Page 172 - SAIT Compendium 2016 Volume1

s 19 INCOME TAX ACT 58 OF 1962 s 20A
of Act 30 of 2000 and inserted by s. 36 (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.]
20 Set-off of assessed losses
(1) For the purpose of determining the taxable income derived by any person from carrying on any trade, there shall, subject to section 20A, be set off against the income so derived by such person—
(a) any balance of assessed loss incurred by the taxpayer in any previous year which has been carried forward from the preceding year of assessment: Provided that no person whose estate has been voluntarily or compulsorily sequestrated shall be entitled to carry forward any assessed loss incurred prior to the date of sequestration, unless the order of sequestration has been set aside, in which case the amount to be so carried forward shall be reduced by an amount which was allowed to be set off against the income of the insolvent estate of such person from the carrying on of any trade;
[Para. (a) 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, by s. 37 (1) of Act 22 of 2012 (deletion of the proviso to para. (a) – date of commencement: 1 January 2013; the deletion of the proviso applies in respect of years of assessment commencing on or after that date) and by s. 31 (1) of Act 43 of 2014 (the reinsertion of a proviso to para. (a)) – date of commencement deemed to have been 1 January 2013 as well; the addition of the proviso applies iro years of assessment commencing on or after that date.]
(b) any assessed loss incurred by the taxpayer during the same year of assessment in carrying on any other trade either alone or in partnership with others, otherwise than as a member of a company the capital whereof is divided into shares:
[Para. (b) substituted by s. 20 (b) of Act 59 of 2000.] Provided that there shall not be set off against any amount— (a) . . .
[Para. (a) deleted by s. 32 (1) of Act 17 of 2009.]
(b) derived by any person from a source within the
Republic, any—
[Words in para. (b) preceding sub-para. (i) substituted by s. 54 (1) (a) of Act 31 of 2013 – date of commencement: 1 January 2014 – the substituted wording applies in respect of years of assessment commencing on or after that date.]
(i) assessed loss incurred by such person during such year; or
(ii) any balance of assessed loss incurred in any previous year of assessment,
in carrying on any trade outside the Republic; or
[Para. (b) substituted by s. 35 (1) (b) of Act 45 of 2003, amended by s. 19 (c) of Act 8 of 2007 and substituted by s. 15 (1) of Act 3 of 2008.]
(c) that is a retirement fund lump sum bene t, retirement fund lump sum withdrawal bene t or severance bene t included in taxable income, any—
[Words in para. (c) preceding sub-para. (i) substituted by s. 54 (1) of Act 31 of 2013 – the substituted wording deemed to have come into operation on 1 March 2013 and applies in respect of years of assessment commencing on or after that date.]
(i) balance of assessed loss;
(ii) ‘assessed loss’ as de ned in subsection (2)
incurred in such year before taking into account that retirement fund lump sum bene t or retirement fund lump sum withdrawal bene t.
[Sub-para. (ii) substituted by s. 35 (1) (b) of Act 60 of 2008.]
[Para. (c) added by s. 19 (d) of Act 8 of 2007, substituted by s. 15 (1) of Act 3 of 2008 and amended by s. 35 (1) (a) of Act 60 of 2008.]
[Sub-s. (1) amended by s. 26 of Act 30 of 2000, by s. 20 (a) and (c) of Act 59 of 2000 and by s. 35 (1) (a) and (b) of Act 45 of 2003.]
(1)bis . . .
[Sub-s. (1)bis inserted by s. 13 of Act 90 of 1964 and
deleted by s. 18 of Act 88 of 1965.]
(2) For the purposes of this section ‘assessed loss’ means any amount by which the deductions admissible under section 11 exceeded the income in respect of which they are so admissible.
[Sub-s. (2) substituted by s. 16 of Act 113 of 1993, by s. 23 of Act 74 of 2002 and by s. 32 (b) of Act 35 of 2007.]
(2A) In the case of any taxpayer other than a company—
(a)
the provisions of subsections (1) and (2) shall mutatis mutandis apply for the purpose of determining the taxable income derived by such taxpayer otherwise than from carrying on any trade, the reference in subsection (1) to ‘taxable income derived by any person from carrying on any trade’ and the reference in that subsection to ‘the income so derived’ being respectively construed as including a reference to taxable income derived by the taxpayer otherwise than from carrying on any trade and a reference to income so derived; and
[Para. (a) substituted by s. 19 (e) of Act 8 of 2007.]
(b) the said taxpayer shall, subject to the provisos to subsection (1), not be prevented from carrying forward a balance of assessed loss merely by reason of the fact that he has not derived any income during
any year of assessment.
[Sub-s. (2A) inserted by s. 15 (1) of Act 65 of 1973.]
(3) . . .
[Sub-s. (3) added by s. 13 (1) of Act 76 of 1968 and deleted by s. 19 (b) of Act 101 of 1990.]
(4) . . .
[Sub-s. (4) added by s. 18 of Act 89 of 1969 and deleted by s. 18 of Act 94 of 1983.]
(5) . . .
[Sub-s. (5) added by s. 18 of Act 89 of 1969, amended by s. 8 (1) of Act 101 of 1978 and deleted by s. 18 of Act 94 of 1983.]
20A Ring-fencing of assessed losses of certain trades
(1) Subject to subsection (3), where the circumstances in subsection (2) apply during any year of assessment in respect of any trade carried on by a natural person, any assessed loss incurred during that year in carrying on that trade may not be set off against any income of that person derived during that year otherwise than from carrying on that trade, notwithstanding section 20 (1) (b).
(2) Subsection (1) applies where the sum of the taxable income of a person for a year of assessment (determined without having regard to the other provisions of this section) and any assessed loss and balance of assessed loss which were set off in terms of section 20 in determining that taxable income, equals or exceeds the amount at which the maximum marginal rate of tax chargeable in respect of the taxable income of individuals becomes applicable, and where—
(a)
that person has, during the ve year period ending on the last day of that year of assessment, incurred an assessed loss in at least three years of assessment in carrying on the trade contemplated in subsection (1)
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SAIT CompendIum oF TAx LegISLATIon VoLume 1