Page 190 - SAIT Compendium 2016 Volume1

s 23N INCOME TAX ACT 58 OF 1962 s 24O
(b) ‘B’ represents the number 40;
(c) ‘C’ represents the average repo rate plus 400 basis
points; and
(d) ‘D’ represents the number 10,
but not exceeding 60 per cent of the adjusted taxable income of that acquiring company.
[Sub-s. (4) substituted by s. 38 (1) (g) of Act 43 of 2014 – date of commencement: 1 January 2015; this substitution applies iro years of assessment commencing on or after that date.]
(5) . . .
[Sub-s. (5) deleted by s. 64 (1) of Act 31 of 2013 – date of commencement: 31 December 2015; the deletion applies iro interest incurred on or after that date.]
stock, any expenditure incurred in respect of that trading stock allowed as a deduction in terms of section 11 (a) or any amount taken into account in respect of the value of trading stock as contemplated in section 22 (1) or (2) must be reduced to the extent that the amount received or accrued from the small business funding entity is applied for that purpose.
(3) Where during any year of assessment any amount is received by or accrues to a small, medium or micro- sized enterprise from a small business funding entity for the acquisition, creation or improvement, or as a reimbursement for expenditure incurred in respect of the acquisition, creation or improvement of an allowance asset, the base cost of that allowance asset must be reduced to the extent that the amount received or accrued from the small business funding entity is applied for that purpose.
(4) Where during any year of assessment any amount is received by or accrues to a small, medium or micro-sized enterprise from a small business funding entity for the acquisition, creation or improvement of an allowance asset or as a reimbursement for expenditure incurred in respect of that acquisition, creation or improvement, the aggregate amount of the deductions or 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, creation or improvement of that allowance asset, reduced by an amount equal to the sum of—
(a) the amount received by or accrued to from a small business funding entity that is applied for that purpose; and
(b) the aggregate amount of all deductions and allowances previously allowed to that person in respect of that allowance asset.
(5) Where during any year of assessment any amount is received by or accrues to a small, medium or micro-sized enterprise from a small business funding entity—
(a) for the purpose of the acquisition, creation or
improvement of an asset other than an asset
contemplated in subsection (2) or (3); or
(b) as a reimbursement for expenditure incurred for the acquisition, creation or improvement of an asset other
than an asset contemplated in subsection (2) or (3), the base cost of that asset must be reduced to the extent that the amount received by or accrued from the small business funding entity is applied for that acquisition, creation or improvement.
(6) (a) Where during any year of assessment—
(i) any amount is received by or accrues to a small, medium or micro-sized enterprise from a small
business funding entity; and
(ii) subsection (2), (3) or (4) does not apply to that
amount,
any amount allowed to be deducted from the income of that small, medium or micro-sized enterprise in terms of section 11 for that year of assessment must be reduced to the extent of the amount received or accrued from a small business funding entity.
(b) To the extent that the amount received or accrued from a small business funding entity exceeds the amount allowed to be deducted as contemplated in paragraph (a),
Prelex
Wording of sub-s. (5) in force until 31 December 2015
(5) This section does not apply to any interest incurred by an acquiring company in respect of any debt contemplated in subsection (2)—
(a) where that interest is incurred in respect of a
linked unit in the acquiring company and that interest accrues to a long-term insurer as de ned in the Long-term Insurance Act, a pension fund, a provident fund, a REIT or a short-term insurer as de ned in the Short-term Insurance Act, if—
(i) the long-term insurer, pension fund, provident fund, REIT or short-term insurer holds at least 20 per cent of the linked units in that acquiring company;
(ii) the long-term insurer, pension fund, provident fund, REIT or short-term insurer acquired those linked units before 1 January 2013; and
(iii) at the end of the previous year of assessment 80 per cent or more of the value of the assets of that acquiring company, re ected in the annual nancial statements prepared in accordance with the Companies Act for the previous year of assessment, is directly or indirectly attributable to immovable property; or
(b) if a directive has been issued by the Commissioner in terms of section 23K in respect of that interest.
[S. 23N inserted by s. 63 (1) of Act 31 of 2013 – date of commencement: see footnote below*.]
23O Limitation of deductions by small, medium or micro-sized enterprises in respect of amounts received or accrued from small business funding entities
(1) For the purposes of this section—
‘allowance asset’ means an asset as de ned in paragraph 1 of the Eighth Schedule, other than trading stock, in respect of which a deduction or allowance is allowable in terms of this Act for purposes other than the determination of any capital gain or capital loss.
(2) Where during any year of assessment any amount is received by or accrues to a small, medium or micro- sized enterprise from a small business funding entity for the acquisition, creation or improvement, or as a reimbursement for expenditure incurred in respect of the acquisition, creation or improvement of trading
* Section 23N comes into operation on 1 April 2014 and applies in respect of any amount of interest incurred by an acquiring company in terms of—
(a) a debt if that debt was issued, assumed or used directly or indirectly for the purpose of—
(i) procuring, enabling, facilitating or funding the acquisition by that acquiring company of any asset in terms of a reorganisation transaction entered into on or after 1 April 2014;
(ii) redeeming, re nancing or settling any debt issued, assumed or used as contemplated in subparagraph (i); or
182 SAIT CompendIum oF TAx LegISLATIon VoLume 1