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Income Tax Act, 1962 (Act 58 of 1962)

Chapter II: The Taxes

Part I: Normal Tax

23. Deductions not allowed in determination of taxable income

 

(1) No deductions shall in any case be made in respect of the following matters, namely—
(a) the cost incurred in the maintenance of any taxpayer, his family or establishment;
(b) domestic or private expenses, including the rent of or cost of repairs of or expenses in connection with any premises not occupied for the purposes of trade or of any dwelling-house or domestic premises except in respect of such part as may be occupied for the purposes of trade: Provided that
(a) such part shall not be deemed to have been occupied for the purposes of trade, unless such part is specifically equipped for purposes of the taxpayer's trade and regularly and exclusively used for such purposes; and
(b) no deduction shall in any event be granted where the taxpayer's trade constitutes any employment or office unless—
(i) his income from such employment or office is derived mainly from commission or other variable payments which are based on the taxpayer's work performance and his duties are mainly performed otherwise than in an office which is provided to him by his employer; or
(ii) his duties are mainly performed in such part.
(c) any loss or expense, the deduction of which would otherwise be allowable, to the extent to which it is recoverable under any contract of insurance, guarantee, security or indemnity;
(d) any tax imposed under this Act or any interest or penalty imposed under any other Act administered by the Commissioner;
(e) income carried to any reserve fund or capitalized in any way;
(f) any expenses incurred in respect of any amounts received or accrued which do not constitute income as defined in section one;
(g) any moneys, claimed as a deduction from income derived from trade, to the extent to which such moneys were not laid out or expended for the purposes of trade;
(h) interest which might have been made on any capital employed in trade;
(i) any expenditure, loss or allowance to the extent to which it is claimed as a deduction from any retirement fund lump sum withdrawal benefit;
(j) [deleted by  Revenue Laws Amendment Act No. 20 of 2006];
(k) any expense incurred by—
(i) 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 paragraph 2(5) of the said Schedule; or
(ii) a personal service provider as defined in the said Schedule,

other than any expense which constitutes an amount paid or payable to any employee of such labour broker or personal service provider for services rendered by such employee, which is or will be taken into account in the determination of the taxable income of such employee and, in the case of such personal service provider, any expense, deduction or contribution contemplated in paragraphs (c), (i), (l), (nA) or (nB) of section 11, expenses in respect of premises, finance charges, insurance, repairs and fuel and maintenance in respect of assets, if such premises or assets are used wholly and exclusively for purposes of trade;

(l) any expense incurred in respect of the payment of any restraint of trade, except as provided for in section 11(cA).
(m) subject to paragraph (k), any expenditure, loss or allowance, contemplated in section 11, which relates to any employment of, or office held by, any person (other than an agent or representative whose remuneration is normally derived mainly in the form of commissions based on his or her sales or the turnover attributable to him or her) in respect of which he or she derives any remuneration, as defined in paragraph 1 of the Fourth Schedule, other than—
(i) any contributions to a pension or retirement annuity fund as may be deducted from the income of that person in terms of sections 11(k) or (n);
(ii) any allowance or expense which may be deducted from the income of that person in terms of section 11(c), (e), (i) or (j);
(iiA) any deduction which is allowable under section 11(nA) or (nB);
(iii) any deduction which is allowable under section 11(a) in respect of any premium paid by that person in terms of an insurance policy, to the extent that—
(aa) it covers that person against the loss of income as a result of illness, injury, disability or unemployment; and
(bb) the amounts payable in terms of that policy as contemplated in item (aa) constitutes or will constitute income as defined; and
(iv) any deduction which is allowable under section 11(a) or (d) in respect of any rent of, cost of repairs of or expenses in connection with any dwelling house or domestic premises, to the extent that the deduction is not prohibited under paragraph (b).
(n) any deduction or allowance in respect of any asset or expenditure to the extent that amount—
(i) is granted or paid to the taxpayer and is exempt from tax in terms of section 10(1)(yA); and
(ii) is so granted or paid for purposes of the acquisition of that asset or funding of that expenditure,

[Proviso deleted by the Taxation Laws Amendment Act, 2012 (Act No. 22 of 2012)]

(o) any expenditure incurred—
(i) where the payment of that expenditure or the agreement or offer to make that payment constitutes an activity contemplated in Chapter 2 of the Prevention and Combating of Corrupt Activities Act, 2004 (Act No. 12 of 2004); or
(ii) which constitutes a fine charged or penalty imposed as a result of an unlawful activity carried out in the Republic or in any other country if that activity would be unlawful had it been carried out in the Republic;
(p) the value in respect of any cession of a policy of insurance ceded by  taxpayer to—
(i) any—
(aa) employee (or former employee);
(bb) director (or former director); or
(cc) dependant or nominee of the employee (or former employee) or director (or former director),

of the taxpayer; or

(ii) any pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund for the benefit of any—
(aa) employee (or former employee);
(bb) director (or former director); or
(cc) dependant or nominee of the employee (or former employee) or director (or former director),

of the taxpayer; and

(q) any expenditure incurred in the production of income in the form of foreign dividends.
(r) any deduction in respect of any premium paid by a person in terms of an insurance policy if that insurance policy covers that person against illness, injury, disability, unemployment or death of that person.

[Paragraph (r) inserted by section 33(1) of Act No. 43 of 2014]

[Paragraph (r) to be commenced: 1 March 2015]