Book on income tax act south africa section 11

Section 1 of incometax act 19612018 short title, extent. The consolidated income tax act is available, in a pdf version, under the tax heading on the university of pretoria, laws of sa consolidated legislation website. South african national treasury to come up with legislation that allows for deductions in respect of credit losses, but does not result in a reduction of revenue for the tax authority. Income tax act 58 of 1962 south african government. All sections in this article refer to the income tax act 1962. We are the leading resource for freely available legislation in south africa and are used daily by thousands of professionals and industry leaders. Doubtful debt allowances, proposal to revoke commissioners discretion south africa. Section page contents division one 111 incometax act, 1961 page u arrangement of sections i3 u text of the incometax act, 1961 as amended by the finance act, 2011 1. Tax administration act 2018 south african institute of. On assessment, c will be entitled to claim a deduction of the r60000 that was r efunded to the employer.

Foreign income tax for sa residents taxtim sa africa. The general deduction formula section 11a taxstudents. In this subsection title of the act prescribed and called the income tax act, 1961. Annexure schedule of writeoff periods acceptable to sars. Evaluation of the source rules as contained in section 9 of the south african income tax act as relating to software in the context of the digital economy.

In 2015, various discretionary powers afforded to the commissioner of sars in the context of assessment provisions contained in the income tax act, no 58 of 1962 act were removed in order to formalise the move towards income tax selfassessment in south africa. The term section 12j refer to section 12j of the south african income tax act, 196 act no. In general, banks are allowed a deduction as determined in terms of irfs 9 of. Evaluation of the source rules as contained in section 9. This realignment was done against the backdrop of international research performed as part of the study on the transition to income. Income tax act, 1962 regulations in terms of section 12t8 of the income tax act, 1962, on the requirements for tax free investment i, nhlanhla musa nene, minister of finance, under section 12t8 of the income tax act, 1962 act no. The section treats interest which is incurred by a company during a year of assessment tax. As from 1 january 2016, section 12b of the income tax act south africa was amended from a threeyear 50% 30% 20% accelerated depreciation allowance on renewable energy to an even quicker depreciation allowance of just one year 100%. Acts online provides legislation, including amendments and regulations, in an intuitive, online format. The act has been enacted by parliament in the twelfth year of the republic of india. Section 11 a of the income tax act and the deductibility of interest expenses on home loans.

Income tax act 94 of 1983 income tax amendment act 30 of 1984 income tax act 121 of 1984. Consequently, this dissertation conducts an analysis of the relevance and appropriateness of south africa s source rules pertaining to software arrangements as contained in section 9 of the income tax act ita and as espoused in the common law. No looking back for section sex of the income tax act wednesday, 28 september 2016 posted by. Your foreign income may not be subject to south africa tax if you. Valuations for the purposes of sections 8, 9 and 10. Minister mthembu to meet with stats council amid funding concerns. Learnership agreement deductions in terms of section 12h. The south african revenue service sars recently issued a draft binding general ruling bgr that addresses the interpretation of the words at the end of the day after that distribution as used in s463av of the income tax act 58 of 1962 act. Cliffe dekker hofmeyr draft ruling on unbundling transactions. The following acts are examples of the primary legislation sars administers. Section 11a of the income tax act and the deductibility of. Renumbered as clause 1a by the direct tax laws amendment act, 1987, w.

The wording merely prevents the taxpayer from claiming the section 12b allowance twice on the same asset. South african tax legislation the sa institute of tax. C will be entitled though, to claim a deduction under section 11 n. Section 11 of income tax act,1961 provides exemptions for income earned from property held under charitable trustssocieties for the activities carried out on charitable or religious purposes subject to certain terms and conditions. Section 11a of the income tax act and the deductibility. What are the tax implicationsin particular, for the mining sectorfrom the lockdown. Section 36 11 b of the income tax act specifically provides that any expenditure incurred during any period of nonproduction, on development, general administration and management including interest incurred on loans used for mining purposes constitute a capital expenditure for tax. This would depend on whether the interest was incurred in the production of income, in terms of s11a of the income tax act, no 58 of 1962 act. Section 46 of the act deals with unbundling transactions and provides parties to such a.

Section 6a of the act makes provision for a prescribed amount of monthly medical scheme. The relevant legislation applicable to businesses and individuals in south africa in relation to tax matters can be found under this section. The trade requirement of section 24j 2 section 24j 2 does not draw a distinction between interest of a capital or revenue nature. Companies act, 1973, or deemed by that section to be so formed and incorporated, if i. Section 11 a of the income tax act and the deductibility of interest expenses on home loans on december 2016, the tax court cape town handed down judgment in x v the commissioner for the south african revenue service case no.

Sars administers a wide range of legislation in terms of part 1 and schedule 1 to the south african revenue service act, 1997. One of the requirements to claim an expense as a deduction, is that the expense must be incurred in the production of income in terms of s11a of the act. Glacier provides access to investment products that are tailored to suit clients. The draft amendments are in the form of proposed new section 11 ja of the income tax act no. This is a list of acts of the parliament of south africa enacted in the years 1960 to 1969 south african acts are uniquely identified by the year of passage and an act number within that year. Republic of south africa updated 10 april 2018 republic of south africa transfer pricing country profile updated april 2018 summary reference the arms length principle 1 does your domestic legislation or regulation make reference to the arms length principle. Exemption under section 11 of income tax act, 1961. It is the national governmentas main source of income and is imposed by the income tax act no. The income tax act 58 of 1962 act entitles taxpayers to deduct certain losses and expenses incurred by them from their taxable income if such losses and expenses comply with the requirements of section 11 a of the act. Under section 442 of the income tax act, a company qualifies for certain corporate rollover relief in that the. Cliffe dekker hofmeyr tax treatment of doubtful debts to.

This incentive allows purchasers of residential units to writeoff a percentage of the cost of buildings, or improvements thereof, acquired or built after 21 october 2008. In the absence of strong precedence under south african case law on this issue, the south african revenue service sars has, together with the ordinary. Section 11 a additionally requires that expenditure and losses be actually incurred in the production of income and not be of a capital nature in order to qualify as a deduction. When compared to the current interpretation note 16 in16, the draft in indicates a marked shift, on certain aspects, in sarss interpretation of the tax exemption that applies to foreign employment income, under s101oii of the income tax act, no 58 of 1962 act.

South african residents account for tax on their worldwide receipts and accruals, if they are tax resident on the basis of being ordinarily resident or through the physical presence test. Proposal in view of the above, it is proposed that the following amendments be made in the act to regularise the tax treatment of funds managed by bargaining councils. The form of tax that people generally associate with the concept of income tax is a. Capital gains arising from the disposal of capital assets on or after 1 october 2001 are included in taxable income at varying inclusion rates and subject to normal tax.

Doubtful debt allowances the latest set of proposed changes to section 11 j of the income tax act seeks to remove south african revenue service sars discretion, in part to reduce the sars administrative burdenbut at what cost to the taxpayer. South africa moved from a source based system of taxation to a. With acts you are guaranteed the latest and most up to date resource for your legislative needs. All guides and interpretation notes referred to are available on the sars website at. C will be entitled though, to claim a deduction under section 11n. Unless indicated otherwise, the latest issue of these. Evaluation of the source rules as contained in section. Home articles section 11 a of the income tax act and the deductibility of interest expenses on home loans. All air prevention and control of pollution act, 1981 apprentices act, 1961 arbitration and conciliation act, 1996 banking cash transaction tax black money undisclosed foreign income and assets and imposition of tax act, 2015 central boards of revenue act, 1963 charitable and religious trusts act, 1920 charitable endowments act, 1890. Treasury and sars are acutely aware of the need for south africa to become more actively engaged in scientific and technological innovation to save the country having to pay exorbitant royalties to foreigners and have perhaps cast envious eyes over the ocean to our antipodean cousins who have so successfully.

The meaning of actually incurred in section 11 of the. Apr 24, 2017 the taxpayer claimed in his income tax returns for the 2010, 2011 and 2012 years of assessment that certain interest incurred on the mortgage bond was incurred in the production of interest income received from the law firm, but the south african revenue service sars disallowed these deductions, to which the taxpayer then objected. These taxes are collected and paid into the national revenue fund. Act, 1977, so as to delete an exemption from income tax in respect of certain. We are the leading resource for freely available legislation in south africa and. National treasury introduced section 11 ja, effective from years of assessment commencing on or after 1 january 2018, to govern the treatment of doubtful debt allowances for covered persons as defined i. Section 6a of the act makes provision for a prescribed amount of. Glacier by sanlam recognises the importance of tax planning as part of your clients. This podcast explores section 23 of the income tax act, which limits or prohibits the deduction of amounts that may otherwise have been deductible under section 11. The general deduction formula is contained in section 11 a read with section 23g of the income tax act 58 of 1962 the act. The ruling deals with the tax treatment of assets forming part of a sale and leaseback arrangement, with specific reference to the writeoff period of these assets in terms of s11e of the income tax act, no 58 of 1962 act. Be it enacted by the parliament of the republic of south africa, as follows.

In addressing this problem, section 18a of the income tax act provides local npos with the opportunity to give private individuals and companies a tangible incentive to make donations by making the donation tax deductible, within certain limits. The general deduction formula section 11 a search taxstudents. It has received the assent of the president on 91961 act no. Apr 16, 2014 section 11a of the income tax act provides a deduction for the following. The act has gone through numerous amendments with the act presently in force is the income tax act no 58 of 1962 which contains provisions for four different types of income tax. The key issue was whether the taxpayer is entitled to deduct from the interest income earned on the firm loan account, a portion of the interest incurred on the home loan. While section 11 a provides positively for what may be deducted, section 23g provides negatively for what may not be deducted.

Previously, at retirement, any disallowed contributions that did not rank for deduction in terms of section 11 of the ita could be set off against any taxable lump sum taken at retirement. May 08, 2014 section 10c of the income tax act, 58 of 1962 ita came into effect on 1 march 2014. Refinement of section 7c 29 august 2017 in brief section 7c of the income tax act, 1962 act no. Section 11 of income tax act,1961 provides exemptions for income earned from property held under charitable trusts societies for the activities carried out on charitable or religious purposes subject to certain terms and conditions.

This note is a binding general ruling made under section89 o f the tax administration act on section 11 e in so far as it relates to the determination of the value of an asset for purposes of section 11 e. However, this exemption is still valid only for tax year 20192020, because from 1 march 2020 this is set to change. The income tax act does not, however, provide clarity on when a debt is considered bad as contemplated in section 11 i the bad debt deduction. Section 11o provides for the deduction of an allowance on the alienation, loss or destruction of. Cliffe dekker hofmeyr sars looks to clear up misconceptions. Lastly, the court referred to the judgment in commissioner for inland revenue v standard bank of south africa ltd 1985 4 sa 485 a. In south africa, any person as defined in section 1 of the income tax act carrying on a trade will be able to deduct expenses and losses relating to that trade under section 11 a. South african interim constitution3, which provided that every person shall. Sars expresses interesting view on an amalgamation transaction.

Income tax and vat acts online the income tax act, 1962, valueadded tax act, 1991 and other tax acts may be accessed on the sars website. By clicking add to cart, i confirm that i am an education provider. In practice, sars allows 25% of doubtful debt provisions as a deduction based on a specific list and determined with reference to a debtors listing in terms of section 11 j of the income tax act. Income tax act 94 of 1983 income tax amendment act 30 of 1984. One of the requirements of section 11 a is that, in order to be eligible for a deduction, the losses and expenses. South africa does not have a social security tax obligation for employers or individuals. The constitution of the republic of south africa, 1996 everyone has the right to administrative action that is. All interpretation notes referred to in this note are available on the sars website at.

Saipa 2017 final south african institute of professional. Section 11 a of the income tax act provides a deduction for the following. Section 23 stipulate specific deductions that may not be. Over many years south african courts have developed or adopted a number of. In addition, we will work through the relevant forms to complete in respect of each type of withholding tax including the declaration from the nonresident party. Section 11w of the income tax act, which deals with premium deductibility, has changed so often that its left many of us confused, and some of us simply annoyed. Conditions for applicability of sections 11 and 12. The third in a series examining the general deduction provision of section 11 a of the income tax act, this podcast examines what it means for expenditure to be incurred in the production of income. Section 10 of the income tax act offers a list of conditions where income earned or at least a portion of it for services rendered outside of south african borders will be exempt from income tax. The south african revenue service sars issued binding private ruling 145 ruling on 8 may 20.

In this subsection title of the act prescribed and called the incometax act, 1961. South africa releases draft amendments on tax impairment. Income tax is a tax levied on all income and profit received by a taxpayer which includes individuals, companies and trusts. Thusanang, december 2004 south african nonprofit organisations npos struggle to encourage philanthropy amongst private individuals and companies. The south african revenue service sars permits a significant tax benefit on residential property under section sex of the income tax act no. Included in this legislation are various tax acts which the south african revenue service administers. Section 12j came into effect on the 1st july 2009 and was created specifically for the purpose of inviting investors to participate in the capitalisation of promising small and medium size qualified enterprises in the republic of south africa. A log book confirming business kilometres travelled.

Be it enacted by the parliamentof the republicof south africa, as follows. No looking back for section sex of the income tax act. We will also discuss the completion and filing of the relevant returns. Be it enacted by the state president and the parliament of the republic of south africa, as follows. The association of savings and investment south african asisa has intervened on behalf of industry members and has had frequent discussions with national treasury regarding the. Income tax act 28 of 1997 south african revenue service act 34 of 1997. Section 11 4 in the income tax act, 1995 4 for the purposes of this section property held under trust includes a business undertaking so held, and where a claim is made that the income of any such undertaking shall not be included in the total income of the persons in receipt thereof. Research and development expenditure august 2012 issue 155. South african reserve bank for the purposes of exchange control or. South african interim constitution3, which provided that every person shall have a. Nov 11, 2016 section 10 of the income tax act offers a list of conditions where income earned or at least a portion of it for services rendered outside of south africa borders will be exempt from income tax. Welcome to the official south african government online site. University of cape town,faculty of commerce,department of finance and tax, 2016 cited yyyy month dd. Cs irp5 would show of r360 000 and income employees tax of r69 421.

List of acts of the parliament of south africa, 196069. Sars expresses interesting view on an amalgamation. The area of tax deductions in our tax law represents the frontline in the continuous. One of these was embodied in section 101gc of the income tax act, that allowed a south african tax resident, who was employed outside of south africa to receive th, retirement benefits e that they earnedaccumulated while outside of south africa, free from tax. Income tax in south africa was first introduced in 1914 with the introduction of the income tax act no 28, an act that had its origins in the new south wales act of 1895. The requirements of this act to keep records, books of account or. Act 90 of 1962, section 5 of act 6 of 1963, section 11 of act 72 of 1963, section 12. You must be an education provider to purchase this book. The south african revenue service sars issued draft interpretation note 16 issue 2 draft in for public comment recently. A tax residents income is taxed in south africa, regardless of the source of the income.