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Income Tax Act, 1962 (Act 58 of 1962)

Chapter II: The Taxes

Part I: Normal Tax

37D. Allowance in respect of land conservation in respect of nature reserves or national parks

 

(1) For the purposes of this section,

 

‘declared land’

means—

(a) land owned by a person and that is declared a national park or nature reserve in terms of an agreement entered into with that person under section 20 or 23 of the National Environmental Management: Protected Areas Act, 2003 (Act No. 57 of 2003); and
(b) an endorsement is effected to the title deed of that land that reflects the declaration contemplated in paragraph (a) and has a duration of at least 99 years.

 

(2) There must be allowed to be deducted from the income of any person in respect of declared land, in the year of assessment during which that land becomes declared land and in each subsequent year of assessment, an amount equal to four per cent of—
(a) the expenditure incurred in respect of—
(i) the acquisition of the declared land; and
(ii) improvements effected to the declared land (other than borrowing or finance costs),

if that expenditure is not less than the market value or municipal value of that declared land; or

(b)        an amount determined in accordance with the formula:

 

A = B + (C × D)

 

in which formula—

(i) ‘A’ represents the amount to be determined;
(ii) ‘B’ represents the cost of acquisition of the declared land and of any improvements to that land;
(iii) ‘C’ represents the amount of a capital gain (if any), that would have been determined in terms of the Eighth Schedule had the declared land been disposed of for an amount equal to the lower of the market value or municipal value of that land on the date of the agreement; and
(iv) ‘D’ represents 60 per cent in the case of a natural person or special trust or 20 per cent in any other case,

[Subsection (2)(b)(iv) substituted by section 53(1)(b) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016) - effective 1 March 2016]

if the market value of the declared land or municipal value of that declared land exceeds the expenditure contemplated in paragraph (a).

[Words and paragraphs in subsection (2)(b) following the formula substituted by section 53(1)(a) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016) - effective 1 March 2015]

 

(3) If a person retains a right of use of the declared land, the deduction to be allowed in terms of this section must be limited to an amount that bears the amount determined as contemplated in subsection (2) the same ratio as the market value of the declared land subject to the right of use bears to the market value of the declared land had that declared land not been subject to that right use.

 

(4) The deductions which may be allowed in terms of this section in respect of declared land must not in aggregate exceed the expenditure incurred as referred to in subsection (2)(a) or the amount referred to in symbol ‘A’ under subsection (2)(b), as the case may be.

 

(5) If the agreement in respect of which the land that becomes declared land is terminated by the person with which the agreement is entered into, an amount equal to the aggregate of the deductions allowed in terms of this section in the five years of assessment preceding the termination must be included in the income of that person in the year of assessment that the agreement is terminated.

 

[Section 37D inserted by section 53(1) of Act No. 43 of 2014 - effective 1 March 2015]