied to reduce the amount of expenditure as
(a) the reduction amount in respect of that debt; and
(b) the aggregate amount of all deductions and allowances previously allowed to that person in respect of that
allowance asset.
(8) This section must not apply to any debt owed by a
person—
(a)
that is an heir or legatee of a deceased estate, to the extent that—
(i) the debt is owed to that deceased estate;
(ii) the debt is reduced by the deceased estate; and
(iii) the amount by which the debt is reduced by the deceased estate forms part of the property of the deceased estate for the purposes of the Estate Duty Act;
(b) (c)
to the extent that the debt is reduced by way of— (i) a donation as de ned in section 55 (1); or
(ii) any transaction to which section 58 applies; or to an employer of that person, to the extent that the debt is reduced in the circumstances contemplated in paragraph 2 (h) of the Seventh Schedule.
[Sub-para. (iii) substituted by s. 30 of Act 43 of 2014 – date of commencement: 20 January 2015.]
[S. 19 amended by s. 19 (a) of Act 101 of 1990, by s. 17 of Act 21 of 1995, by s. 15 of Act 28 of 1997, by s. 19 (a) of Act 8 of 2007, by s. 32 (a) of Act 35 of 2007 and by s. 15 of Act 90 of 1962, by s. 6 of Act 6 of 1963, by s. 17 of Act 88 of 1965, by s. 17 (1) of Act 88 of 1971, by s. 14 (1) of Act 90 of 1972, by s. 18 of Act 85 of 1974, by s. 14 of Act 104 of 1980, by s. 17 of Act 96 of 1981, by s. 15 (1) of Act 91 of 1982, by s. 17 (1) of Act 94 of 1983, by s. 17 of Act 121 of 1984, by s. 12 (1) of Act 96 of 1985, by s. 12 of Act 65 of 1986, by s. 4 (1) of Act 108 of 1986, by s. 13 of Act 85 of 1987, by s. 18 (1) of Act 101 of 1990, by s. 21 of Act 129 of 1991 and by s. 33 of Act 30 of 1998, repealed by s. 25 (1)
SAIT CompendIum oF TAx LegISLATIon VoLume 1 163
Prelex
Words in sub-s. (7) preceding para. (a) in force until date of promulgation of Taxation Laws Amendment Act, 2015
(7) Where a debt owed by a person that was used to fund expenditure incurred in respect of the acquisition, creation or improvement of an allowance asset is reduced, the aggregate amount of the deductions and 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 of that allowance asset, reduced by an amount equal to the sum of—
INCOME TAX ACT – SECTIONS