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«COMPREHENSIVE GUIDE TO THE ITR14 RETURN FOR COMPANIES 1 | COMPREHENSIVE GUIDE TO THE ITR14 RETURN FOR COMPANIES CONTENTS 1. INTRODUCTION 2. HOW TO ...»

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S. 12M allows as a deduction an amount paid by an employer as a lump sum to a former employee who retired on • the grounds of old age, ill health, or infirmity or to a dependant of that former employee or under a policy of insurance taken out with an insurer solely in respect of one or more former employees who retired on the grounds of old age, ill health, or infirmity, or their dependants, but only to the extent that the lump sum is to be used to make contributions to a medical scheme or fund registered under the Medical Schemes Act, or under a similar provision in another country The payment to the individual has to be that he or she can pay the future medical scheme payments. Where the payment is to an insurer, the policy must be only for the retired employee and his or her dependants. If the policy only relates partly to medical scheme coverage, only that part of the premium is deductible. No deduction is allowed if the employer or a connected person to the employer has any further obligation or retains any further obligation (even a contingent obligation) to pay any other amount in respect of any shortfall under the policy.

S. 12O provides a 100% tax exemption (with effect from 1 January 2012) in respect of all receipts and accruals in • respect of films of which principal photography commences on or after 1 January 2012, but before 1 January 2022.

123 | COMPREHENSIVE GUIDE TO THE ITR14 RETURN FOR COMPANIES

S. 24F provides a 100% deduction in respect of the cost of production and purchase of films. It will no longer apply • to films in respect of which the principal photography commenced on or after 1 January 2012, and to any film after 31 December 2012.

Section 24K provides that any amount contemplated in the definition of “interest rate agreement” is deemed to • have been incurred (if it is an expense) or accrued (if it is income) on a day to day basis over the period in respect of which it is calculated.

Section 24K defines an “interest rate agreement” basically as an agreement in terms of which;

ú A person acquires the right to receive an amount calculated with reference to an interest rate or rates on a notional amount or even a fixed amount; and ú That same person becomes liable to pay an amount calculated with reference to an interest rate or rates or a fixed amount.

The interest rate agreement applies where a rate of interest is applied to a notional amount. In other words, a real loan does not exist.

There are two parties to an interest rate swap. Interest rate swaps effectively allows a person to swap floating rates of interest for fixed rates of interest or vice versa in order to introduce certainty or make a profit out of potential change in the interest rates.

In terms of s. 18A, a deduction (subject to a 10% limit of taxable income) is allowed in respect of the sum of bona •

fide donations of cash or property in kind made by a taxpayer during the year of assessment to any:

ú Public benefit organisation (PBO) approved by the Commissioner under s. 30;

ú Institution, board or body contemplated in s. 10(1)(cA)(i);

ú PBO approved by the Commissioner under s. 30 which provides funds or assets to any other approved PBO, or to any institution, board or body contemplated in s10(1)(cA)(i);

ú Agency as contemplated in the definition of “specialised agency” in s. 1 of the Convention on the Privileges and Immunities of the Specialised Agencies, 1947, set out in Schedule 4 to the Diplomatic Immunities and Privileges Act, 2001 (Act 37 of 2001);

ú Department of government in the national, provincial or local sphere as contemplated in s 10(1)(a).

124 | COMPREHENSIVE GUIDE TO THE ITR14 RETURN FOR COMPANIES

Debit Adjustments (Decrease net profit / Increase net loss) Non-Taxable Amounts Credited to the Income Statement Only complete the relevant currency fields (15 blocks) where the adjustment is applicable to the company in Rands (no • cents). On eFiling and in the branch, a pop-up selection box will display from which only those adjustments relevant

to the company must be selected and completed:

ú Accounting interest received / receivable ú Accounting profit on disposal of fixed and / or other assets Adjustments to comply with IFRS: Accounting: Only applicable from Year of Assessment 2006 onwards • Adjustments to comply with IFRS: Fair value: Only applicable from Year of Assessment 2006 onwards • ú Amounts previously taxed as received in advance ú Exempt foreign dividends (s10(1)(k)(ii)) ú Exempt foreign dividends (s10B) ú Income (other than foreign dividends) exempt from tax – s10 (excluding s10(1)(e)) ú Income exempt by virtue of double taxation agreement ú Local dividends excluding dividends mentioned in s8E, s8EA and 103(5) ú Receipts and / or accruals of a capital nature ú Reversal of provisions

125 | COMPREHENSIVE GUIDE TO THE ITR14 RETURN FOR COMPANIES

Other ú Please provide descriptions relating to ‘other’ consolidated above: This free text field (maximum • length of 3 rows with 17 blocks) must only be completed if a value exceeding R0 (zero) was entered in the field “Other”. On eFiling and in the branch, this field will only display if “Other” was checked on the selection list.





Control Total: This currency field (15 blocks) will automatically be calculated on eFiling or for non-eFilers when the • SARS agent captures the return in the branch.

Special Allowances not claimed in the Income Statement

Only complete the relevant currency fields (15 blocks) where the special allowances are applicable to the company • in Rands (no cents). On eFiling and in the branch, a pop-up selection box will display from which only those special

allowances relevant to the company must be selected and completed:

Restraint of trade (s11(cA)): Only applicable from Year of Assessment 2000 onwards • ú Wear and tear allowance (s11(e)) ú Lease premium allowance (s11(f)) ú Improvement to leasehold premises (s11(g)) ú Doubtful debt allowance (s11(j)) ú Amortisation of lump sum contributed to retirement / benefit funds (s11(l)) ú Broad-based employee share plan (deduction this year) (s11(lA)): Only applicable from Year of Assessment 2005 onwards ú Depreciable asset allowance (s11(o)) ú Expenditure before commencing trade (s11A) Deduction against Foreign Dividends (s11C): Only applicable from Year of Assessment 2005 onwards • Research and development deduction (s11B): Only applicable from Year of Assessment 2003 onwards • Research and development deduction (s11D): Only applicable from Year of Assessment 2007 onwards • ú Machinery, plant, implements, utensils and articles deduction (s12B) ú Manufacturers, hotelkeepers, aircraft, ship, storage and packing of agricultural products deduction (s12C) Pipelines, transmission and rail deduction (s12D): Only applicable from Year of Assessment 2000 onwards •

126 | COMPREHENSIVE GUIDE TO THE ITR14 RETURN FOR COMPANIES

Rolling stock (s12DA): Only applicable from Year of Assessment 2008 onwards • Plant and machinery where company qualifies as a SBC (s12E): Only applicable from Year of Assessment 2002 • onwards Airport and port assets (s12F): Only applicable from Year of Assessment 2008 onwards • Industrial assets used for qualifying industrial policy projects (s12G): Only applicable from Year of Assessment 2002 • onwards Learnership agreements registered / in effect (s12H): Only applicable from Year of Assessment 2002 onwards • Registered learnership agreements completed in current year (s12H): Only applicable from Year of Assessment 2002 • onwards Industrial policy projects: Brownfield projects (s12I): Only applicable from Year of Assessment 2009 onwards • Industrial policy projects: Greenfield projects (s12I): Only applicable from Year of Assessment 2009 onwards • Deduction in respect of Venture Capital Company shares (s12J): Only applicable from Year of Assessment 2010 • onwards Certified emission reductions exemption (s12K): Only applicable from Year of Assessment 2009 onwards • Deduction of medical lump sum payments (s12M): Only applicable from Year of Assessment 2010 onwards • Exemption in respect of films (s12O): Only applicable from Year of Assessment 2012 onwards • ú Deduction of buildings used in a manufacturing process (s13) ú Hotel building deduction (s13bis) ú Residential building deduction (s13ter) UDZ (s13quat) - erection of a new building this year: Only applicable from Year of Assessment 2005 onwards • UDZ (s13quat) - improvements this year: Only applicable from Year of Assessment 2005 onwards • Commercial building deduction (s13quin): Only applicable from Year of Assessment 2008 onwards • Residential unit deduction (s13sex): Only applicable from Year of Assessment 2009 onwards • Low cost residential unit deduction (s13sept): Only applicable from Year of Assessment 2009 onwards • Reversal of closing values of work in progress (s 22(2A)) - previous year: Only applicable from Year of Assessment • 2003 onwards Reversal of closing values of consumable stock and spare parts (previous year): Only applicable from Year of Assessment • 2000 onwards Prepaid expenditure not limited by s23H: Only applicable from Year of Assessment 2000 onwards • ú Allowance for future expenditure (s24C) ú Credit agreement and debtors allowance (hire-purchase) (s24) ú Interest incurred (s24J) ú Film allowance (s24F) ú Deductions in respect of co-operatives (s27) ú Environment asset deduction (s37B): Only applicable from Year of Assessment 2000 onwards ú Environmental conservation and maintenance deduction (s37C) ú Lease payments on capitalised leased assets ú Other Please provide descriptions relating to ‘other’ consolidated above: This free text field (maximum length of 3 rows with • 17 blocks) must only be completed if a value exceeding R0 (zero) was entered in the field “Other”. On eFiling and in the branch, this field will only display if “Other” was checked on the selection list.

Control Total: This currency field (15 blocks) will automatically be calculated on eFiling or for non-eFilers when the • SARS agent captures the return in the branch.

127 | COMPREHENSIVE GUIDE TO THE ITR14 RETURN FOR COMPANIES

Credit Adjustments (Increase net profit / Decrease net loss): Non-deductible Amounts Debited to the Income Statement Only complete the relevant currency fields (15 blocks) where the adjustments are applicable to the company in Rands • (no cents). On eFiling and in the branch, a pop-up selection box will display from which only those special allowances

relevant to the company must be selected and completed:

• Accounting interest paid / payable Accounting losses derived from foreign sources (excluding CFC): Only applicable from Year of Assessment 2000 • onwards ú Accounting loss on disposal of fixed and / or other assets ú Adjustments to comply with IFRS: Accounting: Only applicable from Year of Assessment 2006 onwards ú Adjustments to comply with IFRS: Fair value: Only applicable from Year of Assessment 2006 onwards ú Amortisation of lease premiums and improvements to leasehold premises ú Capital expenditure and / or losses Capital Improvement - Farming operations (par 12 of the First Schedule) • ú Depreciation according to financial statements ú Donations (s18A) ú Donations - Other

128 | COMPREHENSIVE GUIDE TO THE ITR14 RETURN FOR COMPANIES

Expenses attributable to exempt income - Local ú ú Expenses attributable to exempt income - Foreign ú Expenses not actually incurred in the production of income (s11(a)) ú Financial assistance (s31) ú Interest paid in respect of capitalised leased assets Interest non-deductible in terms of s23K: Only applicable from Year of Assessment 2011 onwards • ú Interest, penalties paid in respect of taxes (s23(d)) ú Lump sum contributions to retirement and / or benefit funds ú Prepaid expenditure not allowed under s23H: Only applicable from Year of Assessment 2000 onwards ú Provision for doubtful debt not deductible in current year ú Provisions not deductible current year (excluding doubtful debt) ú Transfer pricing adjustments ú Other Please provide descriptions relating to ‘other’ consolidated above: This free text field (maximum length of 3 rows with • 17 blocks) must only be completed if a value exceeding R0 (zero) was entered in the field “Other”. On eFiling and in the branch, this field will only display if “Other” was checked in the selection list.

Control Total: This currency field (15 blocks) will automatically be calculated on eFiling or for non-eFilers when the • SARS agent captures the return in the branch.

Allowances / Deductions Granted in Previous Years of Assessment and now Reversed

–  –  –

129 | COMPREHENSIVE GUIDE TO THE ITR14 RETURN FOR COMPANIES

(maximum length of 3 rows with 17 blocks) must only be completed if a value exceeding R0 (zero) was entered in the field “Other”. On eFiling and in the branch, this field will only display if “Other” was checked in the selection list.

• Control Total: This currency field (15 blocks) will automatically be calculated on eFiling or for non-eFilers when the SARS agent captures the return in the branch.

Amounts not credited to the Income Statement

–  –  –

130 | COMPREHENSIVE GUIDE TO THE ITR14 RETURN FOR COMPANIES

• Please provide descriptions relating to ‘other’ consolidated above: This free text field (maximum length of 3 rows with 17 blocks) must only be completed if a value exceeding R0 (zero) was entered in the field “Other”. On eFiling and in the branch, this field will only display if “Other” was checked in the selection list.

• Control Total: This currency field (15 blocks) will automatically be calculated on eFiling or for non-eFilers when the SARS agent captures the return in the branch.

Recoupment of Allowances Previously Granted

–  –  –

131 | COMPREHENSIVE GUIDE TO THE ITR14 RETURN FOR COMPANIES



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