Page 386 - SAIT Compendium 2016 Volume1

Eighth Schedule INCOME TAX ACT 58 OF 1962 Eighth Schedule
(ii) so much of any expenditure incurred in respect of that asset by that other person that has been recovered from that person as would have constituted expenditure contemplated in subparagraph (1) (e) had it been incurred by that person.
[Sub-para. (4) added by s. 45 (1) (e) of Act 20 of 2006, substituted by s. 60 (1) (b) of Act 8 of 2007, deleted by s. 130 (1) (b) of Act 31 of 2013 (date of commencement: 1 April 2014; the deletion applies iro years of assessment commencing on or after that date) and added by s. 108 (1) (c) of Taxation Laws Amendment Act, 2015 – date of commencement: 1 January 2016; this addition applies iro disposals during any year of assessment commencing on or after that date.]
20A Provisions relating to farming development expenditure
(1) Despite the provisions of paragraph 20 (3) (a), where a person carrying on pastoral, agricultural or other farming operations as contemplated in section 26, incurred expenditure in respect of the matters referred to in items (c) to (i) of paragraph 12 (1) of the First Schedule (referred to in this paragraph as ‘capital development expenditure’) and that person—
(a) ceased to carry on such pastoral, agricultural or other farming operations during any year of assessment; and
(b) at any time thereafter disposes of immovable property on which those operations were carried on,
that person may elect that the amount of the capital development expenditure, or part thereof, which is carried forward and deemed in terms of paragraph 12 (3) of the First Schedule to be expenditure which has been incurred in the next succeeding year of assessment for purposes of paragraph 12 (1) of the First Schedule (as reduced in terms of paragraph 12 (3B) of the First Schedule, if applicable), must be treated as expenditure incurred and paid in respect of that immovable property for the purposes of this Part.
(2) The amount of the capital development expenditure in respect of which the election may be made in terms of subparagraph (1) may not exceed the proceeds from the disposal of that immovable property contemplated in subparagraph (1), reduced by—
(a) in the case of a pre-valuation date asset, any other amount allowable in terms of paragraph 25; or
(b) in any other case, any amount allowable in terms of paragraph 20.
[Item (b) substituted by s. 59 of Act 32 of 2004.]
(3) Where a person adopts or determines the market value of immovable property on which pastoral, agricultural
or other farming operations were carried on as the valuation date value of that asset in terms of paragraph 29 (4), only capital development expenditure incurred by that person on or after 1 October 2001 must be taken into account for the purpose of calculating the amount in respect of which an election can be made in terms of subparagraph (1).
[Para. 20A inserted by s. 96 (1) of Act 45 of 2003.]
21 Limitation of expenditure
(1) Where, but for the provisions of this subparagraph, an amount quali es or has quali ed as an allowable expenditure or may otherwise be taken into account in determining a capital gain or capital loss under more than one provision of this Schedule, that amount or portion thereof, shall not be allowed as expenditure or be taken into account more than once in determining that capital gain or capital loss.
(2) No expenditure shall be allowed under paragraph 20 (1) (a) or (e) where any amount of that expenditure is allowable under any other provision of this Schedule, despite that that other provision imposes any limitation on the amount of the expenditure.
22 Amount of donations tax to be included in base cost
The amount of the donations tax payable by a person in respect of the disposal of an asset which may be taken into account in terms of paragraph 20 (1) (c) (vii) must be determined in accordance with the formula—
(M 2 A)
Y 5 _______ 3 D
M
where—
(a) ‘Y’ represents the amount to be determined;
(b) ‘M’ represents the market value of the asset donated in respect of which the donations tax is payable;
(c) ‘A’ represents all amounts allowed to be taken into account in determining the base cost of the asset in terms of this
Part (other than paragraph 20 (1) (c) (vii)); and
(d) ‘D’ represents the total amount of donations tax so payable:
Provided that where the amount included in ‘A’ is greater than the amount included in ‘M’, the amount of donations tax to be taken into account in terms of paragraph 20 (1) (c) (vii) shall be nil.
23 Base cost in respect of value shifting arrangement
In the case of a disposal by way of a value shifting arrangement—
(a)
(b)
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the base cost of a person’s interest to which paragraph 11 (1) (g) applies, is determined in accordance with the formula—
(A 2 C)
Y 5 ______ 3 B
A
where—
(i) ‘Y’ represents the amount to be determined;
(ii) ‘A’ is the market value of that person’s interests immediately prior to the disposal;
(iii) ‘B’ is the person’s base cost of the interests calculated immediately prior to the disposal; and
[Subitem (iii) substituted by s. 27 (1) of Act 19 of 2001.]
(iv) ‘C’ is the market value of that person’s interests immediately after the disposal. the base cost of a person—
SAIT CompendIum oF TAx LegISLATIon VoLume 1