Page 311 - SAIT Compendium 2016 Volume1

First Schedule INCOME TAX ACT 58 OF 1962 First Schedule
asset, is disposed of by the farmer, there shall be included in his income so much of the amounts received by or accrued to or in favour of the farmer in respect of such disposal as does not exceed the expenditure in respect of such asset allowed under subparagraph (1) or the original cost to him of such asset taken into account under subparagraph (1A), as the case may be, less any amounts which in terms of item (c) of this subparagraph are not allowable as deductions under subparagraph (1A) in respect of such asset in respect of the succeeding year or years of assessment referred to in the said item.
(b) Where any allowance was granted in respect of such asset under the provisions of section 11 (e) of this Act the provisions of section 8 (4) (a) of this Act shall not apply in respect of any amount recovered or recouped in respect of such allowance.
(c) . . .
[Item (c) deleted by s. 45 (c) of Act 113 of 1993.] [Sub-para. (1B) inserted by s. 24 (b) of Act 113 of 1977.]
(1C) For the purposes of this paragraph, where any asset in respect of which any deduction has been allowed to a farmer under the provisions of subparagraph (1) or (1A) (whether in the current or any previous year of assessment) and which is or has become a movable asset, is disposed of by the farmer to any other person by way of donation or for a consideration which is not an adequate consideration or is not readily capable of valuation, a consideration equal in value to the fair value of such asset shall be deemed to have been received by the farmer in respect of his disposal of the asset and to have been paid by such other person in respect of his acquisition of the asset: Provided that the lastmentioned consideration shall not exceed the cost to the farmer of such asset.
[Sub-para. (1C) inserted by s. 24 (b) of Act 113 of 1977 and substituted by s. 45 (d) of Act 113 of 1993.]
(1D) If during the current or any previous year of assessment deductions are allowed to the taxpayer in terms of subparagraph (1A) in respect of capital expenditure incurred to conserve or maintain land in terms of an agreement contemplated in that subparagraph and the taxpayer 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
of violation must be included in the income of the taxpayer for the current year.
[Sub-para. (1D) inserted by s. 57 (1) (d) of Act 60 of 2008.]
(2) No deduction under section 11 (e) or (o) of this Act shall be allowed in respect of any machinery, implements, utensils
or articles for which a deduction is allowable under subparagraph (1) or (1A) of this paragraph or the corresponding provisions of a previous Income Tax Act and no deduction under section 11 (q) of this Act shall be allowed in respect of expenditure of a capital nature for which a deduction is allowable under subparagraph (1) or (1A) of this paragraph or the said corresponding provisions.
[Sub-para. (2) substituted by s. 42 of Act 89 of 1969, by s. 24 (c) of Act 113 of 1977 and by s. 27 (1) (d) of Act 96 of 1981.]
(3) The amount by which the total expenditure incurred by any farmer during any year of assessment in respect of the matters referred to in items (c) to (j), inclusive, of subparagraph (1) exceeds the taxable income (as calculated before allowing the deduction of such expenditure and before the inclusion as hereinafter provided of the said amount in the farmer’s income) derived by him from farming operations during that year of assessment shall be included in his income from such operations for that year and be carried forward and be deemed for the purposes of subparagraph (1) to be expenditure which has been incurred by him during the next succeeding year of assessment in respect of the matters referred to in the said items.
[Sub-para. (3) substituted by s. 42 of Act 89 of 1969, amended by s. 24 (d) of Act 113 of 1977 and substituted by s. 27 (1) (e) of Act 96 of 1981.]
(3A) For the purposes of subparagraph (3) any amount which has been carried forward from the year of assessment ended 30 June 1961 in terms of the proviso to paragraph 17 (3) of the Third Schedule to the Income Tax Act, 1941 shall be deemed to be an amount which has been so carried forward in terms of the said subparagraph.
[Sub-para. (3A) inserted by s. 27 (1) (e) of Act 96 of 1981.]
(3B) Where an amount (hereinafter referred to as the recoupment) falls to be included in a farmer’s income for any
year of assessment under the provisions of subparagraph (1B) and an amount (hereinafter referred to as the qualifying balance) has in terms of subparagraph (3) been carried forward to the year of assessment in question from the preceding year of assessment the recoupment shall to the extent that it does not exceed the qualifying balance be deducted therefrom, and in such case—
(a) the recoupment shall, to the extent that it has been deducted from the qualifying balance, not be included in the farmer’s income under subparagraph (1B); and
(b) only so much of the qualifying balance as remains after the deduction therefrom of the recoupment shall be taken into account for the purposes of subparagraph (3) as expenditure incurred during the year of assessment in question in respect of the matters mentioned in that subparagraph.
[Sub-para. (3B) inserted by s. 27 (1) (f) of Act 96 of 1981.]
(3C) The amount of any expenditure carried forward and deemed to be incurred by a person in the next succeeding
year in terms of subparagraph (3) must be reduced by any amount of expenditure in respect of which an election has been made in terms of paragraph 20A (1) of the Eighth Schedule.
[Sub-para. (3C) inserted by s. 80 of Act 45 of 2003.]
(4) (a) For the purposes of this paragraph ‘employees’, in relation to any farmer, means persons employed by that farmer in connection with his or her farming operations, but does not include his or her relatives or, where the farmer is a company, the holders of shares (or the relatives of holders of shares) in that company or in any company which is associated with it by virtue of the holding of shares.
(b) For the purposes of item (a) ‘holders of shares’ in relation to any company does not include persons who hold all their shares in that company solely because they are employed by that company and who will, in terms of the articles of association of that company, not be entitled to hold those shares after they cease to be so employed.
[Sub-para. (4) substituted by s. 110 of Act 31 of 2013 – date of commencement: 12 December 2013.]
SAIT CompendIum oF TAx LegISLATIon VoLume 1 303
INCOME TAX ACT – SCHEDULES