Special Deductions

S11A Pre Trade S11(c) Legal S11(d) Repairs S11(i) Bad debts S11(j) Doubtful S11(cA) – Restraint
expenditure and expense debts of Trade
losses

All pre trade Requirement: Requirements: Requirements:  Allows taxpayer S11(cA) deduction if:
expenditure is  Actually incurred  Expenditure  To the extent to a deduction of  Any amount
accumulated until trade  Any action, actually incurred which the debt doubtful debts actually incurred
occurs than the total is dispute or action  During the year has become bad only if it would by a person
claimed as a single at law  On repair of during the year have been  In the course of
S11A deduction.  Incurred in the property of assessment allowed for a carrying on a
 The deduction is course, of or by occupied for the  The amount of deduction had it trade
limited to the reason of, purpose of trade the debt must become bad  As
income earned ordinary or to receive have been (must’ve been compensation,
in that trade. operation in income included in the included in any restraint of
carrying on a  For the trade of taxpayer’s income) trade on natural
trade and machinery and income in either  Add back the person, labour
 Not capital of other articles the current or a previous broker or
nature used for trade. previous year of doubtful debt personal service
And  If expenditure assessment form the provider
 If the claimed by incurred is  The debt must previous year  To the extent
the taxpayer – recoverable, no be due to the and claim the that the amount
amount deduction taxpayer new allowance. constitutes
receivable will allowed.  The bad debt  List of all income form
be income if the  Repairs: written off must debtors due: receipts
taxpayer was to Restoration of have been debt considered Limited to the lessor
win part of the included in the to be doubtful * of:
 If claimed original structure tax payers rate i.e 25%  The amount
against the  Improvements: income (may not exceed incurred divided
taxpayer – Any construction  Debt taken over 25%) with the number
amount would on the asset in when of years for
be deductible if addition to its purchasing a which it applies
the taxpayer original structure business, if  One third of the
was to lose. where the asset found to be bad amount
was improved may not deduct incurred.
from its original as it is not
condition. included in the
income of the
Cases buyer.
CIR v African Bad debts recovered =
Products Recoupment = Gross
Manufacturing Co Ltd: income
Vat implications:
For VAT vendor =
by replacement of a Debtor amount includes
subsidiary part of the vat, vat portion will
whole never be bad, therefore
vat should be excluded
need not be the same when calculating a bad
as original debt.

from
improvement/renewal
Renewal=
reconstruction of
(substantially) the
entirety
Improvement= creation
of better asset with an
improved income
earning capacity
•Repair restores the
asset to its original
condition

Flemming
 Repair is the
replacement of
subsidiary parts
of the whole
 Improvements
does not
constitute
repairs.
 Special Deductions
S11(l) Employers S11(m) Annuities S11(f) Lease S11(g) Leasehold S11(h) Leasehold S18A Donations
contributions to paid to former Premium improvements special allowance –
retirement funds employees and Relief to lessor
their dependents

 Employer To:  Allowance only S11(g) makes an  For leasehold Deduction for bona fide
allowed to  Paid to former available when allowance available for: improvements: donations (cash or
deduct amounts employee premium paid  Expenditure  Amount property in kind)to
contributed by  Paid to for the right of actually incurred included in (certificate):
him to any depended of use or  If a taxpayer Gross Income
pension, former occupation of was obliged by Organisations (PBO’s)
provident or employee an asset. a leasehold  Less PV of the
retirement  Paid to former  Available to the agreement amount conducts research/
annuity fund ‘ partners lessee or sub  To effect included in services to the State/
 Owners Should have lessee improvements lessors gross promote certain
contributions to been a partner  on land or to income activities
benefit fund for at least 5 yrs S11(f) deduction will building (Discounted @
(medical aids) Amount paid be determined by:  Used or 6%) provincial
are no longer must be  Total lease occupied for the administration/ local
deductible reasonable & premium or production of authority involved in
under s 11(l) not a consideration income or public benefit activities
and has to meet consideration divided by the income must be
the for his interest number of years derived from  No deduction
requirements of in the for which the them. allowed under s
s 11(a) partnership taxpayer is Value 18A for
 Monthly  These partners entitled to the  The stipulated property in kind
payments – or employees use or value/ number consisting of a
Deducted under must have occupation of of years the fiduciary right,
s11(a) retired due to ill the property taxpayers is usufruct
 Lump Sum – health, old age (limited to a entitled to use Which consist
Deducted in full or infirmity. maximum of 25 the of an intangible
under S11(l) Years) property(limited asset or
after 1 March to 25) financial
2016  Amount spent > instrument
 Deductions are contract (unless it is a
unLtd amount = share in a listed
comp. or issued
Employers contribution allowance ltd to by fin
to Med aid scheme (s contract institution)
12M) amount (excess
claim another Remember is showed
 Pmts: allowance on at the end in the
 Iro retired buildings, i.e s taxable income table
employees (Ill 13, not s13  Need a S18A
health, old age, quin=owner can certificate to
infirmity) claim section deduct it from
 Under 13) taxable
insurance policy  Amount < income.
 Insurer takes contracted  Limited to 10%
risk for amount = of taxable
estimated amount ltd to income.
lifespan actual amount
 Deductible in incurred.
full
 Repayment of
employee benefits
(s 11(nA) and
11(nB))
 An amount
received by an
employee i.r.o
services
rendered or to
be rendered or
in respect of any
employment,
and the amount
was included in
his taxable
income and the
employee
refunds the
amount in full or
a portion
thereof, the re-
pmt will be
deductible by
the employee (s
11 (nA))
 Same applies to
a restraint of
trade refund (s
11 (nB))
 If incurred by a
personal service
provider,
amounts also
deductible