For the purpose of determining the taxable income derived by any person from carrying on any trade , there shall be allowed as deductions from the income of such person so derived—
[Words preceding section 11(a) substituted by section 15(a) of the Revenue Laws Amendment Act, 2000 (Act No. 59 of 2000)]
| (a) | expenditure and losses actually incurred in the production of the income, provided such expenditure and losses are not of a capital nature; |
[Section 11(a) substituted by section 15(a) of the Revenue Laws Amendment Act, 2000 (Act No. 59 of 2000)]
| (b) | [Section 11(b) deleted by section 15(b) of the Revenue Laws Amendment Act, 2000 (Act No. 59 of 2000)]; |
| (bA) | [Section 11(bA) deleted by section 30(1)(a) of the Taxation Laws Amendment Act, 2011 (Act No. 24 of 2011) - effective 1 January 2012]; |
| (bB) | [Section 11(bb) deleted by section 14(1)(a) of the Taxation Laws Amendment Act, 2009 (Act No. 17 of 2009)]; |
| (bC) | [Section 11(bC) deleted by section 16(1)(a) of the Revenue Laws Amendment Act, 2004 (Act No. 32 of 2004)]; |
| (c) | any legal expenses (being fees for the services of legal practitioners, expenses incurred in procuring evidence or expert advice, court fees, witness fees and expenses, taxing fees, the fees and expenses of sheriffs or messengers of court and other expenses of litigation which are of an essentially similar nature to any of the said fees or expenses) actually incurred by the taxpayer during the year of assessment in respect of any claim, dispute or action at law arising in the course of or by reason of the ordinary operations undertaken by him in the carrying on of his trade: Provided that the amount to be allowed under this paragraph in respect of any such expenses shall be limited to so much thereof as— |
| (i) | is not of a capital nature; and |
| (ii) | is not incurred in respect of any claim made against the taxpayer for the payment of damages or compensation if by reason of the nature of the claim or the circumstances any payment which is or might be made in satisfaction or settlement of the claim does not or would not rank for deduction from his income under paragraph (a); and |
[Section 11(c)(ii) substituted by section 18(1)(a) of the Revenue Laws Amendment Act, 2008 (Act No. 60 of 2008)]
| (iii) | is not incurred in respect of any claim made by the taxpayer for the payment to him of any amount which does not or would not constitute income of the taxpayer; and |
| (iv) | is not incurred in respect of any dispute or action at law relating to any such claim as is referred to in paragraph (ii) or (iii) of this proviso; |
[Section 11(c)(iv) substituted by section 10(a) of the Income Tax Act, 1971 (Act No. 88 of 1971]
| (cA) | an allowance in respect of any amount actually incurred by such person in the course of the carrying on of his trade, as contemplated in respect of any restraint of trade imposed on any other person who— |
| (ii) | is or was 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 such Schedule); |
| (iii) | was a personal service company or personal service trust as defined in the Fourth Schedule prior to section 66 of the Revenue Laws Amendment Act, 2008, coming into operation; or |
[Section 11(cA)(iii) substituted by section 18(1)(b) of the Revenue Laws Amendment Act, 2008 (Act No. 60 of 2008) - effective 1 March 2009]
| (iv) | is a personal service provider as defined in the Fourth Schedule, |
[Section 11(cA)(iv) substituted by section 18(1)(b) of the Revenue Laws Amendment Act, 2008 (Act No. 60 of 2008) - effective 1 March 2009]
to the extent that such amount constitutes or will constitute income of the person to whom it is paid: Provided that the amount allowed to be deducted under this paragraph shall not exceed for any one year the lesser of—
| (aa) | so much of such amount so incurred as is equal to such amount divided by the number of years, or part thereof, during which the restraint of trade shall apply; or |
| (bb) | one-third of such amount so incurred; |
[Section 11(cA) inserted by section 22(1)(a) of the Taxation Laws Amendment Act, 2000 (Act No. 30 of 2000]
| (d) | expenditure actually incurred during the year of assessment on repairs of property occupied for the purpose of trade or in respect of which income is receivable, including any expenditure so incurred on the treatment against attack by beetles of any timber forming part of such property and sums expended for the repair of machinery, implements, utensils and other articles employed by the taxpayer for the purposes of his trade; |
| (e) | save as provided in paragraph 12(2) of the First Schedule, such sum as represents the amount by which the value of any machinery, plant, implements, utensils and articles (other than machinery, plant, implements, utensils and articles in respect of which a deduction may be granted under section 12B , 12BA, 12C , 12DA, 12E(1), 12U or 37B) owned by the taxpayer or acquired by the taxpayer as purchaser in terms of an agreement contemplated in paragraph (a) of the definition of "instalment credit agreement" in section 1 of the Value-Added Tax Act and used by the taxpayer for the purpose of his or her trade has been diminished by reason of wear and tear or depreciation during the year of assessment: |
[Words preceding the proviso to section 11(e) substituted by section 11(1)(a) of the Taxation Laws Amendment Act, 2023 (Act No. 17 of 2023), Notice No. 4226, GG49894, dated 22 December 2023 - deemed to have come into operation on 1 March 2023 and applies in respect of assets brought into use on or after 1 March 2023 (section 11(2))]
Provided that—
| (i) | [Section 11(e)(i) deleted by section 19(1)(b) of the Taxation Laws Amendment Act, 2010 (Act No. 7 of 2010] |
| (iA) | no allowance may be made in respect of any machinery, plant, implement, utensil or article the ownership of which is retained by the taxpayer as a seller in terms of an agreement contemplated in paragraph (a) of the definition of "instalment credit agreement" in section 1 of the Value-Added Tax Act; |
[Section 11(e)(iA) substituted by section 27(1)(b) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (ii) | in no case shall any allowance be made for the depreciation of buildings or other structures or works of a permanent nature; |
| (iiA) | where any machinery, implement, utensil or article qualifying for an allowance under this paragraph is mounted on or affixed to any concrete or other foundation or supporting structure and— |
| (aa) | the foundation or supporting structure is designed for such machinery, implement, utensil or article and constructed in such manner that it is or should be regarded as being integrated with the machinery, implement, utensil or article; and |
| (bb) | the useful life of the foundation or supporting structure is or will be limited to the useful life of the machinery, implement, utensil or article mounted thereon or affixed thereto, |
the said foundation or supporting structure shall for the purposes of this paragraph not be deemed to be a structure or work of a permanent nature but shall for the purposes of this Act be deemed to be a part of the machinery, implement, utensil or article mounted thereon or affixed thereto;
[Section 11(e)(iiA) substituted by section 22(1)(a) of the Taxation Laws Amendment Act, 2012 (Act No. 22 of 2012) - effective 1 January 2013]
| (iii) | [Section 11(e)(iii) deleted by section 18(1)(b) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)] |
| (iiiA) | no allowance shall be made under this paragraph in respect of any machinery, implement, utensil or article of which the cost has been allowed as a deduction from the taxpayer's income under the provisions of section 24D; |
[Section 11(e)(iiiA) inserted by section 9(1)(b) of the Income Tax Act, 1981 (Act No. 96 of 1981]
| (iv) | [Section 11(e)(iv) deleted by section 19(1)(b) of the Taxation Laws Amendment Act, 2010 (Act No. 7 of 2010)]; |
| (v) | the value of any machinery, implements, utensils or articles used by the taxpayer for the purposes of his trade shall be increased by the amount of any expenditure (other than expenditure referred to in paragraph (a)) which is incurred by the taxpayer in moving such machinery, implements, utensils or articles from one location to another; |
[Section 11(e)(v) substituted by section 18(1)(c) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
| (vi) | [Section 11(e)(vi) deleted by the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]; |
| (vii) | where the value of any such machinery, implements, utensils or articles acquired by the taxpayer on or after 15 March 1984 is |
for the purposes of this paragraph to be determined having regard to the cost of such machinery, implements, utensils or articles, such cost shall be deemed to be the cost which the taxpayer would, if such taxpayer had acquired such machinery, implements, utensils or articles under a cash transaction concluded at arm’s length on the date on which the transaction for the acquisition of such machinery, implements, utensils or articles was in fact concluded, have incurred in respect of the direct cost of the acquisition of such machinery, implements, utensils or articles, including the direct cost of the installation or erection thereof;
[Section 11(e)(vii) substituted by section 8(1)(a) of the Taxation Laws Amendment Act, 2022 (Act No. 20 of 2022), Notice No. 1541, GG47826, dated 5 January 2023 - deemed to have come into operation on 29 July 2022 and applies in respect of years of assessment ending on or after that date (section 8(2))]
| (viii) | [Section 11(e)(viii) deleted by section 17(1)(a) of the Revenue Laws Amendment Act, 2007 (Act No. 35 of 2007)]; |
| (ix) | where any such machinery, plant, implement, utensil or article was used by the taxpayer during any previous year of assessment or years of assessment for the purposes of any trade carried on by such taxpayer, the receipts and accruals of which were not included in the income of such taxpayer during such year or years the period of use of such asset during such previous year or years shall be taken into account in determining the amount by which the value of such machinery, plant, implement, utensil or article has been diminished; and |
[Section 11(e)(ix) substituted by section 18(1)(c) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015) - effective 1 April 2016]
| (x) | no allowance may be made in respect of any machinery, plant, implement, utensil or article acquired by the taxpayer as or with a ‘government grant’ as defined in section 12P(1); |
[Section 11(e)(x) inserted by section 8(1)(b) of the Taxation Laws Amendment Act, 2022 (Act No. 20 of 2022), Notice No. 1541, GG47826, dated 5 January 2023 - deemed to have come into operation on 29 July 2022 and applies in respect of years of assessment ending on or after that date (section 8(2))]
| (f) | an allowance in respect of any premium or consideration in the nature of a premium paid by a taxpayer for— |
| (i) | the right of use or occupation of land or buildings used or occupied for the production of income or from which income is derived; or |
| (ii) | `the right of use of any plant or machinery used for the production of income or from which income is derived; or |
| (ii)bis | the right of use of any motion picture film or any sound recording or advertising matter connected with such film, if such film, sound recording or advertising matter is used for the production of income or income is derived therefrom; or |
[Section 11(f)(ii)bis inserted by section 9(b) of the Income Tax Act, 1962 (Act No. 90 of 1962)]
| (iii) | the right of use of any patent as defined in the Patents Act or any design as defined in the Designs Act or any trade mark as defined in the Trade Marks Act or any copyright as defined in the Copyright Act or of any other property which is of a similar nature, if such patent, design, trade mark, copyright or other property is used for the production of income or income is derived therefrom; or |
[Section 11(f)(iii) substituted by section 27(1)(c) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (iv) | the imparting of or the undertaking to impart any knowledge directly or indirectly connected with the use of such film, sound recording, advertising matter patent, design, trade mark, copyright or other property as aforesaid; or |
[Section 11(f)(iv) substituted by section 14(1)(b) of the Taxation Laws Amendment Act, 2009 (Act No. 17 of 2009)]
| (v) | the right of use of any pipeline, transmission line or cable or railway line contemplated in the definition of "affected asset" in section 12D, other than an asset contemplated in paragraph (c) of that definition; or |
[Section 11(f)(v) substituted by section 25(1)(a) of the Taxation Laws Amendment Act, 2018 (Act No. 23 of 2018), GG 42172, dated 17 January 2019 - effective 1 April 2019 (section 25(2))
| (vi) | the right of use of any line or cable used for the transmission of electronic communications contemplated in paragraph (c) of the definition of "affected asset" in section 12D: |
[Section 11(f)(vi) inserted by section 25(1)(b) of the Taxation Laws Amendment Act, 2018 (Act No. 23 of 2018), GG 42172, dated 17 January 2019]
Provided that—
| (aa) | the allowance under subparagraph (i), (ii), (ii)bis, (iii) or (v) shall not exceed for any one year such portion of the amount of the premium or consideration so paid as is equal to the said amount divided by the number of years for which the taxpayer is entitled to the use or occupation, or one twenty-fifth of the said amount, whichever is the greater; |
[Section 11(f)(aa) of the proviso to section 11(f) substituted by section 14(1)(d) of the Taxation Laws Amendment Act, 2009 (Act No. 17 of 2009)]
| (bb) | if the taxpayer is entitled to such use or occupation for an indefinite period, or if, in the case of any such right of use or occupation granted under an agreement concluded on or after 1 July 1983, the taxpayer or the person by whom such right of use or occupation was granted holds a right or option to extend or renew the original period of such use or occupation, he shall be deemed, for the purposes of this paragraph, to be entitled to such use or occupation for the period of the probable duration of such use or occupation; and |
[Section 11(f)(bb) of the proviso substituted by section 18(1)(d) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
| (cc) | the allowance under subparagraph (iv) shall not exceed for any one year such portion (not being less than one twenty-fifth) of the amount of the premium or consideration so paid as may be determined having regard to the period during which the taxpayer will enjoy the right to use such film, sound recording, advertising matter, patent, design, trade mark, copyright or other property as aforesaid and any other circumstances which are relevant; |
[Section 11(f)(cc) of the proviso substituted by section 18(1)(d) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
| (dd) | the provisions of this paragraph shall not apply in relation to any such premium or consideration paid by the taxpayer which do not for the purposes of this Act constitute income of the person to whom it is paid, unless such premium or consideration is paid in respect of a right of use of a line or cable— |
| (A) | used for the transmission of electronic communications; and |
| (B) | substantially the whole of which is located outside the territorial waters of the Republic, |
where the term of the right of use is 10 years or more;
[Words following section 11(f)(dd)(B) of the proviso substituted by section 25(1)(c) of the Taxation Laws Amendment Act, 2018 (Act No. 23 of 2018), GG 42172, dated 17 January 2019 - effective 1 April 2019 (section 25(3)]
| (ee) | the allowance under subparagraph (vi) shall not exceed for any one year such portion of the amount of the premium or consideration so paid as is equal to the said amount divided by the number of years for which the taxpayer is entitled to the use or occupation, or one tenth of the said amount, whichever is the greater; |
[Section 11(f)(ee) of the proviso inserted by section 25(1)(d) of the Taxation Laws Amendment Act, 2018 (Act No. 23 of 2018), GG 42172, dated 17 January 2019 - effective 1 April 2019 (section 25(3)]
| (g) | an allowance in respect of any expenditure actually incurred by the taxpayer, in pursuance of an obligation to effect improvements on land or to buildings. incurred under an agreement whereby the right of use or occupation of the land or buildings is granted by any other person, where the land or buildings are used or occupied for the production of income or income is derived therefrom: Provided that— |
| (i) | the aggregate of the allowances under this paragraph shall not exceed the amount stipulated in the agreement as the value of the improvements or as the amount to be expended on the improvements or, if no amount is so stipulated, an amount representing the fair and reasonable value of the improvements; |
[Section 11(g)(i) of the proviso substituted by section 18(1)(f) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
| (ii) | any such allowance shall not exceed for any one year such portion of the aggregate of the allowances under this paragraph as is equal to the said aggregate divided by the number of years (calculated from the date on which the improvements are completed, but not more than 25 years) for which the taxpayer is entitled to the use or occupation; |
[Section 11(g)(ii) of the proviso substituted by section 10(1)(b) of the Income Tax Act, 1983 (Act No. 94 of 1983)]
| (aa) | the taxpayer is entitled to such use or occupation for an indefinite period;or |
| (bb) | the taxpayer or the person by whom such right of use or occupation was granted holds a right or option to extend or renew the original period of such use or occupation, |
the taxpayer shall for the purposes of this paragraph be deemed to be entitled to such use or occupation for such period as represents the probable duration of such use or occupation;
[Section 11(g)(iii) of the proviso substituted by section 18(1)(f) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
| (iv) | the aggregate of the allowances under this paragraph in respect of any building or improvements referred to in section 13(1) or 27(2)(b) shall not exceed the cost (after the deduction of any amount which has been set off against the cost of such building or improvements under section 13(3) or section 27(4)) to the taxpayer of such building or improvements less the aggregate of the allowances in respect of such building or improvements made to the taxpayer under the said section 13(1) or 27(2)(b) or the corresponding provisions of any previous Income Tax Act; |
[Section 11(g)(iv) of the proviso substituted by section 14(1)(f) of the Taxation Laws Amendment Act, 2009 (Act No. 17 of 2009)]
| (v) | [Section 11(g)(iv) of the proviso deleted by section 19(1)(e) of the Taxation Laws Amendment Act, 2010 (Act No. 7 of 2010)]; |
| (vi) | the provisions of this paragraph shall not apply in relation to any such expenditure incurred, if the value of such improvements or the amount to be expended on such improvements, as contemplated in paragraph (h) of the definition of "gross income" in section 1, does not for the purposes of this Act constitute income of the person to whom the right to have such improvements effected has accrued; |
[Section 11(g)(vi) of the proviso substituted by section 19(1)(f) of the Taxation Laws Amendment Act, 2010 (Act No. 7 of 2010)]
| (vii) | if during any year of assessment the agreement whereby the right of use or occupation of the land or buildings is granted is terminated before expiry of the period to which that taxpayer was entitled to the use or occupation, as contemplated in paragraph (ii) or (iii), so much of the allowance which may be allowed under this paragraph, which has not yet been allowed in that year or any previous year of assessment, shall be allowable as a deduction in that year of assessment; |
[Section 11(g)(vii) of the proviso substituted by section 19(1)(g) of the Taxation Laws Amendment Act, 2010 (Act No. 7 of 2010)]
| (gA) | an allowance in respect of any expenditure (other than expenditure which has qualified in whole or part for deduction or allowance under any of the other provisions of this section or the corresponding provisions of any previous Income Tax Act) actually incurred by the taxpayer— |
[Words preceding section 11(gA)(i) substituted by section 10(1)(d) of the Income Tax Act, 1983 (Act No. 94 of 1983)]
| (i) | in devising or developing any invention as defined in the Patents Act or in creating or producing any design as defined in the Designs Act or any trade mark as defined in the Trade Marks Act or any copyright as defined in the Copyright Act or any other property which is of a similar nature; |
[Section 11(gA)(i) substituted by section 27(1)(d) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013)]
| (ii) | in obtaining any patent or the restoration of any patent under the Patents Act or the registration of any design under the Designs Act or the registration of any trade mark under the Trade Marks Act or under similar laws of any other country; or |
[Section 11(gA)(ii) substituted by section 27(1)(d) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (iii) | in acquiring by assignment from any other person any such patent, design, trade mark or copyright or in acquiring any other property of a similar nature or any knowledge essential to the use of such patent, design, trade mark, copyright or other property or the right to have such knowledge imparted, |
[Section 11(gA)(iii) substituted by section 11(1)(c) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
if such invention, patent, design, trade mark, copyright, other property or knowledge, as the case may be, is used by the taxpayer in the production of his income:
[Words following section 11(gA)(iii) substituted by section 11(1)(d) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
Provided that—
| (aa) | where such expenditure exceeds R5 000, and was incurred— |
| (A) | before 29 October 1999, the allowance shall not exceed for any one year such portion of the amount of the expenditure as is equal to such amount divided by the number of years which represents the probable duration of use of the invention, patent, design, trade mark, copyright, other property or knowledge, or four per cent of the said amount, whichever is the greater; |
[Section 11(gA)(aa)(A) of the proviso substituted by section 18(1)(g) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
| (B) | on or after 29 October 1999, the allowance shall not for any one year exceed an amount equal to— |
| (AA) | five per cent of the amount of the expenditure in the case of any invention, patent, trade mark, copyright or other property of a similar nature or any knowledge essential to the use of such invention, patent, trade mark, copyright or other property or the right to have such knowledge imparted; or |
[Section 11(gA)(aa)(B)(AA) of the proviso substituted by section 11(1)(e) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
| (BB) | 10 per cent of the amount of the expenditure in the case of any design or other property of a similar nature or any knowledge essential to the use of such design or other property or the right to have such knowledge imparted; |
[Section 11(gA)(aa)(B)(BB) of the proviso substituted by section 11(1)(e) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
| (bb) | where such expenditure was incurred before the commencement of the year of assessment in question the allowance shall be calculated on the amount of such expenditure, less an amount equivalent to the sum of the allowances to which the taxpayer was entitled under this paragraph and the allowances to which the taxpayer would have been entitled under this paragraph if this paragraph had been applicable, in respect of such expenditure in respect of previous years of assessment, including any year of assessment under any previous Income Tax Act; |
[Section 11(gA)(bb) of the proviso substituted by section 18(1)(h) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
| (cc) | no allowance shall be made in respect of any such invention, patent, design, trade mark, copyright or other property or knowledge so acquired or obtained by the taxpayer on or after 24 June 1988, but prior to 1 July 1993 from any other person who is a resident of the Republic or who is ordinarily resident in a neighbouring country (or, in the case of a company, is incorporated or has its place of effective management in a neighbouring country), if— |
[Words preceding section 11(gA)(cc)(A) of the proviso substituted by section 15(e) of the Taxation Laws Amendment Act, 2000 (Act No. 59 of 2000)]
| (A) | the taxpayer or such other person is a company and such other person or the taxpayer, as the case may be, is interested in more than 50 per cent of any class of shares issued by such company, whether directly as a holder of shares in that company or indirectly as a holder of shares in any other company; or |
[Section 11(gA)(cc)(A) of the proviso substituted by section 27(1)(e) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (B) | both the taxpayer and such other person are companies and any third person is interested in more than 50 per cent of any class of shares issued by one of those companies and in more than 50 per cent of any class of shares issued by the other company, whether directly as a holder of shares in the company by which the shares in question were issued or indirectly as a holder of shares in any other company; |
[Section 11(gA)(cc)(B) of the proviso substituted by section 27(1)(e) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (dd) | where any such invention, patent, design, trade mark, copyright or other property or knowledge was so acquired or obtained by the taxpayer on or after 1 July 1993 from any other person who is a resident of the Republic or who is ordinarily resident in a neighbouring country (or, in the case of a company, is incorporated or has its place of effective management in a neighbouring country), and who is a connected person in relation to the taxpayer, the allowance under this paragraph shall be calculated on the lesser of the cost of such invention, patent, design, trade mark, copyright or other property or knowledge to such connected person or the market value thereof as determined on the date upon which such invention, patent, design, trade mark, copyright or other property or knowledge was acquired or obtained by the taxpayer; |
[Section 11(gA)(dd) of the proviso substituted by section 15(f) of the Revenue Laws Amendment Act, 2000 (Act No. 59 of 2000)]
| (ee) | no allowance shall be made in respect of any expenditure incurred by such taxpayer on or after 29 October 1999, in respect of the acquisition from any other person of any trade mark or other property of a similar nature or any knowledge essential to the use of such trade mark or the right to have such knowledge imparted; |
[Section 11(gA)(ee) of the proviso substituted by section 11(1)(f) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
| (ff) | no deduction shall be allowed under this paragraph in respect of any expenditure incurred by the taxpayer during any year of assessment commencing on or after 1 January 2004; |
[Section 11(gA)(ff) of the proviso substituted by section 27(1)(b) of the Revenue Laws Amendment Act, 2003 (Act No. 45 of 2003)]
| (gB) | expenditure (other than expenditure which has qualified in whole or part for deduction or allowance under any of the other provisions of this section) actually incurred by the taxpayer during the year of assessment in obtaining the grant of any patent or the restoration of any patent, or the extension of the term of any patent under the Patents Act or the registration of any design, or extension of the registration period of any design under the Designs Act or the registration of any trade mark, or the renewal of the registration of any trade mark under the Trade Marks Act or under similar laws of any other country, if such patent, design or trade mark is used by the taxpayer in the production of his or her income; |
[Section 11(gB) substituted by section 27(1)(f) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (gC) | an allowance in respect of any expenditure actually incurred by the taxpayer during any year of assessment commencing on or after 1 January 2004 to acquire (otherwise than by way of devising, developing or creating) any— |
[Words preceding section 11(gC)(i) substituted by section 16(1)(d) of the Revenue Laws Amendment Act, 2004 (Act No. 32 of 2004]
| (i) | invention or patent as defined in the Patents Act; |
[Section 11(gC)(i) substituted by section 27(1)(g) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (ii) | design as defined in the Designs Act; |
[Section 11(gC)(i) substituted by section 27(1)(g) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (iii) | copyright as defined in the Copyright Act; |
[Section 11(gC)(iii) substituted by section 27(1)(g) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (iv) | other property which is of a similar nature (other than trade marks as defined in the Trade Marks Act; or |
[Section 11(gC)(iv) substituted by section 27(1)(g) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (v) | knowledge essential to the use of such patent, design, copyright or other property or the right to have such knowledge imparted, |
[Section 11(gC)(v) substituted by section 11(1)(h) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
which shall be allowed during the year of assessment in which that invention, patent, design, copyright, other property or knowledge is brought into use for the first time by the taxpayer for the purposes of the taxpayer’s trade, if that invention, patent, design, copyright, other property or knowledge, as the case may be, is used by the taxpayer in the production of his or her income:
[Words following section 11(gC)(v) and preceding the proviso substituted by section 11(1)(i) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
Provided that—
| (aa) | where that expenditure actually incurred by the taxpayer exceeds R5 000, that allowance shall not exceed in any year of assessment— |
| (A) | five per cent of the amount of the expenditure in respect of any invention, patent, copyright or other property of a similar nature or any knowledge essential to the use of such invention, patent, copyright or other property or the right to have such knowledge imparted; or |
[Section 11(gC)(aa)(A) of the proviso substituted by section 11(1)(j) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
| (B) | 10 per cent of the amount of the expenditure in respect of any design or other property of a similar nature or any knowledge essential to the use of such design or other property or the right to have such knowledge imparted; |
[Section 11(gC)(aa)(B) of the proviso substituted by section 11(1)(j) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
| (bb) | [Section 11(gC)(bb) deleted by section 17(1)(c) of the Revenue Laws Amendment Act, 2007 (Act No. 35 of 2007)]; |
[Section 11(gC) inserted by section 27(1)(d) of the Revenue Laws Amendment Act, 2003 (Act No. 45 of 2003]
| (gD) | where that trade constitutes the provision of telecommunication services, the exploration, production or distribution of petroleum or the provision of gambling facilities, any expenditure (other than in respect of infrastructure) incurred to acquire a licence from the government of the Republic in the national, provincial or local sphere, contemplated in section 10(1)(a), or an institution or entity contemplated in Schedule 1 or Part A or C of Schedule 3 to the Public Finance Management Act, where that expenditure is incurred in terms of the licence and the licence is required to carry on that trade, which deduction must not exceed for any one year such portion of the expenditure as is equal to the amount of the expenditure divided by the number of years for which the taxpayer has the right to the licence after the date on which the expenditure was incurred, or whichever is the lesser; |
[Section 11(gD) substituted by section 27(1)(h) of the Taxation Laws Amendment Act, 2017 (Act No. 31 of 2013)]
| (h) | such allowance in respect of amounts included in the taxpayer's gross income under paragraph (g) or paragraph (h) of the definition of "gross income" in section 1 as the Commissioner may deem reasonable having regard to any special circumstances of the case and, in the case of an amount so included under the said paragraph (h), to the original period for which the right of use or occupation was granted or, in the case of any amount so included under the said paragraph (h) in consequence of an agreement concluded on or after 1 July 1983, to the number of years taken into account in the determination of the relevant allowance granted to any other person under the provisions of paragraph (g) of this section: |
[Words preceding the proviso to section 11(h) substituted by section 10(1)(f) of the Income Tax Act, 1983 (Act No. 94 of 1983]
Provided that where there has on or after the twenty-ninth day of March, 1972, accrued to the taxpayer the right to have improvements effected on land or to buildings by any other person and an amount is required to be included in the taxpayer's gross income under the said paragraph (h) with respect to such improvements, no allowance shall be made to the taxpayer under this paragraph in respect of such amount, if—
| (i) | the taxpayer or such other person is a company and such other person or the taxpayer, as the case may be, is interested in more than 50 per cent of any class of shares issued by such company, whether directly as a holder of shares in that company or indirectly as a holder of shares in any other company; or |
[Section 11(h)(i) substituted by section 27(1)(i) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (ii) | both the taxpayer and such other person are companies and any third person is interested in more than 50 per cent of any class of shares issued by one of those companies and in more than 50 per cent of any class of shares issued by the other company, whether directly as a holder of shares in the company by which the shares in question were issued or indirectly as a holder of shares in any other company; |
[Section 11(h)(i) substituted by section 27(1)(i) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (hA) | [Section 11(hA) deleted by section 30(1)(b) of the Taxation Laws Amendment Act, 2011 (Act No. 24 of 2011) - effective 1 January 2012]; |
| (hB) | an allowance in respect of expenditure actually incurred and paid in the production of income to discharge all consideration, royalties or compensation otherwise payable to a community or natural person in respect of any existing consideration, contractual royalty, future consideration or compensation that accrued to that community or natural person as contemplated in Item 11 of Schedule II of the Petroleum Resources Development Act, 2002 (Act No. 28 of 2002): Provided that for any year of assessment, the allowance shall not exceed an amount equal to the expenditure incurred and paid divided by the number of years for which all consideration, royalties or compensation otherwise payable has been discharged; |
[Section 11(hB) inserted by section 11(1)(c) of the Revenue Laws Amendment Act, 2006 (Act No. 20 of 2006)]
| (i) | the amount of any debt due to the taxpayer which has during the year of assessment become bad, provided such amount is included in the current year of assessment or was included in previous years of assessment in the taxpayer's income; |
[Section 11(i) substituted by section 17(1)(a) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014)]
| (j) | an allowance in respect of any debt due to the taxpayer, if that debt would have been allowed as a deduction under any other provision of this Part had that debt become bad, of an amount equal to— |
| (i) | if IFRS 9 is applied to that debt by that person for financial reporting purposes, other than in respect of lease receivables as defined in IFRS 9 that have not been included in income, the sum of— |
[Words preceding section 11(j)(i)(aa) substituted by section 13(1)(a) of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG44083, dated 20 January 2021 - deemed to have come into operation on 28 October 2020 and applies in respect of years of assessment commencing on or after that date (section 13(2)]
| (aa) | 40 per cent of the aggregate of— |
| (A) | the loss allowance relating to impairment that is measured at an amount equal to the lifetime expected credit loss, as contemplated in IFRS 9, in respect of debt; and |
[Section 11(j)(i)(aa)(A) substituted by section 13(1)(b) of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG44083, dated 20 January 2021 - deemed to have come into operation on 28 October 2020 and applies in respect of years of assessment commencing on or after that date (section 13(2)]
| (B) | the amounts of debts included in the income of the taxpayer in the current or any previous year of assessment that are disclosed as bad debt written off for financial reporting purposes and that have not been allowed as a deduction under section 11(a) or (i) for the current or any previous year of assessment; and |
| (bb) | 25 per cent of the loss allowance relating to impairment, as contemplated in IFRS 9, in respect of debt other than in respect of debt taken into account under item (aa); or |
[Section 11(j)(i)(bb) substituted by section 13(1)(c) of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG44083, dated 20 January 2021 - deemed to have come into operation on 28 October 2020 and applies in respect of years of assessment commencing on or after that date (section 13(2)]
| (ii) | if IFRS 9 is not applied to that debt by that person for financial reporting purposes, the sum of— |
| (aa) | 40 per cent of so much of any debt, other than a debt contemplated in subparagraph (i), due to the taxpayer, if that debt is 120 days or more in arrears, after taking into account the value of any security in respect of that debt; and |
[Section 11(j)(ii)(aa) substituted by section 13(1)(d) of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG44083, dated 20 January 2021 - come into operation on 1 January 2021 and apply in respect of years of assessment commencing on or after that date (section 13(3)]
| (bb) | 25 per cent of so much of any debt, other than a debt contemplated in subparagraph (i) or item (aa), due to the taxpayer, if that debt is 60 days or more in arrears, after taking into account the value of any security in respect of that debt: |
[Section 11(j)(ii)(bb) substituted by section 13(1)(d) of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG44083, dated 20 January 2021 - come into operation on 1 January 2021 and apply in respect of years of assessment commencing on or after that date (section 13(3)]
Provided that an allowance under this paragraph must be included in the income of the taxpayer in the following year of assessment: Provided further that the Commissioner may, on application by a taxpayer, issue a directive that the percentage contemplated in subparagraph (i)(aa) or (ii)(aa) may be increased, to a percentage not exceeding 85 per cent after taking into account—
| (a) | the history of a debt owed to that taxpayer, including the number of repayments not met, and the duration of the debt; |
| (b) | steps taken to enforce repayment of the debt; |
| (c) | the likelihood of the debt being recovered; |
| (d) | any security available in respect of that debt; |
| (e) | the criteria applied by the taxpayer in classifying debt as bad; and |
| (f) | such other considerations as the Commissioner may deem relevant; |
[Section 11(j) substituted by section 15(1)(a) of the Taxation Laws Amendment Act, 2019 (Act No. 34 of 2019), GG 42951, dated 15 January 2020]
| (jA) | notwithstanding paragraph (j), an allowance equal to 25 percent of the loss allowance relating to impairment, as contemplated in IFRS 9, other than in respect of lease receivables as defined in IFRS 9 that have not been included in income, if the person is a covered person, other than a person that is a controlling company as defined in the Banks Act, as determined by applying the criteria in paragraphs (c)(i) to (iii) and (d) of the definition of "covered person" in section 24JB(1): |
[Words preceding proviso of section 11(jA) substituted by section 13(1)(e) of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG44083, dated 20 January 2021 - come into operation on 1 January 2021 and apply in respect of years of assessment commencing on or after that date (section 13(3)]
Provided further that the loss allowance relating to impairment must exclude any loss allowance in respect of a financial asset that would not be allowed to be deducted under paragraph (a) or (i) if it became bad;
[Further proviso to section 11(jA) inserted by section 13(1)(f) of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG44083, dated 20 January 2021 - deemed to have come into operation on 28 October 2020 and applies in respect of years of assessment commencing on or after that date (section 13(2)]
Provided that the allowance must be increased—
| (a) | to 85 per cent of so much of that loss allowance relating to impairment as is equal to the amount that is in default, as determined by applying to any credit exposure, including any retail exposure, the criteria in paragraphs (a)(ii) to (vi) and (b) of the definition of "default" as defined in Regulation 67 of the regulations issued in terms of section 90 of the Banks Act (contained in Government Notice No. R. 1029 published in Government Gazette No. 35950 of 12 December 2012); and |
| (b) | to 40 percent of so much of that loss allowance relating to impairment as is equal to the difference between— |
| (i) | the amount of the loss allowance relating to impairment that is measured at an amount equal to the lifetime expected credit losses; and |
| (ii) | the amount that is in default as determined under paragraph (a): |
Provided further that the allowance must be included in the income of that person in the following year of assessment;
[Section 11(jA) inserted by section 19(1)(a) of the Taxation Laws Amendment Act, 2017 (Act No. 17 of 2017) - effective 1 January 2018]
| (k) | [Section 11(k) deleted by section 19(1)(b) of the Taxation Laws Amendment Act, 2017 (Act No. 17 of 2017) - effective 1 March 2016] |
| (l) | any amount contributed by a person that is an employer during the year of assessment for the benefit of or on behalf of any employee or former employee of the employer or for any dependant or nominee of a deceased employee or former employee of that employer to any pension fund, provident fund or retirement annuity fund in terms of the rules of that fund: Provided that for the purposes of this paragraph a partner in a partnership must be deemed to be an employee of the partnership and a partnership must be deemed to be the employer of the partners in that partnership; |
[Section 11(l) substituted by section 25(1)(g) of the Taxation Laws Amendment Act, 2018 (Act No. 23 of 2018, GG 42172, dated 17 January 2019 - deemed to have come into operation on 1 March 2018 (section 25(6)]
| (lA) | an amount equal to the market value of any qualifying equity share granted to an employee of that person as contemplated in section 8B, as determined on the date of grant as defined in that section, less any consideration given by that employee for that qualifying equity share, which applies in lieu of any other deduction which may otherwise be allowed to that person or any other person in respect of the granting of that share: |
[Words preceding the proviso to section 11(lA) substituted by section 18(3) of the Revenue Laws Amendment Act, 2005 (Act No. 31 of 2005)]
Provided that the deduction under this paragraph may not during any year of assessment in aggregate exceed an amount of R10 000 in respect of all qualifying equity shares granted to a single employee and so much as exceeds that amount may be carried forward to the immediately succeeding year of assessment and that excess is deemed to be the market value of qualifying equity shares granted to the relevant employee during that immediately succeeding year for purposes of this paragraph;
[Proviso to section 11(lA) substituted by section 18(1)(e) of the Revenue Laws Amendment Act, 2008 (Act No. 60 of 2008)]
| (m) | any amount paid by way of annuity during the year of assessment by any taxpayer— |
| (i) | to a former employee who has retired from the taxpayer's employ on grounds of old age, ill health or infirmity; or |
| (ii) | to a person who was for a period of at least five years a partner in an undertaking carried on by the taxpayer and who retired from the partnership in respect of that undertaking on grounds of old age, ill health or infirmity, provided that the amount so paid to such person is reasonable, having regard to the services rendered by such person as a partner: in such undertaking prior to his retirement and the profits made in such undertaking, and that the said amount does not represent consideration payable to such person in respect of his interest in the partnership; or |
[Section 11(m)(ii) substituted by section 9(1)(f) of the Income Tax Act, 1993 (Act No. 113 of 1993)]
| (iii) | to any person who is dependent for his maintenance upon a former employee or a former partner in an undertaking carried on by the taxpayer or (where such former employee or former partner is deceased) was so dependent immediately prior to his death; |
[Section 11(m) substituted by section 11(1)(m) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
| (n) | [Section 11(n) deleted by section 27(m) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013) - effective 1 March 2015] |
| (nA) | so much of any amount, including any voluntary award, received or accrued in respect of services rendered or to be rendered or any amount received or accrued in respect of or by virtue of any employment or the holding of any office as was included in the taxable income of that person and is refunded by that person; |
[Section 11(nA) inserted by section 18(1)(g) of the Revenue Laws Amendment Act, 2008 (Act No. 60 of 2008)]
| (nB) | so much of any amount contemplated in paragraph (cA) or (cB) of the definition of "gross income" received by or accrued to any person as is refunded by that person; |
[Section 11(nB) substituted by section 25(1)(h) of the Taxation Laws Amendment Act, 2018 (Act No. 23 of 2018), GG 42172, dated 17 January 2019]
| (o) | at the election of the taxpayer, an amount by which the cost to that taxpayer of any depreciable asset— |
[Section 11(o)(i) substituted by section 11(1)(b) of the Taxation Laws Amendment Act, 2023 (Act No. 17 of 2023), Notice No. 4226, GG49894, dated 22 December 2023 - deemed to have come into operation on 1 March 2023 and applies in respect of assets brought into use on or after 1 March 2023 (section 11(2))]
| (ii) | the expected useful life of which for tax purposes did not exceed ten years as determined on the date of original acquisition, |
exceeds the sum of the amount received or accrued from the alienation, loss or destruction of that asset and the amount of any allowance or deduction allowed in respect of that asset in that year or any previous year of assessment or which was deemed to have been allowed in terms of section 12B(4B) or 12C(4A), 12DA(4) or 37B(4) or taken into account in terms of section 11(e)(ix), as the case may be:
[Words following section 11(o)(ii) and preceding the proviso substituted by section 17(1)(e) of the Revenue Laws Amendment Act, 2007 (Act No. 35 of 2007)]
Provided that for the purposes of this paragraph—
| (aa) | the cost of any plant, machinery, implements, utensils or articles shall be deemed to be the actual cost plus the amount by which the value of such plant, machinery, implements, utensils or articles has been increased in terms of paragraph (v) of the proviso to paragraph (e); |
[Section 11(o)(aa) of the proviso substituted by section 18(1)(j) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
| (bb) | the actual cost of any plant, machinery, implement, utensil or article acquired by the taxpayer on or after 15 March 1984 shall be deemed to be the cost of that plant, machinery, implement, utensil or article as determined under paragraph (vii) of the proviso to paragraph (e); |
[Section 11(o)(bb) of the proviso substituted by section 9(1)(a) of the Taxation Laws Amendment Act, 2004 (Act No. 16 of 2004)]
| (cc) | [Section 11(o)(cc) of the proviso deleted by section 18(1)(k) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]; |
| (dd) | [Section 11(o)(dd) of the proviso deleted by section 18(1)(k) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)] |
Provided further that no election may be made in terms of this paragraph by the taxpayer if the amount received or accrued from the alienation, loss or destruction of the asset was received or accrued from a person that is a connected person in relation to the taxpayer;
[Further proviso to section 11(o) inserted by section 17(1)(g) of the Revenue Laws Amendment Act, 2007 (Act No. 35 of 2007)]
| (p) | [Section 11(p) deleted by section 18(1)(h) of the Revenue Laws Amendment Act, 2008 (Act No. 60 of 2008)]; |
| (q) | [Section 11(q) deleted by section 18(1)(h) of the Revenue Laws Amendment Act, 2008 (Act No. 60 of 2008)]; |
| (r) | [Section 11(r) deleted by section 16(1)(a) of the Revenue Laws Amendment Act, 2004 (Act No. 32 of 2004)]; |
| (r)bis | [Section 11(r)bis deleted by section 11(b) of the Income Tax Act, 1967 (Act No. 95 of 1967]; |
| (s) | [Section 11(s) deleted by section 22(1)(d) of the Taxation Laws Amendment Act, 2012 (Act No. 22 of 2012) - effective 1 April 2013] |
| (t) | [Section 11(t) deleted section 18(1)(i) of the Revenue Laws Amendment Act, 2008 (Act No. 60 of 2008)] |
| (u) | [Section 11(u) deleted by section 9(1)(b) of the Taxation Laws Amendment Act, 2004 (Act No. 16 of 2004) - effective 1 January 2005]; |
| (uA) | [Section 11(uA) deleted by section 10(c) of the Income Tax Act, 1994 (Act No. 21 of 1994)]; |
| (v) | [Section 11(v) deleted by section 9 of the Income Tax Act, 1973 (Act No. 65 of 1973]; |
| (w) | expenditure incurred by a taxpayer in respect of any premiums payable under a policy of insurance (other than a policy of insurance that relates to the death, disablement or illness of an employee or director of the taxpayer arising solely out of and in the course of employment of such employee or director) of which the taxpayer is the policyholder, where— |
[Words preceding section 11(w)(i) substituted by section 19(1)(c) of the Taxation Laws Amendment Act, 2017 (Act No. 17 of 2017)]
(i)
| (aa) | the policy relates to the death, disablement or illness of an employee or director of the taxpayer; and |
[Section 11(w)(i)(aa) substituted by section 19(1)(d) of the Taxation Laws Amendment Act, 2017 (Act No. 17 of 2017)]
| (bb) | the amount of expenditure incurred by the taxpayer in respect of the premiums payable under the policy is deemed to be a taxable benefit granted to an employee or director of the taxpayer in terms of paragraph 2(k) of the Seventh Schedule; or |
(ii)
| (aa) | the taxpayer is insured against any loss by reason of the death, disablement or illness of an employee or director of the taxpayer; |
[Section 11(w)(ii)(aa))substituted by section 19(1)(e) of the Taxation Laws Amendment Act, 2017 (Act No. 17 of 2017)]
| (bb) | the policy is a risk policy with no cash value or surrender value; |
| (cc) | the policy is not the property of any person other than the taxpayer at the time of the payment of the premium; and |
[Section 11(w)(ii)(c) deleted by section 17(1)(b) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014) - effective 1 March 2015]
| (dd) | in respect of any policy entered into— |
| (A) | on or after 1 March 2012, the policy agreement states that this paragraph applies in respect of premiums payable under that policy; or |
| (B) | before 1 March 2012, it is stated in an addendum to the policy agreement by no later than 31 August 2012 that this paragraph applies in respect of premiums payable under that policy; |
| (x) | any amounts which in terms of any other provision in this Part, are allowed to be deducted from the income of the taxpayer. |
