S11(gA): Patents, Copyrights, Designs & Trademarks: S11(e): Wear & Tear Allowance.

r Allowance. VALUE APPORTION S11(o): Allowance i.r.o. disposal of assets COST

S11(gB): Deduction for registration: Donation: M/V – VAT on cost (cost to donor) S23(C) 1. Machinery, plant, implements, utensils which
1. Obtaining te grant, restoration or extension of patents. Foundation/Supporting Structure: qualified for s11(e).
OR 1.Must be designed for the asset. 2. Machinery that qualified for 50/30/20 allowance
2. Obtaining registration/extension of registration for any 2. Should be an integral part of the asset. under s12B.
design. OR
3. Useful life of foundation should be ltd to UL of the 3. Machinery, plant, and aircrafts under s12C.
3. Registration/renewal of any trademark if it was used in
asset 4. Plant and machinery of a SBC under s12E.
the TP’s prod. of income.
Moving Costs: - Was called “scrapping” allowance but can claim now
S11(gC): Acquisition of Intellectual Property:
Value of asset is increased by moving cost. even if asset is not scrapped.
1. Expenditure <= R5000: Deduct in FULL in yr it was
Asset partly written off, removal costs are written off - Deduction is not granted i.r.o. any asset which has a
bought into use.
2. Expenditure > R5000: over remaining UL of asset. UL of GREATER THAN 10 YRS!!!
- 5% (Patents, Copyrights, Knowledge and Knowledge If asset is fully written-off then moving costs should be - COST = Actual cost in arm’s length transaction
rights) fully written-off too. PLUS: Moving Costs
- 10% (Designs) LESS: s8(4)(e) & s8(4)(i) recoupments.
- NO APPORTIONMENT S11(e): Applicable to SMALL items: 1. Proceeds are from a connected person.
- PART OF YR = FULL YR. Can only deduct in FULL if following are met; 2. Asset was never used. (no allowances prev. claimed)
- Possible CGT if sold. 1. Must function in its own right. 3. Disposal accrued in prev. yr and has not yet accrued
- Deal with VAT. 2. Asset is not part of a set. (Disposal and claim = same YoA).
4. TP originally acquired asset for no consid. (cost =0)
asset would’ve qualified for s11(e) but s11(o) is based
on COST and not VALUE.
- Both actual and deemed allowances are taken into
account for calc. therefore if TP used asset but could not
claim allowance as it was not part his trade, it will treated
as a deemed allowance.
- FORMULA: Original Cost – (All allowances + SP)

NOTE:
1. Acquired before 1/04/2018
VAT = 14%
Acquired after 1/04/2018
VAT = 15%
2. Sold before 1/04/2018
VAT = 14%
Sold after 1/04/2018
VAT = 15%
CAPITAL ALLOWANCES
S12(C): Manufacturing Assets NO APPORTION & COST CAPITAL ALLOWANCES S13: Manufacturing Building Allowance NO APPORTION &
1. 1st time being used by TP/Lessee & COST
2. It is for the purpose of TP’s/Lessee’s trade. & Wholly/mainly = >50% (doesn’t include 50%) more than half of
3. It is used in a process of manufacture. the floor space must be used to carry on a trade.
- Assets that qualify: Machinery, Plant and Utensils TP sold a factory and had a recoupment and elected s13(3).
- Assets that don’t qualify: s12(E) assets. Cost of new building = Cost – recoupment (of old)
If bought from connected person before 01/01/2013, limit
-Machinery used for R&D must be from (1/10/2012-1/10- S12(E): Small Business Corporations NO APPORTION &
allowance to lesser of: 1.Cost or 2.M/V.
2022) COST Include Finance Costs (pre-prod. interest ≠ part of cost)
-Improvements = separate assets. DEF: 1. CC/Private Co., Personal Liability Co (Inc). Date building Initial Allowance Annual
- Typically a 5 yr allowance of 20% (2nd Hand) 2. All members/shareholders = natural persons. Allowance
-Accelerated allowance: 40/20/20/20is not applicable to commenced
3. GI <= R 20 000 000 (if trading for 6 mnths, R20mil
assets that are leased. must be apportioned by 6/12) Before - -
Requirements for accelerated allowance: 4. Members/shareholders don’t hold shares in other 25/03/1959
1. Asset must be new & unused. (40/20/20/20) companies.
2. Must be purchased on/after 1 Mar 2002. (if before 25/03/1959 – - 2%
5. <20% of total (receipts + accruals + capital gains) is 30/06/1985
20/20/20/20/20)
derived from investment income and personal
3. Must be used in process of manufacture. 01/07/1985 – 17.5% [s13(7)] 2% x (Cost – initial
services rendered.
- No cost = no allowance. 31/12/1988 (before allowance)
6. Not a personal service provider.
- Elements of COST: 31/12/’89)
Lesser of: 1. Actual Cost OR
- Taxed on a sliding scale therefore 1st R500k = tax free.
Manufacturing Assets: 01/01/1989 – - 5%
2. Cash cost in arm’s length transaction. 30/06/1996
PLUS: Installation Costs, Cost of foundation/supporting COST: Lesser of: 1. Cost to SBC OR 2. Cost in an arm’s
structure and moving costs. length transaction. 01/07/1996 – - 10% (Before
Moving costs: costs to move the asset from one location to Plus: Installation Costs 30/09/1996 31/03/’00)
another and can be claimed as a deduction. Relocation Costs are deducted in FULL in yr incurred.
On/after - 5%
1. If TP can still claim allowances for CYoA and at least one Less: Finance Costs & VAT 1/10/1999
more yr; allowances can be claimed in equal S8(4)(e) recoupment (deferral)
instalments over remaining UL of original asset. Non-Manufacturing Assets: 1. Buildings wholly/mainly used by TP/lessee for manufacture
2. Buildings erected on leasehold property = at least 10 years of
2. If asset has been fully written off under 12C; moving costs 1. 50/30/20 allowance for those assets that don’t qualify
occupation.
are deducted in FULL in year in which they are for 100% allowance or that qualify for s11(e). 3. No allowance on leased buildings unless lessee’s receipt +
incurred. 2. s11(e): consider small items <R7k. If this option is accruals = income.
EXCLUDED FROM COST: Finance Cost & VAT. elected; don’t forget to apportion!! 4. Allowance NOT GRANTED on buildings & improvements after
When 12C asset has been acquired to replace an asset 31/12/1989.
which has been damaged/destroyed:
12C allowance is based on cost less any amount recouped
i.r.o. damaged/destroyed asset.
Recoupment excluded from TP’s TI, but is set-off against
cost of new asset.
TP may elect para 65/66 to defer the recoupment.
 S13: Manufacturing Buildings continued:
SP (ltd to Cost): Cost will include both cost of building and
improvement.
1. Constructed @ same time as factory.
2. Built on the same site as the factory.
3. Floor space is <50% of total floor space (total = factory +
sub. building)
M2 of sub. building
M2 of sub. building + factory < 50%
4. All before the 1 April 2007.
st
- If construction happens on/after 1 Apr 2007 = S13quin
comes into effect and TP will only qualify for 5% on cost.
- If part of a building is acquired: Cost x 55% x (5%)
- Acquired an improvement: Cost x 30% x (5%).
CAPITAL ALLOWANCES
S13quin: Commercial Buildings NO APPORTION & COST
1. The building is wholly/mainly used by TP
2. During YoA
3. For purposes of producing income in course of TP’s
trade.
- Trade ≠ Providing residential accommodation.
- TP can lease the building (if leased and lessee is obliged
to effect improvements and spends more than
contract amt; lessee can’t claim excess in terms of
s13quin)
- Allowance also applies to new & unused improvements
- Allowance is based on the lesser of: 1. Cost OR 2. M/V.
- Allowance only applicable to buildings/improvements
on/after 1 Apr 2007.
- 2nd Hand buildings will not qualify for this allowance.
1. Buildings: Cost x 55% x 5%
2. Improvements: Cost x 30% x 5%
CONNECTED PERSONS FOR ITA:
In relation to a company:
1. >50% of shares and voting rights in same group of
companies
2. Any person that individually/jointly or any other
person who is connected to person above that owns
at least 20% of share and/or voting rights.
3. Any other company holds at least 20% of shares or
voting rights in the company in question.
Co A Co B
Holds @least Mr Z Holds >
20% 50%
Co. A & Co. B = connected
S13sex: Residential Units NO APPORTION & COST
1. Res. Units must be new & unused. (Can’t be 2nd hand)
2. If allowance is to be claimed only on an improvement
then only improvement need to be new & unused.
3. TP must own at least 5 units in RSA:
Units don’t have to be in the same place,
Must be used for TP’s trade (providing res. accom)
Excludes units occupied by employees in mining
4. Unit % improvement must be used for TP’s trade
- DEF: Res. Unit = Building/ self-contained apartment in a
building. Excludes units owned by a TP that is a hotel
keeper
- Elements of COST: Lesser of 1. Cost OR 2. Arm’s length
M/V @ date of acquisition.
Incl. Direct costs of acquisition, erections,
improvements.
1. Buildings: Cost x 55% x 5%
2. Improvements: Cost x 30% x 5%
LOW-COST RES. UNITS:
1. Cost for apartments = R350k. Cost for Other = R300k
2. Rental can’t exceed 1% of cost over the period.
(10% increase = used to calculate deemed increase in
cost)
Calc: Apartment of R350k taken into use in 2016.
350k x 1.1 = 3500k (2017)
350k x 1.1 = 3500k (2018) Rental can’t exceed 1% of cost
1.1 = 10%+1%
If it exceeds = not low cost.
If it does not exceed cost, can claim 10% on actual
cost of R350k (350k x 10% = R35k)
 S12(H): Learnership Allowances:
CAPITAL ALLOWANCES NQF Level (1-6): R30k
NQF Level (7-10): R50k
NQF Level (1-6): R40k
NQF Level (7-10): R20k
NQF Level (1-6): R60k
NQF Level (7-10): R50k

NQF Level (1-6): Allowance = R40k in year of completion

NQF Level (7-10): Allowance = R20K in year of
completion
NQF Level (1-6): Allowance: R40k x no. of consecutive
12 mnths since day entered into agreement (in year of
completion).
NQF Level (7-10): Allowance: R20k x no. of consecutive
12 mnths since day entered into agreement (in year of
completion).

-S12(H): Does not apply where leaner has failed to

complete learnership agreement.
 S8(4)(a): General Recoupment: Deferred Recoupment: Deferred Recoupment Requirements:
Asset would’ve qualified for s11(e). 1. Proceeds from disposal must be equal/exceed cost
Recoupment as well as allowances will be based 2. Replacement asset contract must be concluded
on the M/V of that asset. within 12 months.
3. Replacement asset must be taken into use within
36 months.
If not met; recoup & cap gain = taxed in FULL.

Involuntary Disposal Voluntary Disposal

Non-depreciable Assets Depreciable Assets
For Buildings (s13) Excludes Buildings
Silent on trade Purposes of trade
Steps to calculate Recoupments: Personal use assets incl.
Step One: Tax Value:
Tax Value = Cost/Value – any allowances claimed.
Step Two: Recoupment
Recoupment / (loss): Selling Price (ltd to cost) – Tax
Value
SP= 1. If SP>COST = COST
2. If SP<COST = SP
- If asset was used partly for business use & partly for
RECOUPMENTS STEPS FOR DEFFERAL:
private use = Proceeds must be apportioned
1. Start with allowances of old and new asset.
accordingly.
2. Determine if Para 65/66 applies (consider requirements)
- If asset was originally used for private use and then
3. Calculate recoupment and cap. gain (if any) of the old asset.
used for trade purposes:
4. Defer the recoupment in terms of replacement asset bought.
Recoupment is calculated with reference to original
cost price and not tax value on day it was used for
Recoupment and Cap gain must be apportioned to each replacement
trade purposes.
asset.
EG: Recoup/Cap gain x Cost of A = X x allowance of A = recoup/gain
Interest payable is shown in the recoupment and not separate. (Cost of A+B)
Interest = official interest rate on recoupment from date of
disposal to end of prescribed period. Recoup/Cap gain x Cost of B = X x allowance of B = recoup/gain
(Cost of A+B)