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Income Tax Act, 1962 (Act 58 of 1962)

Chapter II: The Taxes

Part I: Normal Tax

23L. Limitation of deductions in respect of certain short-term insurance policies

[Heading substituted by section 60(1)(a) of Act No. 31 of 2013 - effective 1 April 2014]

 

(1) For the purposes of this section—

 

'investment policy'

[Definition deleted by section 60(1)(b) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013) - effective 1 April 2014]

 

'policy' means a policy of insurance or reinsurance other than a long-term policy as defined in section 1 of the Long-term Insurance Act;

[Definition substituted by section 60(1)(c) of Act No. 31 of 2013]

 

'policy benefits' means any amount, in cash or otherwise, received or accrued under a policy;

 

'premium' means the consideration given or to be given in return for an undertaking to provide policy benefits.

 

(2) No deduction is allowed in respect of any premium incurred by a person in terms of a policy to the extent that the premium is not taken into account as an expense for the purposes of financial reporting pursuant to IFRS in either the current year of assessment or a future year of assessment.

[Subsection (2) substituted by section 60(1)(d) of Act No. 31 of 2013 - effective 1 April 2014]

 

(3) Where policy benefits are received by or accrue to a person in terms of a policy during a year of assessment, there must be included in the gross income of that person an amount equal to the aggregate amount of all policy benefits received by or accrued to that person during that year of assessment and previous years of assessment in respect of that policy, less—
(a) the aggregate amount of premiums incurred in terms of that policy that were not deductible in terms of subsection (2); and
(b) the aggregate amount of policy benefits in respect of that policy that were included in the gross income of that person during previous years of assessment.

[Subsection (3) substituted by section 60(1)(d) of Act No. 31 of 2013 - effective 1 April 2014]

 

[Section 23L inserted by section 50(1) of Act No. 22 of 2012 - effective 31 March 2014]