Acts Online
GT Shield

Income Tax Act, 1962 (Act 58 of 1962)

Chapter II: The Taxes

Part I: Normal Tax

11. General deductions allowed in determination of taxable income

 

 

(1) For the purpose of determining the taxable income derived by any person from carrying on any trade , there shall be allowed as deductions from the income of such person so derived—
(a) expenditure and losses actually incurred in the production of the income, provided such expenditure and losses are not of a capital nature;
(b) [deleted by section 15 of Act 59 of 2000];
(bA) [deleted by Act No. 24 of 2011 of the Taxation Laws Amendment Act];
(bB) [deleted by section 14 of Taxation Laws Amendment Act No. 17 of 2009];
(bC) [deleted by Revenue Laws Amendment Act, No. 32 of 2004];
(c) any legal expenses (being fees for the services of legal practitioners, expenses incurred in procuring evidence or expert advice, court fees, witness fees and expenses, taxing fees, the fees and expenses of sheriffs or messengers of court and other expenses of litigation which are of an essentially similar nature to any of the said fees or expenses) actually incurred by the taxpayer during the year of assessment in respect of any claim, dispute or action at law arising in the course of or by reason of the ordinary operations undertaken by him in the carrying on of his trade: Provided that the amount to be allowed under this paragraph in respect of any such expenses shall be limited to so much thereof as—
(i) is not of a capital nature; and
(ii) is not incurred in respect of any claim made against the taxpayer for the payment of damages or compensation if by reason of the nature of the claim or the circumstances any payment which is or might be made in satisfaction or settlement of the claim does not or would not rank for deduction from his income under paragraph (a); and
(iii) is not incurred in respect of any claim made by the taxpayer for the payment to him of any amount which does not or would not constitute income of the taxpayer; and
(iv) is not incurred in respect of any dispute or action at law relating to any such claim as is referred to in paragraph (ii) or (iii) of this proviso;
(cA) an allowance in respect of any amount actually incurred by such person in the course of the carrying on of his trade, as contemplated in respect of any restraint of trade imposed on any other person who—
(i) is a natural person;
(ii) is or was a labour broker as defined in the Fourth Schedule (other than a labour broker in respect of which a certificate of exemption has been issued in terms of such Schedule);
(iii) was a personal service company or personal service trust as defined in the Fourth Schedule prior to section 66 of the Revenue Laws Amendment Act, 2008, coming into operation; or
(iv) is a personal service provider as defined in the Fourth Schedule,

to the extent that such amount constitutes or will constitute income of the person to whom it is paid: Provided that the amount allowed to be deducted under this paragraph shall not exceed for any one year the lesser of—

(aa) so much of such amount so incurred as is equal to such amount divided by the number of years, or part thereof, during which the restraint of trade shall apply; or
(bb) one-third of such amount so incurred;
(d) expenditure actually incurred during the year of assessment on repairs of property occupied for the purpose of trade or in respect of which income is receivable, including any expenditure so incurred on the treatment against attack by beetles of any timber forming part of such property and sums expended for the repair of machinery, implements, utensils and other articles employed by the taxpayer for the purposes of his trade;
(e) save as provided in paragraph 12(2) of the First Schedule, such sum as the Commissioner may think just and reasonable as representing the amount by which the value of any machinery, plant, implements, utensils and articles (other than machinery, plant, implements, utensils and articles in respect of which a deduction may be granted under section 12B , 12C , 12DA, 12E(1), 12U or 37B owned by the taxpayer or acquired by the taxpayer as purchaser in terms of an agreement contemplated in paragraph (a) of the definition of ‘instalment credit agreement’ in section 1 of the Value-Added Tax Act and used by the taxpayer for the purpose of his or her trade has been diminished by reason of wear and tear or depreciation during the year of assessment: Provided that

[Words preceding subsection (1)(e)(i) substituted by section 26(1)(a) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016) - effective 1 April 2016)]

(i) [Subsection (1)(e)(i) deleted by the Taxation Laws Amendment Act No. 7 of 2010] ;
(iA) no allowance may be made in respect of any machinery, plant, implement, utensil or article the ownership of which is retained by the taxpayer as a seller in terms of an agreement contemplated in paragraph (a) of the definition of ‘instalment credit agreement’ in section 1 of the Value-Added Tax Act;
(ii) in no case shall any allowance be made for the depreciation of buildings or other structures or works of a permanent nature;
(iiA) where any machinery, implement, utensil or article qualifying for an allowance under this paragraph is mounted on or affixed to any concrete or other foundation or supporting structure and—
(aa) the foundation or supporting structure is designed for such machinery, implement, utensil or article and constructed in such manner that it is or should be regarded as being integrated with the machinery, implement, utensil or article; and
(bb) the useful life of the foundation or supporting structure is or will be limited to the useful life of the machinery, implement, utensil or article mounted thereon or affixed thereto,

the said foundation or supporting structure shall for the purposes of this paragraph not be deemed to be a structure or work of a permanent nature but shall for the purposes of this Act be deemed to be a part of the machinery, implement, utensil or article mounted thereon or affixed thereto;

(iii) no allowance shall be made under this paragraph in respect of any ship to which the provisions of section 14(1)(a) or (b) apply or in respect of any aircraft to which the provisions of section 14bis(1)(a), (b) or (c) apply;
(iiiA) no allowance shall be made under this paragraph in respect of any machinery, implement, utensil or article of which the cost has been allowed as a deduction from the taxpayer's income under the provisions of section 24D;
(iv) [deleted by the Taxation Laws Amendment Act No. 7 of 2010];
(v) the value of any machinery, implements, utensils or articles used by the taxpayer for the purposes of his trade shall be increased by the amount of any expenditure (other than expenditure referred to in paragraph (a)) which is incurred by the taxpayer in moving such machinery, implements, utensils or articles from one location to another;

[Subparagraph (v) amended by section 18(1)(c) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015]

(vi) [deleted by the Taxation Laws Amendment Act No. 8 of 2007];
(vii) where the value of any such machinery, implements, utensils and articles acquired by the taxpayer on or after 15 March 1984 is for the purposes of this paragraph to be determined having regard to the cost of such machinery, implements, utensils and articles, such cost shall be deemed to be the cost which a person would, if he had acquired such machinery, implements, utensils and articles under a cash transaction concluded at arm's length on the date on which the transaction for the acquisition of such machinery, implements, utensils and articles was in fact concluded, have incurred in respect of the direct cost of the acquisition of such machinery, implements, utensils and articles, including the direct cost of the installation or erection thereof;

[Subparagraph (vii) amended by section 18(1)(c) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015]

(viii) [deleted by the Revenue Laws Amendment Act, 2007 (Act No. 35 of 2007];
(ix) where any such machinery, plant, implement, utensil or article was used by the taxpayer during any previous year of assessment or years of assessment for the purposes of any trade carried on by such taxpayer, the receipts and accruals of which were not included in the income of such taxpayer during such year or years the period of use of such asset during such previous year or years shall be taken into account in determining the amount by which the value of such machinery, plant, implement, utensil or article has been diminished;

[Subparagraph (ix) amended by section 18(1)(c) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015]

(f) an allowance in respect of any premium or consideration in the nature of a premium paid by a taxpayer for—
(i) the right of use or occupation of land or buildings used or occupied for the production of income or from which income is derived; or
(ii) `the right of use of any plant or machinery used for the production of income or from which income is derived; or
(ii)bis the right of use of any motion picture film or any sound recording or advertising matter connected with such film, if such film, sound recording or advertising matter is used for the production of income or income is derived therefrom; or
(iii) the right of use of any patent as defined in the Patents Act or any design as defined in the Designs Act or any trade mark as defined in the Trade Marks Act or any copyright as defined in the Copyright Act or of any other property which is of a similar nature, if such patent, design, trade mark, copyright or other property is used for the production of income or income is derived therefrom; or
(iv) the imparting of or the undertaking to impart any knowledge directly or indirectly connected with the use of such film, sound recording, advertising matter patent, design, trade mark, copyright or other property as aforesaid; or
(v) the right of use of any pipeline, transmission line or cable or railway line contemplated in the definition of "affected asset" in section 12D:

Provided that

(aa) the allowance under sub-paragraph (i), (ii), (ii)bis, (iii) or (v) shall not exceed for any one year such portion of the amount of the premium or consideration so paid as is equal to the said amount divided by the number of years for which the taxpayer is entitled to the use or occupation, or one twenty-fifth of the said amount, whichever is the greater,
(bb) if the taxpayer is entitled to such use or occupation for an indefinite period, or if, in the case of any such right of use or occupation granted under an agreement concluded on or after 1 July 1983, the taxpayer or the person by whom such right of use or occupation was granted holds a right or option to extend or renew the original period of such use or occupation, he shall be deemed, for the purposes of this paragraph, to be entitled to such use or occupation for the period of the probable duration of such use or occupation; and

[Paragraph (bb) amended by section 18(1)(d) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015]

(cc) the allowance under sub-paragraph (iv) shall not exceed for any one year such portion (not being less than one twenty-fifth) of the amount of the premium or consideration so paid as may be determined having regard to the period during which the taxpayer will enjoy the right to use such film, sound recording, advertising matter, patent, design, trade mark, copyright or other property as aforesaid and any other circumstances which are relevant;

[Paragraph (cc) amended by section 18(1)(d) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015]

(dd) the provisions of this paragraph shall not apply in relation to any such premium or consideration paid by the taxpayer which do not for the purposes of this Act constitute income of the person to whom it is paid, unless such premium or consideration is paid in respect of a right of use of a line or cable—
(A) used for the transmission of electronic communications; and
(B) substantially the whole of which is located outside the territorial waters of the Republic,

where the term of the right of use is 15 years or more;

[Paragraph (dd)(B) amended by section 18(1)(e) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

(g) an allowance in respect of any expenditure actually incurred by the taxpayer, in pursuance of an obligation to effect improvements on land or to buildings. incurred under an agreement whereby the right of use or occupation of the land or buildings is granted by any other person, where the land or buildings are used or occupied for the production of income or income is derived therefrom: Provided that
(i) the aggregate of the allowances under this paragraph shall not exceed the amount stipulated in the agreement as the value of the improvements or as the amount to be expended on the improvements or, if no amount is so stipulated, an amount representing the fair and reasonable value of the improvements;

[Subparagraph (i) amended by section 18(1)(f) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015]

(ii) any such allowance shall not exceed for any one year such portion of the aggregate of the allowances under this paragraph as is equal to the said aggregate divided by the number of years (calculated from the date on which the improvements are completed, but not more than 25 years) for which the taxpayer is entitled to the use or occupation;
(iii) if—
(aa) the taxpayer is entitled to such use or occupation for an indefinite period;or
(bb) the taxpayer or the person by whom such right of use or occupation was granted holds a right or option to extend or renew the original period of such use or occupation,

the taxpayer shall for the purposes of this paragraph be deemed to be entitled to such use or occupation for such period as represents the probable duration of such use or occupation;

[Subparagraph (iii) amended by section 18(1)(f) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015]

(iv) the aggregate of the allowances under this paragraph in respect of any building or improvements referred to in section 13(1) or 27(2)(b) shall not exceed the cost (after the deduction of any amount which has been set off against the cost of such building or improvements under section 13(3) or section 27(4)) to the taxpayer of such building or improvements less the aggregate of the allowances in respect of such building or improvements made to the taxpayer under the said section 13(1) or 27(2)(b) or the corresponding provisions of any previous Income Tax Act;
(v) [deleted by the Taxation Laws Amendment Act No. 7 of 2010];
(vi) `the provisions of this paragraph shall not apply in relation to any such expenditure incurred, if the value of such improvements or the amount to be expended on such improvements, as contemplated in paragraph (h) of the definition of "gross income" in section 1, does not for the purposes of this Act constitute income of the person to whom the right to have such improvements effected has accrued;
(vii) if during any year of assessment the agreement whereby the right of use or occupation of the land or buildings is granted is terminated before expiry of the period to which that taxpayer was entitled to the use or occupation, as contemplated in paragraph (ii) or (iii), so much of the allowance which may be allowed under this paragraph, which has not yet been allowed in that year or any previous year of assessment, shall be allowable as a deduction in that year of assessment.
(gA) an allowance in respect of any expenditure (other than expenditure which has qualified in whole or part for deduction or allowance under any of the other provisions of this section or the corresponding provisions of any previous Income Tax Act) actually incurred by the taxpayer—
(i) in devising or developing any invention as defined in the Patents Act or in creating or producing any design as defined in the Designs Act or any trade mark as defined in the Trade Marks Act or any copyright as defined in the Copyright Act or any other property which is of a similar nature;
(ii) in obtaining any patent or the restoration of any patent under the Patents Act or the registration of any design under the Designs Act or the registration of any trade mark under the Trade Marks Act or under similar laws of any other country; or
(iii) in acquiring by assignment from any other person any such patent, design, trade mark or copyright or in acquiring any other property of a similar nature or any knowledge essential to the use of such patent, design, trade mark, copyright or other property or the right to have such knowledge imparted,

if such invention, patent, design, trade mark, copyright, other property or knowledge, as the case may be, is used by the taxpayer in the production of his income: Provided that

(aa) where such expenditure exceeds R5 000, and was incurred—
(A) before 29 October 1999, the allowance shall not exceed for any one year such portion of the amount of the expenditure as is equal to such amount divided by the number of years which represents the probable duration of use of the invention, patent, design, trade mark, copyright, other property or knowledge, or four per cent of the said amount, whichever is the greater;

[Subparagraph (A) amended by section 18(1)(g) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015]

(B) on or after 29 October 1999, the allowance shall not for any one year exceed an amount equal to—
(AA) five per cent of the amount of the expenditure in the case of any invention, patent, trade mark, copyright or other property of a similar nature or any knowledge essential to the use of such invention, patent, trade mark, copyright or other property or the right to have such knowledge imparted; or
(BB) 10 per cent of the amount of the expenditure in the case of any design or other property of a similar nature or any knowledge essential to the use of such design or other property or the right to have such knowledge imparted;
(bb) where such expenditure was incurred before the commencement of the year of assessment in question the allowance shall be calculated on the amount of such expenditure, less an amount equivalent to the sum of the allowances to which the taxpayer was entitled under this paragraph and the allowances to which the taxpayer would have been entitled under this paragraph if this paragraph had been applicable, in respect of such expenditure in respect of previous years of assessment, including any year of assessment under any previous Income Tax Act;

[Paragraph (bb) amended by section 18(1)(h) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015]

(cc) no allowance shall be made in respect of any such invention, patent, design, trade mark, copyright or other property or knowledge so acquired or obtained by the taxpayer on or after 24 June 1988, but prior to 1 July 1993 from any other person who is a resident of the Republic or who is ordinarily resident in a neighbouring country (or, in the case of a company, is incorporated or has its place of effective management in a neighbouring country), if—
(A) the taxpayer or such other person is a company and such other person or the taxpayer, as the case may be, is interested in more than 50 per cent of any class of shares issued by such company, whether directly as a holder of shares in that company or indirectly as a holder of shares in any other company; or
(B) both the taxpayer and such other person are companies and any third person is interested in more than 50 per cent of any class of shares issued by one of those companies and in more than 50 per cent of any class of shares issued by the other company, whether directly as a holder of shares in the company by which the shares in question were issued or indirectly as a holder of shares in any other company;
(dd) where any such invention, patent, design, trade mark, copyright or other property or knowledge was so acquired or obtained by the taxpayer on or after 1 July 1993 from any other person who is a resident of the Republic or who is ordinarily resident in a neighbouring country (or, in the case of a company, is incorporated or has its place of effective management in a neighbouring country), and who is a connected person in relation to the taxpayer, the allowance under this paragraph shall be calculated on the lesser of the cost of such invention, patent, design, trade mark, copyright or other property or knowledge to such connected person or the market value thereof as determined on the date upon which such invention, patent, design, trade mark, copyright or other property or knowledge was acquired or obtained by the taxpayer;
(ee) no allowance shall be made in respect of any expenditure incurred by such taxpayer on or after 29 October 1999, in respect of the acquisition from any other person of any trade mark or other property of a similar nature or any knowledge essential to the use of such trade mark or the right to have such knowledge imparted;
(ff) no deduction shall be allowed under this paragraph in respect of any expenditure incurred by the taxpayer during any year of assessment commencing on or after 1 January 2004;
(gB) expenditure (other than expenditure which has qualified in whole or part for deduction or allowance under any of the other provisions of this section) actually incurred by the taxpayer during the year of assessment in obtaining the grant of any patent or the restoration of any patent, or the extension of the term of any patent under the Patents Act or the registration of any design, or extension of the registration period of any design under the Designs Act or the registration of any trade mark, or the renewal of the registration of any trade mark under the Trade Marks Act or under similar laws of any other country, if such patent, design or trade mark is used by the taxpayer in the production of his or her income;
(gC) an allowance in respect of any expenditure actually incurred by the taxpayer during any year of assessment commencing on or after 1 January 2004 to acquire (otherwise than by way of devising, developing or creating) any—
(i) invention or patent as defined in the Patents Act;
(ii) design as defined in the Designs Act;
(iii) copyright as defined in the Copyright Act;
(iv) other property which is of a similar nature (other than trade marks as defined in the Trade Marks Act; or
(v) knowledge essential to the use of such patent, design, copyright or other property or the right to have such knowledge imparted,

which shall be allowed during the year of assessment in which that invention, patent, design, copyright, other property or knowledge is brought into use for the first time by the taxpayer for the purposes of the taxpayer’s trade, if that invention, patent, design, copyright, other property or knowledge, as the case may be, is used by the taxpayer in the production of his or her income: Provided that—

(aa) where that expenditure actually incurred by the taxpayer exceeds R5 000, that allowance shall not exceed in any year of assessment—
(A) five per cent of the amount of the expenditure in respect of any invention, patent, copyright or other property of a similar nature or any knowledge essential to the use of such invention, patent, copyright or other property or the right to have such knowledge imparted; or
(B) 10 per cent of the amount of the expenditure in respect of any design or other property of a similar nature or any knowledge essential to the use of such design or other property or the right to have such knowledge imparted;
(bb) [deleted by the Revenue Laws Amendment Act, 2007 (Act No. 35 of 2007)];
(gD) where that trade constitutes the provision of telecommunication services, the exploration, production or distribution of petroleum or the provision of gambling facilities, any expenditure (other than in respect of infrastructure) incurred to acquire a licence from the government of the Republic in the national, provincial or local sphere, contemplated in section 10(1)(a), or an institution or entity contemplated in Schedule 1 or Part A or C of Schedule 3 to the Public Finance Management Act, where that expenditure is incurred in terms of the licence and the licence is required to carry on that trade, which deduction must not exceed for any one year such portion of the expenditure as is equal to the amount of the expenditure divided by the number of years for which the taxpayer has the right to the licence after the date on which the expenditure was incurred, or 30, whichever is the lesser;
(h) such allowance in respect of amounts included in the taxpayer's gross income under paragraph (g) or paragraph (h) of the definition of "gross income" in section 1 as the Commissioner may deem reasonable having regard to any special circumstances of the case and, in the case of an amount so included under the said paragraph (h), to the original period for which the right of use or occupation was granted or, in the case of any amount so included under the said paragraph (h) in consequence of an agreement concluded on or after 1 July 1983, to the number of years taken into account in the determination of the relevant allowance granted to any other person under the provisions of paragraph (g) of this section: Provided that where there has on or after the twenty-ninth day of March, 1972, accrued to the taxpayer the right to have improvements effected on land or to buildings by any other person and an amount is required to be included in the taxpayer's gross income under the said paragraph (h) with respect to such improvements, no allowance shall be made to the taxpayer under this paragraph in respect of such amount, if—
(i) the taxpayer or such other person is a company and such other person or the taxpayer, as the case may be, is interested in more than 50 per cent of any class of shares issued by such company, whether directly as a holder of shares in that company or indirectly as a holder of shares in any other company; or
(ii) both the taxpayer and such other person are companies and any third person is interested in more than 50 per cent of any class of shares issued by one of those companies and in more than 50 per cent of any class of shares issued by the other company, whether directly as a holder of shares in the company by which the shares in question were issued or indirectly as a holder of shares in any other company;
(hA) [deleted by Act No. 24 of 2011 of the Taxation Laws Amendment Act];
(hB) allowance in respect of expenditure actually incurred and paid in the production of income to discharge all consideration, royalties or compensation otherwise payable to a community or natural person in respect of any existing consideration, contractual royalty, future consideration or compensation that accrued to that community or natural person as contemplated in Item 11 of Schedule II of the Petroleum Resources Development Act, 2002 (Act No. 28 of 2002): Provided that for any year of assessment, the allowance shall not exceed an amount equal to the expenditure incurred and paid divided by the number of years for which all consideration, royalties or compensation otherwise payable has been discharged;
(i) the amount of any debt due to the taxpayer which has during the year of assessment become bad, provided such amount is included in the current year of assessment or was included in previous years of assessment in the taxpayer's income;

[Paragraph (i) amended by section 17(1)(a) of Act No. 43 of 2014]

(j) an allowance as may be made each year by the Commissioner in respect of so much of any debt due to the taxpayer as the Commissioner considers to be doubtful if that debt would have been allowed as a deduction under any other provisions of this Part had that debt become bad; Provided that such allowance shall be included in the income of the taxpayer in the following year of assessment;
(k)

any amount contributed during a year of assessment to any pension fund, provident fund or retirement annuity fund in terms of the rules of that fund by a person that is a member of that fund: Provided that—

(i) the total deduction to be allowed in terms of this paragraph must not in the year of assessment exceed the lesser of—
(aa) R350 000; or
(bb) 27,5 per cent of the higher of the person’s—
(A) remuneration (other than in respect of any retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit and severance benefit) as defined in paragraph 1 of the Fourth Schedule; or
(B) taxable income (other than in respect of any retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit and severance benefit) as determined before allowing any deduction under this paragraph and section 18A;

[Subsection (1)(k)(i)(bb)(B) substituted by section 26(1)(b) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016) - effective 1 March 2016]

(ii) any amount so contributed in any previous year of assessment which has been disallowed solely by reason of the fact that it exceeds the amount of the deduction allowable in respect of that year of assessment is deemed to be an amount so contributed in the current year of assessment, except to the extent that the amount so contributed has been—
(aa) allowed as a deduction against income in any year of assessment;
(bb) accounted for under paragraph 5(1)(a) or 6(1)(b)(i) of the Second Schedule; or
(cc) exempted under section 10C;
(iii) any amount so contributed by an employer of the person for the benefit of the person must, to the extent that the amount has been included in the income of the person as a taxable benefit in terms of the Seventh Schedule, be deemed to have been contributed by the person; and
(iv) for the purposes of this paragraph, a partner in a partnership must be deemed to be an employee of the partnership and a partnership must be deemed to be the employer of the partners in that partnership;
(v) any deduction in terms of this paragraph must apply for the purpose of determining the total amount of taxable income, before any deduction in terms of section 18A or the inclusion of any taxable capital gain of the person, whether derived from the carrying on of any trade or otherwise;

[Subsection (1)(k)(v) substituted by section 26(1)(c) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016) - effective 1 March 2016]

(l) any sum contributed by an employer during the year of assessment for the benefit of his employees to any pension fund, provident fund or benefit fund (other than a fund contemplated in paragraph (a) of the definition of 'benefit fund'): Provided that
(i) in respect of any lump sum contribution, the Commissioner may determine that the said sum shall be deducted in a series of annual instalments, so that only a portion thereof is deducted in the year of assessment in which it is contributed, and the residue in such subsequent years of assessment and in such proportions as the Commissioner may determine, until the contribution is extinguished;
(ii) if the contributions (including any lump sum payments) made by the employer in respect of any employee during any year of assessment to such funds exceed an amount equal to ten per cent of the approved remuneration of such employee for such year of assessment, and the Commissioner is satisfied that the aggregate of such contributions and the total remuneration accrued during such year of assessment to such employee in respect of his employment by the employer is excessive or unjustifiable in relation to the value of the services rendered by such employee to the employer, and having regard to other benefits, if any, derived by him from his employment by the employer, only so much of such contribution as appears to the Commissioner to be reasonable, but not less than an amount equal to ten per cent of the approved remuneration of such employee for such year of assessment, shall be allowed to be deducted under this paragraph;
(iii) for the purposes of paragraph (ii) of this proviso "approved remuneration", in relation to any employee for any year of assessment, means so much of the total remuneration accrued to such employee during such year of assessment in respect of his employment by the employer concerned as the Commissioner considers to be fair and reasonable in relation to the value of the services rendered by such employee during such year of assessment to the employer and having regard to other benefits, if any, derived by him from his employment by the employer;
(iv) where any contributions are made to any such fund by the members of a partnership in their capacity as employers, the references in paragraph (ii) of this proviso to an employer shall be construed as applying to the partnership as though its members were one person;
(v) a partner in a partnership must for purposes of this paragraph be deemed to be an employee of the partnership;
(vi) [Deleted by the Tax Administration Act, 2011 (Act No. 28 of 2011)]
(lA) an amount equal to the market value of any qualifying equity share granted to an employee of that person as contemplated in section 8B, as determined on the date of grant as defined in that section, less any consideration given by that employee for that qualifying equity share, which applies in lieu of any other deduction which may otherwise be allowed to that person or any other person in respect of the granting of that share: Provided that the deduction under this paragraph may not during any year of assessment in aggregate exceed an amount of R10 000 in respect of all qualifying equity shares granted to a single employee and so much as exceeds that amount may be carried forward to the immediately succeeding year of assessment and that excess is deemed to be the market value of qualifying equity shares granted to the relevant employee during that immediately succeeding year for purposes of this paragraph;
(m) any amount paid by way of annuity during the year of assessment by any taxpayer—
(i) to a former employee who has retired from the taxpayer's employ on grounds of old age, ill health or infirmity; or
(ii) to a person who was for a period of at least five years a partner in an undertaking carried on by the taxpayer and who retired from the partnership in respect of that undertaking on grounds of old age, ill health or infirmity, provided that the amount so paid to such person is reasonable, having regard to the services rendered by such person as a partner: in such undertaking prior to his retirement and the profits made in such undertaking, and that the said amount does not represent consideration payable to such person in respect of his interest in the partnership; or
(iii) to any person who is dependent for his maintenance upon a former employee or a former partner in an undertaking carried on by the tarpayer or (where such former employee or former partner is deceased) was so dependent immediately prior to his death;

(n)        

(i)        

(aa) so much of the total current contributions to any retirement annuity fund or funds made during the year of assessment by any taxpayer as a member of such fund or funds as does not in the case of the taxpayer exceed the greatest of—
(A) 15 per cent of an amount equal to the amount remaining after deducting from, or setting off against, the income derived by the taxpayer during the year of assessment (excluding income derived from any retirement funding employment (being the income or part thereof referred to in the definition of "retirement funding employment" in section 1), and any retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit and severance benefit) the deductions or assessed losses admissible against such income under this Act (excluding this paragraph, sections 17A, 18 and 18A and items (c) to (i), inclusive, of paragraph 12(1) of the First Schedule); or
(B) the amount, if any, by which the amount of R3 500 exceeds the amount of any deduction to which the taxpayer is entitled under paragraph (k)(i) in respect of the said year; or
(C) the amount of R1 750;
(bb) so much of the total of any contributions to any retirement annuity fund or funds made during the year of assessment by any taxpayer as a member of such fund or funds as does not exceed R1 800 in the case of the taxpayer, where such contributions are made under conditions prescribed in the rules of the fund whereby a member who has discontinued his or her contributions prematurely is entitled to be reinstated as a full member thereof and the current contributions to the fund have been paid in full:

Provided that

(aa) no deduction shall be made under subparagraph (i)(aa) in respect of any amount paid into a retirement annuity fund for the benefit of a taxpayer as a member of such fund where such amount is a lump sum benefit derived by the taxpayer from a pension fund, a pension preservation fund, a provident fund, a provident preservation fund or a retirement annuity fund and that amount has under the provisions of paragraph 6 (i)(a)(i)(aa), (bb), (cc) or (dd) of the Second Schedule qualified for deduction from any amount to be included in the taxpayer’s gross income;
(bb) the deductions in terms of subparagraph (i)(aa) shall not exceed an amount equal to the amount remaining after deducting from or setting off against the income derived by the taxpayer during the year of assessment the deductions and assessed losses admissible against such income under this Act (excluding subparagraph (i)(aa), sections 17A and 19(3) and paragraph 12(1)(c) to (i), inclusive, of the First Schedule);
(cc) any current contributions (excluding any amount referred to in item (aa) of this proviso) to any retirement annuity fund or funds which are made by the taxpayer as a member of such fund or funds during a year of assessment and do not qualify for deduction from his or her income for that year under subparagraph (i)(aa) shall be carried forward and, except to the extent that such contributions have been exempted under section 10C or accounted for under paragraph 5(1)(a) or 6(1)(b)(i) of the Second Schedule, be deemed for the purposes of subparagraph (i)(aa) to be current contributions made to the fund or funds in question during the next succeeding year of assessment;
(dd) no deduction shall be made under subparagraph (i)(bb) in respect of an contribution relating to any year of assessment which, if such contribution had been made during that year, would not have qualified for deduction under this paragraph, as applicable in relation to the said year;
(ee) any amount being a portion of a contribution made as contemplated in subparagraph (i)(bb) and which has been disallowed solely by reason of the fact that it exceeds the amount of the deduction allowable in respect of the year of assessment, shall be carried forward and be deemed for the purposes of subparagraph (i) to be a contribution so made in the next succeeding year of assessment;
(ff) the provisions of this paragraph shall apply for the purpose of determining the taxpayer's total taxable income whether derived from the carrying on of any trade or otherwise;
(gg) where any such contribution was allowed as a deduction to a taxpayer, no deduction in respect of such contribution shall be allowed to such taxpayer's spouse; and
(ii) for the purposes of subparagraph (i), any contribution contemplated in that subparagraph which has been made by an employer of the taxpayer for the benefit of the taxpayer must, to the extent that the amount has been included in the income of the taxpayer as a taxable benefit in terms of the Seventh Schedule, be deemed to have been made by the taxpayer;
(nA) so much of any amount, including any voluntary award, received or accrued in respect of services rendered or to be rendered or any amount received or accrued in respect of or by virtue of any employment or the holding of any office as was included in the taxable income of that person and is refunded by that person;
(nB) so much of any amount contemplated in paragraph (cA) of the definition of ‘gross income’ received by or accrued to any person as is refunded by that person;
(o) at the election of the taxpayer, an amount by which the cost to that taxpayer of any depreciable asset—
(i) which qualified for an allowance or deduction in terms of section 11(e), 11B, 11D, 12B, 12C, 12DA, 12E, 14 , 14bis or 37B(2)(a); and
(ii) the expected useful life of which for tax purposes did not exceed ten years as determined on the date of original acquisition,

exceeds the sum of the amount received or accrued from the alienation, loss or destruction of that asset and the amount of any allowance or deduction allowed in respect of that asset in that year or any previous year of assessment or which was deemed to have been allowed in terms of section 12B(4B) or 12C(4A), 12DA(4) or 37B(4) or taken into account in terms of section 11(e)(ix), as the case may be: Provided that for the purposes of this paragraph—

(aa) the cost of any plant, machinery, implements, utensils or articles shall be deemed to be the actual cost plus the amount by which the value of such plant, machinery, implements, utensils or articles has been increased in terms of paragraph (v) of the proviso to paragraph (e);

[Paragraph (aa) amended by section 18(1)(j) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015]

(bb) the actual cost of any plant, machinery, implement, utensil or article acquired by the taxpayer on or after 15 March 1984 shall be deemed to be the cost of that plant, machinery, implement, utensil or article as determined under paragraph (vii) of the proviso to paragraph (e);
(cc) [Paragraph (cc) deleted by section 18(1)(k) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015];
(dd) [Paragraph (dd) deleted by section 18(1)(k) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015]

Provided further that no election may be made in terms of this paragraph by the taxpayer if the amount received or accrued from the alienation, loss or destruction of the asset was received or accrued from a person that is a connected person in relation to the taxpayer;

(p) [deleted by the Revenue Laws Amendment Act No. 60 of 2008];
(q) [deleted by the Revenue Laws Amendment Act No. 60 of 2008];
(r) [deleted by Revenue Laws Amendment Act, No. 32 of 2004];
(r)bis [deleted by the Taxation Laws Amendment Act, 2012 (Act No. 22 of 2012)];
(s) [deleted by the Revenue Laws Amendment Act No. 60 of 2008];
(t) [deleted on 1 January, 2005 (Taxation Laws Amendment Act, 2004 (16 of 2004)];
(u) [deleted by the Taxation Laws Amendment Act, 2002];
(uA) [deleted by the Taxation Laws Amendment Act, 2002];
(v) [deleted by section 9 of Act 65 of 1973];
(w) expenditure incurred by a taxpayer in respect of any premiums payable under a policy of insurance (other than a policy of insurance that relates to the death, disablement or severe illness of an employee or director of the taxpayer arising solely out of and in the course of employment of such employee or director) of which the taxpayer is the policyholder, where—

(i)        

(aa) the policy relates to the death, disablement or severe illness of an employee or director of the taxpayer; and
(bb) the amount of expenditure incurred by the taxpayer in respect of the premiums payable under the policy is deemed to be a taxable benefit granted to an employee or director of the taxpayer in terms of paragraph 2(k) of the Seventh Schedule; or

(ii)        

(aa) the taxpayer is insured against any loss by reason of the death, disablement or severe illness of an employee or director of the taxpayer;
(bb) the policy is a risk policy with no cash value or surrender value;
(cc) the policy is not the property of any person other than the taxpayer at the time of the payment of the premium; and

[Proviso deleted by section 17(1)(b) of Act No. 43 of 2014]

(dd) in respect of any policy entered into—
(A) on or after 1 March 2012, the policy agreement states that this paragraph applies in respect of premiums payable under that policy; or
(B) before 1 March 2012, it is stated in an addendum to the policy agreement by no later than 31 August 2012 that this paragraph applies in respect of premiums payable under that policy;
(x) any amounts which in terms of any other provision in this Part, are allowed to be deducted from the income of the taxpayer.