Page 246 - SAIT Compendium 2016 Volume1

s 37B INCOME TAX ACT 58 OF 1962 s 37D
(6) For purposes of determining the taxable income derived during any year of assessment by a taxpayer, there shall be allowed as a deduction any expenditure or loss in respect of decommissioning, remediation or restoration arising from any trade previously carried on by that taxpayer to the extent that such expenditure or loss—
(a) is incurred for purposes of complying with any law of the Republic that provides for the protection of the environment upon the cessation of trade;
(b) would otherwise have been allowed as a deduction in terms of section 11 had that taxpayer still been carrying on that trade; and
(c) is not otherwise allowed as a deduction.
(7) Any assessed loss of a taxpayer as de ned in section 20 (2) that is attributable to any expenditure or loss contemplated in subsection (6) may be set off against income derived by that taxpayer during a year of assessment notwithstanding the fact that the taxpayer is
not carrying on any trade during that year.
(8) No deduction shall be allowed under section 11, 12C
or 13 in respect of the cost of an environmental treatment and recycling asset or an environmental waste disposal asset.
(9) The deductions which may be allowed in terms of this section in respect of any asset shall not in the aggregate exceed the cost to the taxpayer of such asset.
[S. 37B inserted by s. 12 (1) of Act 101 of 1978, repealed by s. 22 (1) of Act 21 of 1994 and inserted by s. 48 of Act 35 of 2007.]
37C Deductions in respect of environmental conservation and maintenance
(1) Expenditure actually incurred by a taxpayer to conserve or maintain land is deemed to be expenditure incurred in the production of income and for purposes of a trade carried on by that taxpayer, if—
(a) the conservation or maintenance is carried out in terms of a biodiversity management agreement that has a duration of at least ve years entered into by the taxpayer in terms of section 44 of the National Environmental Management: Biodiversity Act, 2004 (Act 10 of 2004); and
(b) land utilised by the taxpayer for the production of income and for purposes of a trade consists of, includes or is in the immediate proximity of the land that is the subject of the agreement contemplated in paragraph (a).
(2) (a) Any deduction of expenditure contemplated in subsection (1) must not be allowed to the extent that the expenditure exceeds the income of the taxpayer derived from trade carried on by the taxpayer on land utilised as contemplated in subsection (1) (b) in any year of assessment.
(b) The amount by which the deduction exceeds the income of the taxpayer so derived must be deemed to be expenditure incurred by the taxpayer in the following year of assessment.
(3) An amount equal to the expenditure actually incurred by a taxpayer to conserve or maintain land owned by the taxpayer is for purposes of section 18A deemed to be a donation by the taxpayer actually paid or transferred during the year to the Government for which a receipt has been issued in terms of section 18A (2), if the conservation or maintenance is carried out in terms of a declaration that has a duration of at least 30 years in terms of section 20, 23 or 28 of the National Environmental Management: Protected Areas Act, 2003 (Act 57 of 2003).
(4) If during the current or any previous year of assessment a deduction is or was allowed to the taxpayer in terms of subsection (1) or (3) in respect of expenditure incurred to conserve or maintain land in terms of an agreement or declaration contemplated in those subsections, and the taxpayer subsequently is in breach of that agreement or violates that declaration, an amount equal to the deductions allowed in respect of expenditure incurred within the period of ve years preceding the breach or violation must be included in the income of the taxpayer for the current year of assessment.
(5) . . .
[Sub-s. (5) amended by s. 86 (1) of Act 31 of 2013 and deleted by s. 52 (1) of Act 43 of 2014 – date of commencement: 1 March 2015; the deletion applies iro years of assessment commencing on or after that date.]
(6) and (7) . . .
[Sub-ss. (6) and (7) deleted by s. 52 (1) of Act 43 of 2014
– date of commencement: 1 March 2015; the deletion applies iro years of assessment commencing on or after that date.]
[S. 37C inserted by s. 3 of Act 30 of 1984, repealed by s. 49 of Act 35 of 2007, inserted by s. 46 (1) of Act 60 of 2008, and amended by s. 86 (1) of Act 31 of 2013.]
37D Allowance in respect of land conservation in respect of nature reserves or national parks
(1) For the purposes of this section, ‘declared land’ means—
(a) land owned by a person and that is declared a national park or nature reserve in terms of an agreement entered into with that person under section 20 or 23 of the National Environmental Management: Protected Areas Act, 2003 (Act 57 of 2003); and
(b) an endorsement is effected to the title deed of that land that re ects the declaration contemplated in paragraph (a) and has a duration of at least 99 years.
(2) There must be allowed to be deducted from the income of any person in respect of declared land, in the year of assessment during which that land becomes declared land and in each subsequent year of assessment, an amount equal to four per cent of—
(a) the expenditure incurred in respect of—
(i) the acquisition of the declared land; and
(ii) improvements effected to the declared land (other than borrowing or nance costs),
if that expenditure is not less than the market value or
municipal value of that declared land; or
(b) an amount determined in accordance with the
formula:
A = B + (C × D) in which formula—
(i) ‘A’ represents the amount to be determined;
(ii) ‘B’ represents the cost of acquisition of the declared land and of any improvements to that
land;
(iii) ‘C’ represents the amount of a capital gain (if
any), that would have been determined in terms of the Eighth Schedule had the declared land been disposed of for an amount equal to the lower of the market value or municipal value of that land on the date of the agreement; and
(iv) ‘D’ represents 66,6 per cent in the case of a natural person or special trust or 33,3 per cent in any other case, if the market value of the declared land or municipal value of that declared
238 SAIT CompendIum oF TAx LegISLATIon VoLume 1