Page 243 - SAIT Compendium 2016 Volume1

s 36
INCOME TAX ACT 58 OF 1962 s 37
institution’, as de ned in the Seventh Schedule, in relation to the taxpayer by the employee in respect of the unit at the end of the taxpayer’s year of assessment: Provided that no amount shall be taken into account in terms of this paragraph in the eleventh and subsequent years of assessment, and that this paragraph shall not apply in respect of any disposal by the taxpayer if—
(i) the disposal is subject to any condition other than a condition in terms of which the employee is required—
(aa) on termination of employment; or
(bb) in the case of consistent failure for a period of three months on the part of the employee to pay an amount owing to the taxpayer or an ‘associated institution’, as de ned in the Seventh Schedule, in relation to the taxpayer in respect of a low-cost residential unit,
to dispose of the low-cost residential unit to the taxpayer (or any associated institution, as de ned in the Seventh Schedule, in relation to the taxpayer) for an amount equal to the actual cost (other than borrowing or nance costs) to the employee of the unit and the land on which the unit is erected;
(ii) the employee must pay interest to the taxpayer in respect of the amount owing to the taxpayer by the employee in respect of the unit; or
(iii) the disposal is for an amount that exceeds the actual cost (other than borrowing or nance costs) to the taxpayer of the unit and the land on which the unit is erected:
Provided further that if the amount owing or any part thereof is paid to the taxpayer, the taxpayer is deemed to have recovered or recouped an amount equal to the lesser of—
(i) the amount so paid; or
(ii) the amount of the expenditure in terms of this
section in the current and any previous year of
assessment;
[Para. (f) added by 44 (1) (e) of Act 60 of 2008.]
[De nition of ‘capital expenditure’ amended by s. 12 (e), (f), (g) and (h) of Act 72 of 1963 and substituted by s. 15 (d) of Act 90 of 1964, by s. 23 of Act 55 of 1966 and by s. 16 of Act 95 of 1967.]
‘capital expenditure incurred’, for the purpose of determining the amount of capital expenditure incurred during any period in respect of any mine, means the amount (if any) by which the expenditure that is incurred during such period in respect of such mine and is capital expenditure, exceeds the sum of the amounts received or accrued during the said period from disposals of assets the cost of which has in whole or in part been included in capital expenditure taken into account (whether under this Act or any previous Income Tax Act) for the purposes of any deduction in respect of such mine under section 15 (a) of this Act or the corresponding provisions of any previous Income Tax Act;
[De nition of ‘capital expenditure incurred’ inserted by s. 21 (c) of Act 65 of 1973 and substituted by s. 17 of Act 36 of 1996.]
‘expenditure on shaft sinking’ includes the expenditure on sumps, pump-chambers, stations and ore bins accessory to a shaft;
‘expenditure’ means net expenditure after taking into account any rebates or returns from expenditure, regardless of when such last-mentioned expenditure was incurred.
[De nition of ‘expenditure’ substituted by s. 21 (d) of Act 65 of 1973.]
(12) The balance of capital expenditure unredeemed at the commencement of the rst year of assessment
chargeable under this Act shall be the balance shown to be unredeemed at the end of the last year of assessment chargeable under the Income Tax Act, 1941.
37 Calculation of capital expenditure on sale, transfer, lease or cession of mining property
(1) For the purposes of this Act, but subject to subsection (1A), whenever a taxpayer—
(a) sells, transfers, leases or cedes any mining property;
and
(b) disposes of any assets contemplated in section 36
(11) (hereinafter referred to as ‘the capital assets’) in consequence of the sale, transfer, lease or cession contemplated in paragraph (a),
the person acquiring those capital assets shall be deemed to have acquired such capital assets at a cost equal to the effective value of those capital assets to that person on the effective date of that agreement of sale, transfer, lease or cession of the mining property, and the said cost shall be deemed to be expenditure that is incurred by that person during the period of assessment during which that agreement takes effect and to be capital expenditure which is in respect of such period required to be taken into account for the purposes of the de nition of ‘capital expenditure incurred’ in section 36 (11).
(1A) Where any consideration is given by the person acquiring the assets disposed of by the taxpayer, as contemplated in subsection (1), and the effective value of all those assets (including any mining property) so acquired, exceeds that consideration, the amount of the cost and expenditure in respect of the capital assets shall, for the purposes of subsection (1), be deemed to be an amount which bears to the total amount of such consideration the same ratio as such effective value of those capital assets bears to the effective value to that person of all the assets (including any mining property) so disposed of to that person.
(2) For the purposes of paragraph (j) of the de nition of ‘gross income’ in section 1 and section 36, the taxpayer who disposes of any capital assets contemplated in subsection (1), shall be deemed to have disposed of such capital assets for a consideration equal in value to the cost of those capital assets to the person acquiring such capital assets as determined under subsection (1) and (1A), and such consideration shall be deemed to have been received by or to have accrued to the said taxpayer on the effective date of the agreement of sale, transfer, lease or cession.
(3) If the value of the consideration given or the value of the property disposed of is in dispute, the value may, be xed by the Commissioner and shall be determined—
(a) in the case of any mining property, in the same
manner as if transfer duty were payable; or
(b) in the case of any capital asset, at the market value of
such capital asset.
(4) The effective value on the effective date of the
agreement of sale, transfer, lease or cession, of all the assets disposed of, shall be determined by the Director-General for Minerals and Energy who shall, notwithstanding the repeal of the Second Schedule to the Transvaal Mining Leases and Mineral Law Amendment Act, 1918 (Act 30 of 1918), for the purposes of such determination have all the powers which were conferred upon him by the provisions of that Schedule.
(5) For the purpose of this section, ‘mining property’ means—
(a) any land on which mining is carried on; or
(b) any right to minerals (including any right to mine for
minerals) and a lease or sub-lease of such a right.
[S. 37 amended by s. 29 of Act 85 of 1974 and by s. 25 of Act 141 of 1992 and substituted by s. 42 (1) of Act 60 of 2001.]
SAIT CompendIum oF TAx LegISLATIon VoLume 1
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INCOME TAX ACT – SECTIONS