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Income Tax Act, 1962 (Act 58 of 1962)

Chapter II: The Taxes

Part I: Normal Tax

23D. Limitation of allowances granted in respect of certain assets

 

(1) [Subsection (1) deleted by the Revenue Laws Amendment Act, 2007 (Act No. 35 of 2007)]

 

(2) Where any depreciable asset which is let or licensed by a taxpayer to a lessee or licensee was held within a period of two years preceding the commencement of the lease or licence—
(a) by the lessee or licensee, or by any sublessee or sublicense in relation to the asset; or
(b) by a person who was at any time during that period a connected person in relation to the lessee, licensee, sublessee or sublicense,

the cost or value of the depreciable asset for the purpose of this section and any deduction or allowance claimed by the taxpayer in respect of the asset shall not exceed the amount determined in accordance with subsection (2A).

 

(2A) The amount to be determined for purposes of subsection (2) is the sum of—
(a) The cost of the asset to the most recent lessee, licensee, sublessee, sublicense or connected person contemplated in subsection (2) that previously held that asset, less the sum of—
(i) all deductions which have been allowed to the lessee, licensee, sublessee, sublicensee or connected person in respect of the asset; and
(ii) all deductions that are deemed to have been allowed to the lessee, licensee, sublessee, sublicensee or connected person in respect of the asset in terms of section 11(e)(ix), 12B(4B), 12C(4A), 12D(3A), 12DA(4), 12F(3A), 13(1A), 13bis(3A), 13ter(6A), 13quin(3) or 37B(4);
(b) any amount contemplated in paragraph (n) of the definition of "gross income" in section 1 that is required to be included in the income of the lessee, licensee, sublessee, sublicensee or connected person that arises as a result of the disposal of the asset; and
(c) the applicable percentage in paragraph 10 of the Eighth Schedule, of the capital gain of the lessee, licensee, sublessee, sublicensee, or connected person that arises as a result of the disposal.

 

(3) [Subsection (3) deleted by the Revenue Laws Amendment Act, 2007 (Act No. 35 of 2007)]