1) For the purpose of determining the taxable income derived by any person from carrying on any trade , there shall, subject fo section 20A, be set off against the income so derived by such person--
a) any balance of assessed loss incurred by the taxpayer in any previous year which has been carried forward from the preceding year of assessment: Provided that--
i) no person whose estate has been voluntarily or compulsorily sequestrated shall, be entitled to carry forward any assessed loss incurred prior to the date of sequestration, unless the order of sequestration has been set aside, in which case the amount to be so carried forward shall be reduced by an amount which was allowed to be set off against the income of the insolvent estate of such person from the carrying on of any trade and
ii) the balance of assessed loss shall be reduced by the amount or value of any benefit received by or accruing to a person resulting from a concession granted by or a compromise made with any creditor of such person whereby any liability owed by such person to such creditor has been reduced or extinguished, to the extent that-
aa) the amount advanced by such creditor was used, directly or indirectly, to fund expenditure or an asset; and
bb) a deduction was allowed, in terms of section 11, in respect of such expenditure or asset;
iii) [para. (iii) deleted by s.17 of Act No. 21 of 1995];
b) any assessed loss incurred by the taxpayer during the same year of assessment in carrying on any other trade either alone or in partnership with others, otherwise than as a member of a company the capital whereof is divided into shares:
Provided that there shall not be set off against any amount
a) distributed to such person by any pension fund or provident fund which is included in the gross income of such person in terms of paragraph (eB) of the definition of 'gross income' in section 1, any—
i) balance of assessed loss; or
ii) 'assessed loss' as defined in subsection (2) incurred in such year before taking into account any amount of such distribution;
b) derived by any person from the carrying on within the Republic of any trade, any—
i) assessed loss incurred by such person during such year; or
ii) any balance of assessed loss incurred in any previous year of assessment, in carrying on any trade outside the Republic; or
c) that is a retirement fund lump sum benefit or retirement fund lump sum withdrawal benefit included in taxable income, any—
i) balance of assessed loss;
ii) ‘assessed loss’ as defined in subsection (2) incurred in such year before taking into account that retirement fund lump sum benefit or retirement fund lump sum withdrawal benefit.
2) For the purposes of this section ‘assessed loss’ means any amount by which the deductions admissible under section 11 exceeded the income in respect of which they are so admissible
2A) In the case of any taxpayer other than a company--
a) the provisions of subsections (1) and (2) shall mutatis mutandis apply for the purpose of determining the taxable income derived by such taxpayer otherwise than from carrying on any trade, the reference in subsection (1) to "taxable income derived by any person from carrying on any trade" and the reference in that subsection to "the income so derived" being respectively construed as including a reference to taxable income derived by the taxpayer otherwise than from carrying on any trade and a reference to income so derived; and
b) the said taxpayer shall, subject to the provisos to subsection (1), not be prevented from carrying forward a balance of assessed loss merely by reason of the fact that he has not derived any income during any year of assessment.