Within the summary is s11(o) summary, leasehold summary for capital allowance, s13 allowance, recoupment summary. Added is Scrapping and debt benefits allowances. This is a powerful summary to summarize all the important information of capital allowances in CTA and ITC.
CAPITAL ALLOWANCES
What is a connected person, the act refers specifically to connected persons in section 1. If
an asset is sold to a connected person, no s11 (o) allowance will be allowed as a deduction.
Type of taxpayer Connected persons in relation to the taxpayer
Natural person (par(a) of Any relative
definition) A trust of which the natural person is a beneficiary
Trust other than a portfolio of a Any beneficiary of a trust
collective investment scheme. Any connected person in relation to a beneficiary
(par(b) of definition)
Connected person in relation to a Any other person who is connected person in
trust (par(bA) of definition) relation to the trust
Members of a partnership or Any other member
foreign partnerships (par(c) of Any connected person in relation to an member of
definition) the partnership or foreign partnership
Company including a portfolio of Any other companies in the same group of
a collective investment scheme companies, where a group companies consist of a
par(d)(i) – (vA) controlling group company that:
Directly hold more than 50% of the equity
shares or voting rights in at least one
controlled group company and
Directly or indirectly holds more than 50% of
the equity shares in or voting rights in each
controlled group company.
Any person (excluding companies) that individually
or jointly with that person’s connected person holds
20% or more of a company equity shares or voting
rights.
Any company that holds 20% or more of a equity
shares or voting rights (but only if non other
shareholder holds the majority of voting rights in the
company)
Any other company, if the company is managed or
controlled by a connected person (or his connected
person)
Any other company that would be part of the same
group of companies according to the definition of
group companies
Close corporation Any member
Any relative of the member or trust that is a
connected person in relation to a member
Any other close corporation which is a connected
person to one of the members.
, Section Information
Intellectual property –
s11(gB) and s11(gC) When to Registration/ Acquisition
consider renewal of
registration
When is it Expenditure Expenditure was
applicable? was actually actually incurred
incurred during the year of
during the assessment to
year of acquire ( NOT
assessment develop/create) the
It’s used in property
the It’s used in the
production of production of
income income
When can In year of Claimed if brought
it be assessment into use for the 1st
claimed actually incurred time
No apportionment
for periods used
less than a year
Deduction Expenditure x ≤ R 5000 =
100% Cost x 100%
> R 5000 =
Cost x 10%
(design) Cost x
5% (other)
Trademark Expenditure on Expenditure on trade
trade mark mark CANNOT be
can be claimed claimed
Lease premium – s11(f) Premium paid for the right of use/occupation of property
used in the production of income.
Receiver (Lessor) : Include in gross income par (g)
The following cannot be classified as lease premiums:
Does NOT qualify as income in the hands of the
recipient
Contract is transferred from one lessee to
another
Lessor pays lessee to vacate the building
Amount paid by lessee for cancellation of the
lease
Remember the following:
1. Deduction is apportioned for periods less than a
year
2. It’s calculated by using the number of years of use
(including renewal periods) LIMITED to 25 years
3. If a lessee cedes/surrenders the right:
A full year’s allowance will be included in the
year the right is ceded/surrendered
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