15. Section 6 of the Income Tax Act, 1962, is hereby amended— (a) by the substitution for the expression“R37 10” in paragraph (a) of subsection (2) of the expression “R3 800”; and (b) by the substitution for the expression “R2 775” in paragraph (b) of subsection 25 (2) of the expression “R2 900”. Amendment of section 6quaf of Act 58 of 1962, as inserted by section 5 of Act 85 of 1987 and amended by section 5 of Act 28 of 1997 and section 12 of Act 53 of 1999 16. (1) Section 6quat of the Income Tax Act, 1962, is hereby amended— (a) by the substitution for subsection (1) of the following subsections: “(l) Subject to the provisions of subsection (2), there shall be deducted from the normal tax payable by any resident of the Republic or any person contemplated in section 9C(2)(b) or any shareholder who is a ‘resident’ as defined in section 9E, in whose taxable income there is included— (a) any income received by or accrued to such resident or person from any country other than the Republic other than any foreign dividend contemplated in paragraph (d]; or (b) any proportional amount of investment income contemplated in section 9D; or 30 35 (c) any income payable to such resident from the Republic, where such income is deemed to be from a source within the Republic in terms of the provisions of paragraphs (d), (d)bis and ~) of section 9(1); g 40 @ any foreign dividend contemplated in section 9E, a rebate determined in accordance with this section. (1A) For the purposes of subsection(1), the rebate shall be an amount equal to the sum of any taxes on income proved to be payable, without any right of recovery by any person (other than a right of recovery in terms of any entitlement to carry back losses arising during any year of assessment to any year of assessment prior to such year of assessment), by— [(i)(au)]f@@ such resident of the Republic; and [(bb)] ~ any controlled foreign entity, as contemplated in section 9D, in respect of such proportional amount; or [(ii)] ~ such person contemplated in section 9C(2)(b); or 45 50 24 No. 21390 GOVERNMENT GAZETTE, 19 JULY 2000 Act No. 30,2000 TAXATION LAWS AMENDMENT ACT, 2000 (b) (c) (i) such shareholder in respect of any dividend contemplated in subsection (1)(d); and (d) (ii) any company in respect of any profits from which such dividend is declared or deemed to have been declared; or any company in respect of the proportional amount of any profits from which any dividend is declared or deemed to have been declared to a controlled foreign entity and which dividend relates to any proportional amount of investment income included in the income of such shareholder as contemplated in subsection ( 1 )(b), to the government of [such other] any country other than the Republic in respect of the amount of income derived from such country. ‘which $ so included in that resident’s or person’s or shareholder’s taxable income. [Provided that] ~ Notwithstanding the provisions of subsection (1 A)— (a) the rebate [under this subsection] of any tax proved to be pavable to the ~ovemment of any other country shall not exceed an amount which bears to the total normal tax payable the same ratio as the taxable income attributable to the income derived from such country, which is so included bears to the total taxable income: and where such sum of any taxes payable to the government of any such other country exceeds the rebate as determined in paragraph (a) [of this proviso] (hereinafter referred to as the excess amount), such excess amount [(excluding so much of such excess amount relating to foreign tax paid or payable by any controlled foreign entity which distributes its profits in the form of dividends)] may— (i) in the case of any excess amount which relates to any amount included in the income of any company as contemplated in p~auraph (a), (c) or (d) of subsection (1), be deducted from any Second~ Tax on Companies which becomes payable by such company after the determination of such excess amount, limited to an amount determined by applying the rate of the Secondary Tax on Companies to the profits attributable to the inclusion of the income contemplated in [paragraph (a) of this subsection] such paragraphs; or (ii ) in the case of any excess amount relating to any amount included in the income of any company as contemplated in paragraph (b) of subsection ( 1), be deducted from any Secondary Tax on Companies which becomes payable by such company on the distribution of any profits derived by way of dividends declared to such company by such controlled foreign entity from profits that relate to any amount of investment income so included in terms of paragraph (b), limited to an amount determined by 5 10 15 20 25 30 35 40 45 26 No. 21390 GOVERNMENT GAZETI’E, 19 JULY 2000 Act No. 30,2000 TAXATION LAWS AMENDMENT ACT, 2000 applying the rate of the Secondary Tax on Companies to the amount of the taxable income attributable to the inclusion of the income contemplated in such para~raphz after the deduction of— [(i)]@@ any normal tax paid or payable; or [(ii)]~ such sum of taxes payable to the government of any such other country, whichever amount is the greater: Provided that— (A) the amount of any such excess amount as exceeds the amount of any Secondary Tax on Companies as contemplated in subparagraph (i) or (ii), may— (AA) be carried forward to the immediately succeeding year of assessment and shall be deemed to be a tax on i~come paid to the government of such country in such year; and (BB) be set off against the amount of any normal tax payable by such company during such year of assessment in respect of any amount derived from such country which is included in the taxable income of such shareholder during such year, as contemplated in paragraph (a), (b), (c,) or(d) of subsection(1), after any tax payable by such company to the government of such country in respect of the amount so included during such year of assess- ment has been set off against the amount of— (AAA) such normal tax payable in respect of such amount of income; and (BBB) any Secondary Tax on Companies as contem- plated in subparagraph (i) or (ii) which becomes payable during such yew, and (B) the excess amount contemplated in this paragraph shall not be allowed to be carried forward for more than three years reckoned from the year of assessment when such excess amount was for the first time carried forward; 5 10 15 20 25 30 (c) the amount of any tax which— (i) becomes payable to the government of any other country in 35 respect of any amount which— (au) is declared to any company which is a resident as a foreign dividend which is exempt from tax in terms of section 9E(7)(e); or (W) would, but for the provisions of section 9D(9)(f), have been included in any income of such company which is a resident; and (ii) has not been taken into account as a rebate against any normal tax payable by such company in respect of such amount previously included in his taxable income in terms of section 9D, may be deducted from any Secondary Tax on Companies which becomes payable by such company on the distribution of any profits derived by way of dividends declared to such company by any $0 $5 28 No. 21390 Act No. 30,2000 TAXATION LAWS AMENDMENT ACT, 2000 GOVERNMENT GAZETTE, 19 JULY 2000 controlled foreign entity from profits relating to any investment income so previously included; (d) no rebate shall be allowed as a deduction from the tax payable by any shareholder, in respect of any tax contemplated in subsection ( lA)(c)(ii) or (d), which is payable by— (i) any company distributing any dividend to such shareholder, if such shareholder (in the case of a company, together with any other company in a group of companies of which such company forms part) holds for his or its own benefit less than 10 per cent of the equity share capital in such company; or (ii) any company in respect of any profits from which the dividend is declared or deemed to have been declared, if such share- holder does not hold a qualifying interest in such company; (e) no rebate shall be allowed in respect of any tax payable on any amount contemplated in subsection (1)(d), if the shareholder has made an election as contemplated in section 9E(6). ”; and (b) by the substitution for subsection (3) of the following subsection: “(3) For the purposes of this section— ‘controlled company’ means a controlled company as defined in section 9&; ‘controlling company’ means a controlling company as defined in section ~; ‘group of companies’ means a group of companies as defined in section ~; ‘qualifying interest’ means any qualifying interest as defined in section 9E; ‘resident of the Republic’ means— @ any natural person who is ordinarily resident in the Republic; and @ any person, other than a natural person, which is incorporated or has its place of effective management in the Republic.”. (2) Subsection (1) shall be deemed to have come into operation on 23 February 2000, and applies in respect of any foreign dividend— (a) received by or accrued to any person on or after that date; or (b) which accrued to the person before 23 February 2000, but which is received on or after that date: Provided that the provisions of this paragraph shall not apply in respect of any dividend declared by a company before 23 Febmary 2000, where— (i) such company is listed on a recognised stock exchange; or (ii) in any other case, the chief executive officer and— (aa) an external auditor of the company; or (bb) where a company is situated in a country which does not require compulsory appointment of an external auditor, a registered public accountant of the same standing as a qualified chartered accountant, 5 10 15 Z() 25 30 35 40 have declared under oath or affirmation that such dividend was actually declared by the company before 23 February 2000. 45 30 No. 21390 GOVERNMENT GAZETTE, 19 JULY 2000 Act No. 30,2000 TAXATION LAWS AMENDMENT ACT, 2000 Amendment of section 8 of Act 58 of 1962, as amended by section 6 of Act 90 of 1962, section 6 of Act 90 of 1964, section 9 of Act 88 of 1965, section 10 of Act 55 of 1966, section 10 of Act 89 of 1969, section 6 of Act 90 of 1972. section 8 of Act 85 of 1974, section 7 of Act 69 of 1975, section 7 of Act 113 of 1977, section 8 of Act 94 of 1983, section 5 of Act 121 of 1984, section 4 of Act 96 of 1985, section 5 of Act 65 of 1986, section 6 of Act 85 of 1987, section 6 of Act 90 of 1988, section 5 of Act 101 of 1990, section 9 of Act 129 of 1991, section 6 of Act 141 of 1992, section 4 of Act 113 of 1993, section 6 of Act 21 of 1994, section 8 of Act 21 of 1995, section 6 of Act 36 of 1996, section 6 of Act 28 of 1997, section 24 of Act 30 of 1998 and section 14 of Act 53 of 1999 17. (1) Section 8 of the Income Tax Act, 1962, is hereby amended— (a) by the substitution for paragraph (g) of subsection ( 1 ) of the following paragraph: “(g) Where, during any year of assessment. any person contemplated in paragraph (e) has held a public office for less than 12 months, the amount of R2 500 referred to in the proviso to paragraph (d)(iv) and the amount determined [by the Minister] in terms of paragraph ~), shall be reduced to an amount which bears to the relevant amount, the same ratio as the number of months (in the determination of which a part of a month shall be reckoned as a full month), for which the office was held bears to 12 months.”; (b) by the addition to paragraph (a) of subsection (4) of the following proviso: “Provided that the provisions of this paragraph shall not apply in respect of anv such amount so recovered or recouped which has been included in the gross income of such taxpayer in terms of paragraph (eB ) of the definition of ‘gross income’ .“; and (c) by the substitution for paragraph (e) of subsection (4) of the following paragraph: “(e) If anv amount which was deducted— m (iiJ (iii_) (NJ under the provisions of section 11(e) or section 12(1) or section 12( 1 ) as applied by section 12(3) or the corresponding provisions of any previous Income Tax Act or section 12B or section 12C or section 14 or section 14bis or section 27(2)(d), in respect of’ machinery or plant which was used by the taxpayer directly in a process of manufacture, or directly in any other process carried on by him on or after 15 March 1961, which in the opinion of the Commissioner was of a similar nature; or in respect of machine~ or plant which was used by an agricultural co-operative (as defined in section 27(9)) directly for storing or packing pastoral, agricultural or other farm products or for subjecting such products to a primary process as defined in the said section 27(9): or in respect of a ship or aircraft used by him for the purposes of his trade; or in resp;ct of any p ipeline, transmission line or cable or railway line as contemplated in section 12D, has as a result of damage or destruction (hereinafter referred to as ‘the event’ ) been recovered or recouped during any year of assessment, and if the taxpayer satisfies the Commissioner— [(i)]fc@ that he has concluded or will within a period of one year (or such longer period as the Commissioner in the circumstances of the case may allow) from the date of the event conclude a contract for the acquisition by him of further new or unused machinery, [or] plant, [or a] ship, [or] aircraft, pipeline, transmission line or cable or railway line (hereinafter referred to as the ‘further asset’) to replace the aforesaid machinery, [or] plant, [or] ship, [or] aircraft, pipeline. transmission line or cable or railway line; and 5 10 15 ~o 25 30 35 40 45 50 55 3? No. 21390 GOVERNMENT GAZEITE, 19 JULY 2000 Act No. 30,2000 TAXATION LAWS AMENDMENT ACT, 2000 [(ii)]~ that the further asset has been or will be brought into use within a period of three years from the date of the event and will be used by him— [(ua)]~ directly in a process of manufacture or any other process which in the opinion of the Commissioner is of a similar nature; [(bb)]@ in the case of such co-operative, directly for storing or packing pastoral, agricultural or other farm products or for subjecting such products to a primary process, as defined in section 27(9); [or] [(cc)]~ in the case of a ship or aircraft, directly for the purposes of the taxpayer’s trade; Q @ in the case of a pipeline. transmission line or cable or railway line in his sole business of the transpor- tation of persons. goods, things or natural oil as defined in section 12D or the transmission of electricity or any telecommunication signal, for a period of not less than five years or until the further asset is scrapped or disposed of in the ordinary course of the taxpayer’s trade prior to the expiry of such period of five years, the said amount shall, notwithstanding the provisions of paragraph (a) of this subsection, not be included in the income of the taxpayer for the aforesaid year of assessment: Provided that if, owing to any occurrence or because of any circumstance arising during any year of assessment the Commissioner is no longer satisfied in regard to the matters in regard to which in terms of the preceding provisions of this paragraph he is required to be satisfied, the said amount shall be included in the income of the taxpayer for the year of assessment during which such occurrence takes place or such circumstance arises.”. (~) (a) Subsection (I )(a) shall be deemed to have come into operation on 1 March 1999. (b) Subsection (1)(b) shall be deemed to have come into operation on 23 February 2000. (c) Subsection (1)(c) shall be deemed to have come into operation on 23 February 2000, and shall apply in respect of any pipeline, transmission line or cable or railway line contracted for, and the construction, installation or erection of which commenced, on or after that date. Amendment of section 9C of Act 58 of 1962, as inserted by section 9 of Act 28 of 1997 and amended by section 27 of Act 30 of 1998 5 10 15 ~o 25 30 35 18. (1) Section 9C of the Income Tax Act, 1962, is hereby amended by the substitution 40 for the definition of “resident” in subsection (1) of the following definition: ‘“ ‘resident’ means— f@ any natural person who is ordinarily resident in the Republic; and ~ any person, other than a natural person, which is incomorated, or has its place of effective management, in the Republic;”. 45 (2) Subsection (1) shall be deemed to have come into operation on 23 February 2000. Amendment of section 9D of Act 58 of 1962, as inserted by section 9 of Act 28 of 1997 and amended by section 28 of Act 30 of 1998 and section 17 of Act 53 of 1999 19. (1) Section 9D of the Income Tax Act, 1962, is hereby amended— (a) by the substitution for the definition of “investment income” in subsection (1) 50 of the following definition: “ ‘investment income’ means investment income as defined in section 9C(1) and includes any foreign dividend as defined in section 9E;”; 34 No. 21390 GOVERNMENT GAZETTE, 19 JULY 2030 Act No. 30,2000 TAXATION LAWS AMENDMENT ACT, 2000 (b) by the substitution for the proviso to subsection (2) of the following proviso: “Provided that— (@ the provisions of this subsection shall not apply to any amount of investment income to which the provisions of subsection (4) are applicable; @ the amount of any investment income received bv or accrued to such entity by way of foreign dividends, shall for the purposes of this section be determined in accordance with the provisions of section 9E, as if such entity had been a resident.”; (c) by the addition to subsection (4) of the following proviso: “Provided that any amount of investment income received by or accrued to such person by way of foreign dividends. shall for the purposes of this section be determined in accordance with the provisions of section 9E. as if such person had been a shareholder who is a resident.”; 5 10 (d) by the substitution for the words preceding the proviso to paragraph (a) of 15 subsection (9) of the following words: “in respect of investment income, other than income from foreign dividends, where the foreign tax actually paid or payable without any right of recovery by any person (other than a right of recovery in terms of any entitlement to carry back losses arising during any year of assessment to any year of assessment prior to such year of assessment) in any country other than the Republic, relating to the proportional amount contemplated in subsection (2) or (4), after taking into consideration any deductions or allowances under the taxation provisions of such other country determined at the ratio as contemplated in subsection (2) or (4), as the case may be, is more than 85 per cent of the normal tax payable in the Republic:”; (e) by the substitution for paragraph (d) of subsection (9) of the following paragraph: “(d) to any p articular class of investment income which is taxable in a country which the Minister [of Finance] has identified by notice in the Gazette as a country whose tax on income is dete&ined on a basis which is substantially the same as that of the Republic; [or]”; and (~) by the addition to subsection (9) of the following paragraphs: 20 25 30 35 “(f) in relation to the proportional amount of investment income relating to any foreign dividend declared to or deemed to have been declared to a controlled foreign entity which is attributable to any resident, to the extent that the profits from which the dividend is declared or deemed to have been declared relate to any proportional amount of 40 investment income which has been included in the income of such resident in terms of the provisions of this section; or (g) to the proportional amount of any investment income of any company listed on a stock exchange as defined in section 1 of the Stock Exchanges Control Act, 1985 (Act No. 1 of 1985), or any 45 subsidiary of such company, which is attributable to any resident by virtue of the shareholding of such resident in such company which resident, together with any connected person in relation to such resident, directly or indirectly holds less than 10 per cent of the equity share capital in such company or subsidi~. ”. 50 (2) Subsection (1) shall be deemed to have come into operation on 23 February 2000, and applies in respect of any foreign dividend— (a) received by or accrued to any person on or after that date; or (b) which accrued to the person before 23 February 2000, but which is received on or after that date: Provided that the provisions of this paragraph shall not 55 apply in respect of any dividend declared by a company before 23 February 2000, where— (i) such company is listed on a recognised stock exchange; or (ii) in any other case, the chief executive officer and— (au) the external auditor of the company; or 60 36 No. 21390 GOVERNMENT GAZETTE, 19 JULY 2000 Act No. 30,2000 TAXATION LAWS AMENDMENT ACT. 2000 (bb) where a company is situated in a country which does not require compulsory appointment of an external auditor, a registered public accountant of the same standing as a qualified chartered accountant, have declared under oath or affirmation that such dividend was actually declared by the company before 23 February 2000. 5 Insertion of section 9E in Act 58 of 1962 20. (1) The following section is hereby inserted after section 9D of the Income Tax Act, 1962: “Taxation of foreign dividends 9E. (1) For the purposes of this section— ‘controlled company’ means a company in relation to which anothel company is the controlling company; 6controlling company’, in relation to any other company, means a compan~ which is a resident and which holds for its own benefit, whether directly 01 indirectly, through one or more companies in a group of companies 01 which all the companies in question form part, shares in such othel company which constitute not less than 75 per cent of the equity shart capital of the said other company; ‘designated country’ means a country designated by the Minister undel subsection (8); ‘effective date’ means 23 February 2000; ‘fixed capital’ includes share capital, share premium and accumulated profits, whether of a capital nature or not; ‘foreign dividend’ means any dividend received by or which accrued to any person from any company, to the extent that the dividend is declared from profits derived by such company from a source outside the Republic which are not deemed to be from a source within the Republic, or from profits which are deemed to be from a source within the Republic which have not been subject to tax in the Republic, and includes the following amounts. which shall be deemed to be a dividend declared by such company to such person— (a) any amount deemed to have been distributed by any company as contemplated in section 64C(3)(a), (b), (c)or (d) to such person or any resident who is a connected person in relation to such person to the extent that such company could have distributed a dividend to such person from profits derived from a source outside the Republic which are not deemed to be from a source within the Republic, or from profits which are deemed to be from a source within the Republic which have not been subject to tax in the Republic, and none of the provisions contained in section 64C(4) apply: Provided that the provisions of this paragraph shall not apply in respect of any amount distributed by any company which is being wound up or liquidated or whose corporate existence is finally terminated, out of profits of a capital nature (other than profits of a capital nature derived from the disposal by such company, on or after the effective date, of any interest in any other company with retained profits which were available for distribution by such other company to such company which would not have been excluded from the provisions of paragraph (b) had that paragraph applied); or (b) any amount derived by any person from the disposal by such person of any share or interest in the fixed capital in a company, to the extent that such company or any subsidiary of such company has any undistri- buted profits which were derived from a source outside the Republic which are not deemed to be from a source within the Republic, or from profits deemed to be from a source within the Republic which have not been subject to tax in the Republic, which were directly or indirectly available for distribution to such person: Provided that the provisions 10 15 20 25 30 35 40 $5 50 j5 38 No. 21390 GOVERNMENT GAZETTE, 19 JULY 2000 Act No. 30,2000 TAXATION LAWS AMENDMENT ACT, 2000 of this paragraph shall not apply in respect of the disposal of any shar or other interest in the fixed capital in a comparty— (i) where such person at no time on and after the effective date hell 10 per cent or more of the total equity share capital of SUCI company; (ii) to any resident, where such resident will after such disposal hoh for his own benefit at least 10 per cent of the equity share capita of such company; (iii) where such person retains the same effective interest in the equit: share capital or fixed capital of the company as prior to th( disposal: Provided that the provisions of this subparagraph shal not apply if one of the main purposes of such disposal is th avoidance, postponement or reduction of liability for any tax duty or levy which, but for such disposal would have been o would have become payable by any person under this Act or an! other Act administered by the Commissioner; (iv) by a shareholder who acquired such shares or interest from an! person who is not a resident and who is not a connected person il relation to such shareholder, to the extent that such undistributed{ profits were derived prior to the acquisition of the shares by SUC1 shareholde~ , (v) to the extent that the proceeds from the disposal have otherwist been included in the taxable income of such person; or (vi) where the Commissioner is satisfied that the disposal of tlx shares or the non-declaration of dividends by such company wa! not effected as part of a scheme for the purposes of avoiding tht liability for tax, duty or levy, taking into account such condition: as the Minister may prescribe by regulation; ‘group of companies’ means a controlling company and one or more othel companies which are controlled companies in relation to the controlling company; ‘proportionate amount of the profit’, in relation to a shareholder, means ar amount which bears to the total profit, the same ratio as such shareholder’s shareholding bears to the total shareholding, and for that purpose, if there are different classes of shares— (a) the expression ‘total shareholding’ refers only to the total of the class of shares of which such shareholding is part; and (b) the expression ‘total profits’ means the total profits attributable to such class of shares; ‘qualifying interest’ of any person means— (a) any direct interest of at least 10 per cent held by such person in the equity share capital of any company; and (b) any direct interest of at least 10 per cent held by any company contemplated in paragraph (a) in the equity share capital of any other company, which other company shall for the purposes of this definition be deemed to be a company contemplated in paragraph (a) in which such person holds a direct interest of at least 10 per cent; ‘resident’ means a resident as defined in section 9C( 1 ). (2) Any foreign dividend received by or accrued to a resident shall for the purposes of the definition of ‘gross income’ in section 1, be deemed to have been received by or to have accrued to such resident from a source within the Republic. 5 10 15 !0 !5 ;0 5 0 5 0 40 No. 21390 GOVERNMENT GAZETTE, 19 JULY 2000 Act No. 30,2000 TAXATION LAWS AMENDMENT ACT, 2000 (3) Subject to subsection (7), where during any year of assessment any foreign dividend is received by or accrues to any resident, the amount to be included in the gross income of such resident for such year of assessment in terms of paragraph (k) of the definition of ‘gross income’ in section 1. shall— (a) ifsuchresident— (i) holds forhisown benefit; or (ii) in the case of a company, together with any other company in a group of companies of which such company forms part, hold for their own benefit, at least 10 percent of the equity share capital in the company declaring the dividend. be the proportionate amount of the profit from which the dividend is distributed, before taking into account any foreign tax on income imposed in respect of such profit and any withholding tax paid in respect of such dividend: Provided that— (au) unless such resident proves otherwise in such manner and such form as the Commissioner may prescribe, the dividend shall be deemed to have been distributed from the profits most recently derived and available for distribution; and (bb) where such company derived its profits by way of dividends received or accrued and by way of other sources of profits, the dividend shall be deemed to have been declared on a proportionate basis from such dividends and other sources of profits; or (b) if such resident— . (i) does not hold for his own benefit; or (ii) in the case of a company, together with any other company in a group of companies of which such company forms part, do not hold for their own benefit, at least 10 percent of the equity share capital in the company declaring the dividend, be the amount of such dividend declared before taking into account the amount of any withholding tax paid in respect of such dividend. (4) In determining the proportionate amount of the profit to be included in the income of any resident in terms of subsection (3)(a). there shall be taken into account any profits derived by any other company in which the company distributing the dividend has an interest and which have been distributed to such company in the form of dividends, if the resident has a qualifying interest in such other company: Provided that— (a) unless such resident proves otherwise in such manner and such form as the Commissioner may prescribe, the dividend shall be deemed to have been distributed by such other company from the profits most recently derived and available for distribution: and (b) where such other company derived its profits by way of dividends received or accrued to such company and by way of other sources of profits, the dividend shall be deemed to have been declared by such other company on a proportionate basis from such dividends and other sources of profits. (5) For the purposes of subsection (3)(b), where— 5 10 15 20 25 30 35 to 15 (a) any dividend is declared by a company to any unit portfolio referred to 0 in paragraph (e)(i) of the definition of ‘company’ in section 1; and (b) such dividend is distributed by such unit portfolio by way of a dividend, or a portion of a dividend, to persons who have become entitled to such dividend by virtue of their being registered as holders of units in such unit portfolio, such dividend contemplated in paragraph (a) shall be deemed to have been declared by such company directly to such holders of units. 5 42 No. 21390 GOVERNMENT GAZETTE, 19 JULY 2000 Act No. 30,2000 TAXATION LAWS AMENDMENT ACT, 2000 (6) Any resident who receives a foreign dividend or to whom a foreigl dividend accrues may, notwithstanding the provisions of subsection (3), il respect of any year of assessment elect that the amount of such dividend tf be included in the gross income of such resident shall— (a) if such resident— (i) holds for his own benefit; or (ii) in the case of a company, together with any other company in : group of companies of which such company forms part, hold fol their own benefit, at least 10 percent of the equity share capital in the company declann~ such dividend, be the amount of the profits from which such dividenc is declared after taking into account any foreign tax on incomt imposed in respect of such profits and any withholding tax paid ir respect of such dividend; or (b) if such resident— (i) does not hold for his own benefit; or (ii) in the case of a company, together with any other company in t group of companies of which such company forms part, do nol hold for their own benefit, at least 10 percent of the equity share capital in the company declaring such dividend, be the amount of such dividend after taking intc account any withholding tax paid in respect of such dividend, and such election shall apply in respect of all foreign dividends received by or accrued to such resident during the year of assessment in respect 01 which the election was made. (7) There shall be exempt from tax any foreign dividend declared 01 deemed to have been declared by— (a) any company which is a re~ident of the Republic, which during— (i) the entire period of existence of such company; or (ii) each of the three years of assessment preceding the year of assessment during which such dividend is declared or deemed to have been declared, whichever period is shorter, derived 75 per cent or more of its total receipts or accruals from a source within the Republic or deemed to be from a source within the Republic and which was subject to tax in the Republic; any company incorporated in the Republic out of profits derived— (i) by way of dividends which accrued to such company prior to the (b) effective date; (ii) by such company through a branch outside the Republic— (au) if such profits were repatriated to the Republic prior to the effective date; or (bb) in any other case, if such branch is situated in a designated country and the profit from which the dividend is distributed is subject to tax at a rate of at least 27 per cent without any right of recovery by any person (other than a right of recovery in terms of an entitlement to carry back losses arising during any year of assessment to any year of assessment prior to such year of assessment); any company listed on a stock exchange as defined in section 1 of the Stock Exchanges Control Act, 1985 (Act No. 1 of 1985), to a resident who, together with any connected person in relation to such resident, does not hold at least 10 per cent of the equity share capital of such company, if more than 10 per cent of the equity share capital in such company is at the time of the declaration of such dividend held collectively by residents: Provided that where such company was not listed on such stock exchange on the effective date, the exemption (c) 44 No. 21390 GOVERNMENT GAZETTE, 19 JULY 2000 Act No. 30,2000 TAXATtON LAWS AMENDMENT ACT, 2000 shall apply only upon approval by the Commissioner, which approva the Commissioner may grant on application by such company, having regard to- (i) the fact whether or not the profits of such company were generated in a designated country; and (ii) the tax rate at which the profits from which the dividend was declared was or will be taxed; (d) any company, which is distributed directly or indirectly to a resident who holds a qualifying interest in such company, to the extent that the profits from which the dividend is declared— (i) were generated in a designated country; and (ii) are or will be subject to tax at a rate of at least 27 per cent without any right of recovery by any person (other than a right of recovery in terms of an entitlement to carry back losses arising during any year of assessment to any year of assessment prior to such year of assessment); or (e) any company to the extent that the profits from which the dividend is distributed— (i) relate to any amount of investment income which has or will be included in the income of the shareholder of such company in terms of section 9D; or (ii) have or will be included in the taxable income of such company in terms of this Act; or (iii) have otherwise been included in the taxable income of the shareholder in terms of paragraph (a) of the definition of “foreign dividend”. (8) The Minister may, by notice in the Gazette, designate countries which— (a) have entered into an agreement with the Republic for the avoidance of double taxation and where such agreement is in force; have a tax on income that is determined on a basis which is substantially the same as that of the Republic; have a statutory rate of tax on income of companies of at least 27 per cent without any right of recovery of such tax by any person (other than a right of recovery in terms of an entitlement to carry back losses arising during any year of assessment to any year of assessment prior to such year of assessment); and comply with any other requirement which the Minister may prescribe by regulation. (b) (c) (d) 5 10 15 20 25 }0 )5 (9) The discretion exercised by the Commissioner in terms of this section 10 shall be subject to obiection and appeal.”. (2) Subsection (1) shall be deemed to have come into operation on 23 February 2000, and applies in respect of any foreign dividend— (a) received by or accrued to any person on or after that date; or (b) which accked to the person before 23 February 2000, but which is received 45 on or after that date: Provided that the provisions of this paragraph shall not apply in respect of any dividend declared by a company before 23 February 2000, where— (i) such company is listed on a recognised stock exchange; or (ii) in any other case, the chief executive officer and— (au) an external auditor of the company; or (bb) where a company is situated in a country which does not require compulsory appointment of an external auditor, a registered public accountant of the same standing as a qualified chartered accountant, have declared under oath or affirmation that such dividend was actually 55 declared by the company before 23 February 2000. 50 46 No. 2 [390 GOVERNMENT GAZETTE, 19 JULY 2000 Act No. 30,2000 TAXATtON LAWS AMENDMENT ACL 2000 Amendment of section 10 of Act 58 of 1962, as amended by section 8 of Act 90 of 1962, section 7 of Act 72 of 1963, section 8 of Act 90 of 1964, section 10 of Act 88 of 1965, section 11 of Act 55 of 1966, section 10 of Act 95 of 1967, section 8 of Act 76 of 1968, section 13 of Act 89 of 1969, section 9 of Act 52 of 1970, section 9 of Act 88 of 1971, section 7 of Act 90 of 1972, section 7 of Act 65 of 1973, section 10 of Act 85 5 of 1974, section 8 of Act 69 of 1975, section 9 of Act 103 of 1976, section 8 of Act 113 of 1977, section 4 of Act 101 of 1978, section 7 of Act 104 of 1979, section 7 of Act 104 of 1980, section 8 of Act 96 of 1981, section 6 of Act 91 of 1982, section 9 of Act 94 of 1983, section 10 of Act 121 of 1984, section 6 of Act 96 of 1985, section 7 of Act 65 of 1986, section 3 of Act 108 of 1986, section 9 of Act 85 of 1987, section 7 of Act 90 10 of 1988, section 36 of Act 9 of 1989, section 7 of Act 70 of 1989, section 10 of Act 101 of 1990, section 12 of Act 129 of 1991, section 10 of Act 141 of 1992, section 7 of Act 113 of 1993, section 4 of Act 140 of 1993, section 9 of Act 21 of 1994, section 10 of Act 21 of 1995, section 8 of Act 36 of 1996, section 9 of Act 46 of 1996, section 10 of Act 28 of 1997, section 29 of Act 30 of 1998 and section 18 of Act 53 of 1999 15 21. (1) Section 10 of the Income Tax Act, 1962, is hereby amended— (a) (b) (c) (d) by the deletion of paragraphs (cB), (cC), (cD), (cF), (cI). (cJ), (j) and VA) of subsection (1); by the deletion of paragraph (cK) of subsection (1); by the insertion after paragraph (cM) of subsection (1) of the following 20 paragraph: “~ the receipts and accruals of anY Qublic benefit organisation which has been approved by the Commissioner in terms of section 30(3~”; by the substitution for paragraph (d) of subsection (1) of the following paragraph: “(d) the receipts and accruals of any [terminating building society]— $ pension fund, provident fund, retirement annuity fund; z (@ benefit fund [mutual savings bank], mutual loan association, fidelity or indemnity fund, trade union, chamber of commerce or indus&ies (or an a~sociation of such chambers), local publicity 30 association or non-proprietary stock exchange approved by the Commissioner subject to such conditions as the Minister may prescribe by regulation; or 25 (iii) company, society or other association of persons established to-- (au) provide social and recreational amenities or facilities for the 35 members of such company, society or other association; or (bb) promote the common interests of persons (being members of such company, society or association of persons) carrying on any particular kind of business, profession or occupation, approved by the Commissioner subject to such conditions as the Minister may Prescribe by regulation;”; (e) by the substitution for subparagraph (iii) of paragraph (hA) of subsection (1) of the following subparagraph: “(iii) for the purposes of this paragraph, so much of any dividend as has been distributed by any unit portfolio constituting a company in terms of paragraph (e)~ of the definition of ‘company’ in section 1 out of interest derived by such unit portfolio which is exempt from tax in the hands of such unit portfolio under the provisions of paragraph (iA), shall be deemed to be interest;”; 40 45 (f) by the substitution for subparagraph (xv) of paragraph (i) of subsection (1) of the following subparagraph: 50 “(xv) in the case of any taxpayer who is a natural person, so much of the aggregate of any dividends and interest received by or accmed to him which [is] are not otherwise exempt from tax, as does not during the year o~msessment exceed [the amountofR2000]— 55 48 No. 21390 GOVERNMENT GAZETTE, 19 JULY 2)00 Act No. 30,2000 TAXATION LAWS AMENDMENT ACT, 2000 (au) in the case of any person who was or, had he lived would have been, at least 65 years of age on the last day of the year of assessment, the amount of R4 000; or (bb) in any other case, the amountofR3000: Provided that the amount of the exemption from tax shall— (A) first apply in respect of any foreign dividends contemplated in section 9E received or accrued which would not otherwise have been exempt from tax; and (B) in so far as such amount exceeds the amount of such foreign dividends, apply in respect of such interest and other taxable dividends recei~ed or accrued;”; (g) by the deletion of subparagraph (xvi) of paragraph (i) of subsection (1); (h) by the substitution for paragraph (iA) of subsection (1) of the following paragraph: “(iA) in the case of any unit portfolio referred to in paragraph (e)@ of the definition of ‘company’ in section 1, so much of the interest g foreign dividends contemplated in section 9E received by or accrued to such unit portfolio as has been distributed, or as the Commissioner is satisfied will be distributed, by way of a dividend or a portion of a dividend, to persons who have become entitled to such dividend by virtue of their being registered as holders of units in such unit portfolio on a date falling on or after the first day of April, 1971 ;“; (i) by the addition of the word “or” at the end of subitem (B) of item (bb) of subparagraph (i) of paragraph (k) of subsection (1); (j) by the addition to subparagraph (i) of paragraph (k) of subsection (1) of the following item: “@@ to the amount of any foreign dividend contemplated in section 9E received by or accrued to any resident as defined in section 9C;”; and (k) by the deletion of subparagraph (xii) of paragraph (t) of subsection (l). (2) (a) Subsection (1)(a), (c) and (d) shall come into operation on a date fixed by the President by proclamation in the Gazette: Provided that any company, society, trust, institution, union, chamber, exchange, other association of persons or fund whose receipts and accruals were exempt from tax in terms of the provisions of paragraphs (cB), (cC), (cD), (cF), (cI), (cJ), (j) and @A) of section 10( 1) of the Income Tax, 1962, prior to the amendment thereof by this section, which company, society, trust, institution, union, chamber, exchange, other association of persons or fund applies for approval by the Commissioner in terms of section 10(1 )(d)(ii) or (iii) or section 30 of that Act within a period of 12 months after the date so fixed by the President, or submit a written undertaking as provided for in the said section 30 within such period, shall continue to enjoy exemption until written notification by the Commissioner of his decision in terms of the said section 10(1 )(d)(ii) or (iii) or section 30: Provided further that any such company, society, trust, institution, union, chamber, exchange, other association or fund, shall subject to the provisions of the said section 30- 5 10 15 20 25 30 35 40 (i) within a period of five years after the date so fixed by the President; or (ii) at such time as any amendment to the constitution or other written document 45 in terms of which it has been established is effected, whichever is sooner, submit to the Commissioner a copy of such constitution or other written instrument in terms of which it has been established. (b) Subsection (1)(b) and (k) shall be deemed to have come into operation on 1 January 2000 and shall apply in respect of any year of assessment commencing on or after that date. (c) Subsection (1)&) and (g) shall be deemed to have come into operation on 1 March 2000, and shall apply in respect of any year of assessment commencing on or after that date. (d) Subsection (1)(e), (h), (i) and (j) shall be deemed to have come into operation on 23 February 2000, and apply in respect of any foreign dividend— 50 55 50 No. 21390 GOVERNMENT GAZETTE, 19 JULY 2000 Act No. 30, 2000 TAXATION LAWS AMENDMENT ACT, 2000 (i) received by or accrued to any person on or after that date; or (ii) which accrued to the person before 23 February 2000, but which is received on or after that date: Provided that the provisions of this paragraph shall not apply in respect of any dividend declared by a company before 23 February 2000, where— 5 (au) such company is listed on a recognised stock exchange; or (bb) in any other case, the chief executive officer and— (A) an external auditor of the company; or (B) where a company is situated in a country which does not require compulsory appointment of an external auditor, a registered public 10 accountant of the same standing as a qualified chartered accountant, have declared under oath or affirmation that such dividend was actually declared by the company before 23 February 2000. Amendment of section 11 of Act 58 of 1962, as amended by section 9 of Act 90 of 1962, section 8 of Act 72 of 1963, section 9 of Act 90 of 1964, section 11 of Act 88 of 15 1965, section 12 of Act 55 of 1966, section 11 of Act 95 of 1967, section 9 of Act 76 of 1968, section 14 of Act 89 of 1969, section 10 of Act 52 of 1970, section 10 of Act 88 of 1971, section 8 of Act 90 of 1972, section 9 of Act 65 of 1973, section 12 of Act 85 of 1974, section 9 of Act 69 of 1975, section 9 of Act 113 of 1977, section 5 of Act 101 of 1978, section 8 of Act 104 of 1979, section 8 of Act 104 of 1980, section 9 of 20 Act 96 of 1981, section 7 of Act 91 of 1982, section 10 of Act 94 of 1983, section 11 of Act 121 of 1984, section 46 of Act 97 of 1986, section 10 of Act 85 of 1987, section 8 of Act 90 of 1988, section 8 of Act 70 of 1989, section 11 of Act 101 of 1990, section 13 of Act 129 of 1991, section 11 of Act 141 of 1992, section 9 of Act 113 of 1993, section 5 of Act 140 of 1993, section 10 of Act 21 of 1994, section 12 of Act 21 of 1995, 25 section 9 of Act 36 of 1996, section 12 of Act 28 of 1997, section 30 of Act 30 of 1998 and section 20 of Act 53 of 1999 22. (1) Section 11 of the Income Tax Act, 1962, is hereby amended— (a) by the insertion after paragraph (c) of the following paragraph: “(cA) an allowance in respect of any amount actually incurred by such person 30 in the course of the carrying on of his trade, as compensation in respect of any restraint of trade imposed on any other person who- (i) is a natural person; (ii) is or was a labour broker as defined in the Fourth Schedule (other than a labour broker in respect of which a certificate of exemption 35 has been issued in terms of such Schedule); (iii) is or was a personal service company as defined in the Fourth Schedule; or (iv) is or was a personal service trust as defined in the Fourth Schedule, to the extent that such amount constitutes or will constitute income of the 40 person to whom it is paid: Provided that the amount allowed to be deducted under this paragraph shall not exceed for any one year the lesser of— (aa) so much of such amount so incurred as is equal to such amount divided by the number of years, or part thereof, during which the 45 restraint of trade shall apply; or ~ one-third of such amount so incurred;”; (b) by the substitution for the words preceding the proviso to paragraph (o) of the following words: “save as provided in paragraph 12(2) of the First Schedule, an allowance 50 in respect of— ~ any building (or portion thereof) referred to in section 13(1) or (4) or section 13bis( 1 ) or section 27(2)(b) or of any improvements (or portion thereof) to such building; or ~ [ofl any shipbuilding structure referred to in section 13(8) or of any 55 improvement to such shipbuilding structure; or 51 No, 21390 GOVERNMENT GAZETTE, 19 JULY 2000 Act No. 30,2000 TAXATION LAWS AMENDMENT ACT. 2000 ~ [ofl any residential unit referred to in section 13te~ or (@ [ofl any pemanent work, road pavement or ancillary service referred to in section 24G; or ~ [ofl any machinery, plant, implements, utensils or articles used by the taxpayer for the purposes of his trade; ~ ~ an~transmission line or cable or railway line referred to in section ~J which have been scrapped by such taxpayer during the year of assessment, such allowance to be the excess of the original cost to such taxpayer of such building (or portion thereof), [or such] improvements (or portion thereof) to such building, [or such] shipbuilding structure, [or such] improvements to such shipbuilding structure, [or such] residential unit, [or such] permanent work, road pavement, [or] ancillary service, [or such] machinery, plant, implements. utensils, [or] articles, transmission line or cable or railway line over the total amount arrived at by adding all the allowances made in respect thereof under the provisions of paragraph (e) of this section, or section 12(1), or section 12(1) as applied by section 12(3), or section 12A(2), or section 12B, or section 1 ZC, or section 12D, or section 13(]), or section 13(1) as applied by section 13(4) or (8), or section 13bis( 1 ), (2) or (3), or section 13ter(2) or (3), or section 14(1)(a) or (b), or the corresponding provisions of any previous Income Tax Act, or section 14bis( 1 )(a), (b) or (c), or section 24F, or section 24G, or section 27(2)(b) or (d), to any amount or the value of any advantage accruing to the taxpayer in respect of the sale or other disposal of such building, shipbuilding structure, improvements, residen- tial unit, permanent work, road pavement, ancillary service, machinery, plant, implements, utensils [or] articles, transmission line or cable or railway line:”; (c) by the substitution for paragraphs (i) and (ii) of the proviso to paragraph (o) of the following paragraphs: .L(i) no allowance shall be made in the case of any such building (or portion thereof), [or of any such] improvements (or portion thereof) to such building, [or of any such] shipbuilding structure, [or of any such] improvements to such shipbuilding structure, [or of any such] residen- tial unit, transmission line or cable or railway line which has or have been scrapped within a period of ten years from the date of erection or purchase, or in the case of any such residential unit in respect of which any amount has fallen for inclusion in the taxpayer’s income under the provisions of section 13ter(7)(a), whether in the current or in any previous year of assessment; for the purposes of this paragraph the cost of any building (or portion thereof). [or of any] improvements (or portion thereof) to any building, [or of any] shipbuilding structure, [or of any] improvements to any shipbuilding structure, [or of any such] residential unit, transmission line or cable or railway line shall be deemed to be that portion of the actual cost on which the allowance in question was made;”; (d) by the substitution for subparagraph (B) of paragraph (old) of the proviso to (ii) paragraph (w) of the following subparagraph: “(B) the only benefit payable under the policy is a benefit payable within a period fixed in such policy upon or by reason of the death or disablement of the employee or director whose life is insured under the policy or the policy is a [personal accident] disability policy as defined in section 1 of the Long-term Insurance Act, [1943 (Act 27 of 1943)] 1998 (Act No. 52 of 1998); or”; 5 10 15 ~o 25 30 35 40 45 50 (e) by the substitution for paragraph ~) of the proviso to paragraph (w) of the 55 - f o l l o w i n g p a r a g r a p h : “@no deduction shall be made from the income of any taxpayer in respect of premiums paid by him under any policy of insurance of which he is the owner on the life of an employee of that taxpayer or, where the taxpayer is a company, of a director or employee of that company, except in so far 60 54 No. 21390 GOVERNMENT GAZE’lTE, 19 JULY 2000 Act No. 30,2000 TAXATION LAWS AMENDMENT ACT, 2000 as an allowance may be made under this paragraph or, in the case of a policy which is not a life policy or a [personal accident] disability policy as defined in section 1 of the Long-term Insurance Act, [1943] ~, a deduction which may. in appropriate circumstances, be made under paragraph (a) or (b) of this section;”. 5 (2) (a) Subsection (1)(a) shall be deemed to have come into operation on 23 February 2000, and shall apply in respect of any amount incurred on or after that date. (b) Subsection (1)(b) and (c) shall be deemed to have come into operation on 23 February 2000, and shall apply in respect of any transmission line or cable or railway line contracted for and the construction, erection or installation of which commenced on 10 or after that date. Insertion of section 12D in Act 58 of 1962 23. (1) The following section is hereby inserted after section 12C of the Income Tax Act, 1962: “Deduction in respect of certain pipelines, transmission lines and 15 railway Iines 12D. (1) For the purposes of this section— ‘affected asset’ means any— (a) pipeline used for the transportation of natural oil; (b) line or cable used for the transmission of electricity; (c) telephone Iine or cable used for the transmission of any signal for the purposes of telecommunication; and (d) railway line used for the transportation of persons, goods or things, contracted for on or after the effective date, and the construction, erection 01 installation of which commenced on or after such date, and includes any earthworks or supporting structures forming part of such pipeline. transmission line or cable or railway line; ‘effective date’ means 23 February 2000; and ‘natural oil’ means any Iiquid or solid hydrocarbon or combustible gas existing in a natural condition in the earth’s crust and includes any refined by-products of such liquid or solid hydrocarbon or combustible gas. (2) In respect of any new and unused affected asset which— (a) is owned by the taxpayer and is brought into use for the first time by such taxpayer on or after the effective date; and (b) is used directly by such taxpayer— (i) in the production of his income; and (ii) in carrying on his sole business of— (aa) the transportation of persons, goods. things or natural oil; or (bb) the transmission of electricity or any telecommunication signal, 20 ’25 30 35 $0 there shall be allowed to be deducted an allowance in respect of the cost actually incurred by the taxpayer in respect of the acquisition of such asset. (3) The allowance contemplated in subsection (2) shall not for any one year exceed— (a) 10 per cent of the cost incurred in respect of any asset contemplated in $5 paragraph (a) of the definition of ‘affected asset’; or (b) 5 per cent of the cost incurred in respect of any asset contemplated in paragraph (b), (c) or (d) of the definition of ‘affected asset’. (4) For the purposes of this section the cost to a taxpayer of any affected asset shall be deemed to be— (a) where such asset has been acquired to replace any asset which has been damaged or destroyed, the actual cost of such asset, less any amount which has been recovered or recouped in respect of the damaged or destroyed asset which has been excluded from the 50 56 No. 21390 GOVERNMENT GAZETTE, 19 JULY 2CO0 Act No. 30,2000 TAXATtON LAWS AMENDMENT ACT, 2000 taxpayer’s income in terms of section 8(4)(e), whether in the current or any previous year of assessment; or (b) in any other case, the lesser of— (i) the actual cost of acquisition of the asset incurred by the taxpayer; (ii) %e cost which a person would, if he had acquired the said asset under a cash transaction concluded at arm’s length on the date on which the transaction for the acquisition of the said asset was in fact concluded, have incurred in respect of the direct cost of acquisition of the asset (including the direct cost of the installation or erection thereof). (5) No deduction shall be allowed under this section in respect of any affected asset which has been disposed of by the taxpayer during any previous year of assessment. (6) The deductions which may be allowed in terms of this section and any other provision of this Act in respect of the cost of any affected asset shall not in the aggregate exceed the amount of such cost.”. 5 10 15 (~) Subsection (I) shall be deemed to have come into operation on 23 February 2000, and shall apply in respect of any pipeline, transmission line or cable or railway line contracted for and the construction, installation or erection of which commenced on or 20 after that date. Substitution of section 18A of Act 58 of 1962, as inserted by section 15 of Act 52 of 1970 and substituted by section 16 of Act 96 of 1981 and amended by section 14 of Act 91 of 1982, section 16 of Act 94 of 1983, section 16 of Act 121 of 1984, section 15 of Act 90 of 19S8, section 17 of Act 101 of 1990, section 20 of Act 129 of 1991 and 25 section 11 of Act 36 of 1996 24. (1) The following section is hereby substituted for Section 18A of the Income Tax Act, 1962: “Deduction of donations to certain public benefit organisations 18A. (1) There shall be allowed to be deducted from the taxable income of any taxpayer so much of the sum of any bcmafide donations in cash or in kind made by such taxpayer and actually paid or transferred during the year of assessment to- ( a ) any— 30 (i) public benefit organisation approved by the Commissioner under 35 section 30; or (ii) institution, board or body contemplated in section 10(1 )(cA)(i), which carries on in the Republic any public benefit activity which is determined by the Minister by notice in the Gazette for the purposes of this section, a copy of which shall be laid upon the table in Parliament; (b) any public benefit organisation approved by the Commissioner under section 30, which— (i) provides funds solely to any public benefit organisation, institu- tion, board or body contemplated in paragraph (a); and (ii) during the year of assessment preceding the year of assessment of such public benefit organisation during which the donation is received, distributed or incurred the obligation to so distribute at least 75 per cent of the funds received by or accrued to such organisation by way of donations which qualified for a deduction in terms of this section, as does not exceed the greater of— (au) five per cent of the taxable income of the taxpayer as calculated before allowing any deduction under this section or section 18; or 40 45 50 58 No. 21390 GOVERNMENT GAZETTE, 19 JULY 2000 Act No. 30,2000 TAXATION LAWS AMENDMENT ACT, 2000 (bb) R1 000. (2) Any claim for a deduction in respect of any donation under subsection (1) shall not be allowed unless supported by a receipt issued by the public benefit organisation, institution, board or body concerned, on which tht following details are given, namely— (a) the reference number of the public benefit organisation, institution board or body issued by the Commissioner for the purposes of this section; (b) the date of the receipt of the donation; (c) the name of the public benefit organisation, institution, board or body which received the donation, together with an address to which enquiries may be directed in connection therewith; (d) the name and address of the donor; (e) the amount of the donation or the nature of the donation (if not made in cash); v) a certification to the effect that the receipt is issued for the purposes of section 18A of the Income Tax Act, 1962, and that the donation has been or will be used exclusively for the object of the public benefit organisation, institution, board or body concerned. (3) If any deduction is claimed by any taxpayer under the provisions of subsection (1) in respect of any donation of property in kind, the amount of such deduction shall be deemed to be an amount equal to- (a) where such property constitutes trading stock of the taxpayer (including any livestock or produce in respect of which the provisions of paragraph 11 of the First Schedule are applicable), the amount which has been taken into account for the purposes of section 22(8) or, in the case of such livestock or produce, the said paragraph 11, in relation to the donation of such property; or (b) where such property (other than trading stock) constitutes an asset used by the taxpayer for the purposes of his trade, the cost to the taxpayer of such property less any allowance (other than any investment allowance) allowed to be deducted from the income of the taxpayer under the provisions of this Act in respect of that asset; or (c) where such property does not constitute trading stock of the taxpayer or an asset used by him for the purposes of his trade, the cost to the taxpayer of such asset, less, in the case of a movable asset which has deteriorated in condition by reason of use or other causes, a depreciation allowance calculated in the manner contemplated in section 8(5)( bB)(i); or (d) where such property is purchased, manufactured, erected, assembled, installed or constructed by or on behalf of the taxpayer in order to form the subject of the said donation, the cost to the taxpayer of such property. (4) The provisions of subsections (9) and ( 10) of section 30 shall apply mufafis mutandis in respect of any institution, board or body contemplated in subsection (1)(a). (5) If the Commissioner has reasonable grounds for believing that any person who is in a fiduciary capacity responsible for the management or control of the income or assets of any public benefit organisation, institution, board or body has with intent— (a) in any material way failed to ensure that the objects for which the public benefit organisation, institution, board or body was established are carried out or has expended moneys belonging to the public benefit organisation, institution, board or body for the purposes not covered by such objects; or 5 10 15 20 25 30 35 $0 15 ;0 ;5 60 No. 21390 GOVERNMENT GAZEITE, 19 JULY 2000 Act No. 30,2000 TAXATtON LAWS AMENDMENT ACT, 2000 (b) issued or allowed a receipt to be issued to any taxpayer for the purposes of this section in respect of any fees or other emoluments payable to such organisation, institution, board or body by such taxpayer, the Commissioner may by notice in writing addressed to that person direct that donations to such fund shall not qualify for deduction under the provisions of this section in respect of any year of assessment specified in such notice, and any claim by any taxpayer for such deduction shall accordindy be disallowed.”. (2) Subsection (1) shall in so far as it— (a) determines the limit of the deduction as contemplated in section 18A(1), be deemed to have come into operation on 1 March 2000, and shall apply in respect of years of assessment commencing on or after that date; and (b) amends the rest of section 18A, come into operation on a date fixed by the President by proclamation in the Gazette. 5 10 15 (3) The public benefit activities determined by the Minister of Finance by notice in the Gazerte as contemplated in section 18A(1)(a) of the Income Tax Act, 1962, shall be incorporated into that Act within a period of 12 months after the date fixed by the President in terms of subsection (2)(b). Repeal of section 19 of Act 58 of 1962, as amended by section 15 of Act 90 of 1962, 20 section 6 of Act 6 of 1963, section 17 of Act 88 of 1965, section 17 of Act 88 of 1971, section 14 of Act 90 of 1972, section 18 of Act 85 of 1974, section 14 of Act 104 of 1980, section 17 of Act 96 of 1981, section 15 of Act 91 of 1982, section 17 of Act 94 of 1983, section 17 of Act 121 of 1984, section 12 of Act 96 of 1985, section 12 of Act 65 of 1986, section 4 of Act 108 of 1986, section 13 of Act 85 of 1987, section 18 of 25 Act 101 of 1990, section 21 of Act 129 of 1991 and section 33 of Act 30 of 1998 25. (1) Section 19 of the Income Tax Act, 1962, is hereby repealed. (2) Subsection (1) shall be deemed to have come into operation on 1 March 2000, and shall apply in respect of any year of assessment commencing on or after that date. Amendment of section 20 of Act 58 of 1962, as amended by section 13 of Act 90 of 30 1964. section 18 of Act 88 of 1965, section 13 of Act 76 of 1968, section 18 of Act 89 of 1969, section 15 of Act 65 of 1973, section 8 of Act 101 of 1978, section 18 of Act 94 of 1983, section 19 of Act 191 of 1990, section 16 of Act 113 of 1993, section 17 of Act 21 of 1995 and section 15 of Act 28 of 1997
