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Division of Revenue Act, 2014 (Act No. 10 of 2014)

Chapter 3 : Conditional Allocations to Provinces and Municipalities

Part 3 : Matters relating to Schedule 4 to 7 allocations

17. Expenditure in terms of purpose and subject to conditions

 

 

(1) Despite anything to the contrary in any other legislation, an allocation referred to in Schedules 4 to 7 may only be utilised for the purpose stipulated in the Schedule concerned and in accordance with the applicable framework.

 

(2) A receiving officer may not transfer any portion of a Schedule 5 allocation to any other organ of state for the performance of a function to be funded by the allocation, unless before the transfer is made, the receiving officer and the organ of state agree to a payment schedule and the National Treasury approves the agreed payment schedule and—
(a) the transfer—
(i) is approved in the budget for the receiving provincial department or municipality; or
(ii) if not so approved—
(aa) the receiving officer notifies the National Treasury that the purpose of the transfer is not to artificially inflate the expenditure estimates of the relevant provincial department or municipality and indicates  the reasons for the transfer; and
(bb) the National Treasury approves the transfer; or
(b) the transfer is for the payment for services or goods procured in accordance with  the supply chain management policy or procurement policy of the relevant province or municipality and, if it is an advance payment, paragraph (a)(ii) applies with the necessary changes.

 

(3) For purposes of the implementation of a Schedule 6 allocation to a municipality—
(a) Eskom Holdings Limited may receive funds directly from the transferring national officer of the Department of Energy;
(b) a water board, as defined in section 1 of the Water Services Act, 1997 (Act No.  25 108 of 1997), may receive funds directly from the transferring national officer of the Department of Water Affairs or the Department of Human Settlements.

 

(4)
(a) For purposes of the Human Settlements Development Grant, a receiving officer and a municipality with level one, two or three accreditation as at 1 April 2014, must, by the date determined by the National Treasury, comply with subsection (2) by—
(i) entering into a payment schedule; and
(ii) submitting the payment schedule to the National Treasury for approval.
(b) If a municipality receives accreditation after 1 April 2014, the National Treasury may approve that paragraph (a) applies.
(c) If the transfer of the Human Settlements Development Grant to a municipality with level three accreditation is withheld or stopped in terms of section 18 or 19, the receiving officer must request the National Treasury to amend the payment schedule in terms of section 24.

 

(5) If a function partially or fully funded by the Human Settlements Development Grant is assigned by a province to a municipality having a level 3 accreditation, as envisaged in section 10 of the Municipal Systems Act—
(a) funds from that Grant for the province for the function must be stopped in terms of section 19 and reallocated in terms of section 20 to the municipality which has been assigned the function;
(b) any project or contract regarding the function must, if possible, be finalised by the province before the date the function is assigned and, if not finalised, the province must notify the relevant municipality and the National Treasury;
(c) any project or contract regarding the function not finalised at the date at which the function is assigned, must be subjected to an external audit and the province and the municipality must enter into an agreement to cede to the municipality all contracts related to the function;
(d) money that is retained by the province for any contract related to the function that is not ceded to the municipality must be spent by 31 March 2015 and will not be available in terms of section 30 of the Public Finance Management Act or section 29(6)(c);
(e) the receiving officer of the province must submit to the transferring national officer and the National Treasury a list of liabilities attached to the function, that were not transferred to the municipality, within seven days after the function  is  assigned  to  provide  for  the  adjustment  of  the  applicable allocations; and
(f) the receiving officer of a municipality assigned the function must, within one month from the date of the stopping of funds in terms of paragraph (a) confirm to the transferring national officer that the planned expenditure submitted by the receiving officer of the province in terms of section 12(6)(a) will be implemented by the municipality or submit revised planned expenditure.

 

(6) If a function is partially or fully funded by the Public Transport Operations Grant, is assigned by a province to a municipality, as envisaged in section 10 of Municipal Systems Act, subsection (5) applies with the necessary changes.

 

(7) A project funded by the Human Settlements Development Grant that is initiated after 1 April 2014, must be implemented in terms of an agreement with the municipality and aligned to the allocations for the municipality in the applicable framework.