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Income Tax Act, 1962 (Act 58 of 1962)

Chapter II: The Taxes

Part I: Normal Tax

20. Set-off of assessed losses

 

(1) For the purpose of determining the taxable income derived by any person from carrying on any trade , there shall, subject to section 20A, be set off against the income so derived by such person—
(a) any balance of assessed loss incurred by that person in any previous year which has been carried forward from the preceding year of assessment: Provided that 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;

[Subsection (1)(a) substituted by section 39(a) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]

(b) any assessed loss incurred by a person 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:

[Words preceding proviso of section 1(b) substituted by section 39(b) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]

Provided that there shall not be set off against any amount

(a) [Subsection (1)(b)(a) deleted by section 20(1) of Act No. 17 of 2009]
(b) derived by any person from a source within the Republic, 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, retirement fund lump sum withdrawal benefit or severance 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 person 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 person  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 that person otherwise than from carrying on any trade and a reference to income so derived; and
(b) the said person 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.

[Subsection (2A) substituted by section 30(c) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]