Income Tax Act, 1962 (Act No. 58 of 1962)Chapter II : The TaxesPart I : Normal Tax12D. Deduction in respect of certain pipelines, transmission lines and railway lines |
(1) For the purposes of this section—
"affected asset"
means any—
| (a) | pipeline used for the transportation of natural oil; |
| (aA) | pipeline for the transportation of water used by power stations in the process of generating electricity; |
| (b) | line or cable used for the transmission of electricity; |
| (c) | line or cable used for the transmission of electronic communications and |
| (d) | railway line used for the transportation of persons, goods or things, |
and includes any earthworks or supporting structures and equipment forming part of or ancillary to such pipeline, transmission line or cable or railway line and any improvement to such pipeline, transmission line or cable or railway line;
[Definition substituted by section 33(1) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013) - effective 1 April 2014]
[Definition deleted by section 23(1)(b) of the Revenue Laws Amendment Act, 2007 (Act No. 35 of 2007) - effective 1 January 2008];
means any liquid or solid hydrocarbon or combustible gas existing in a natural condition in the earth’s crust and includes any refined by-products of such liquid or solid hydrocarbon or combustible gas.
| (2) | There shall be allowed to be deducted an allowance in respect of the cost actually incurred by the taxpayer in respect of the acquisition of— |
[Words preceding section 12D(2)(a) substituted by section 19(1)(a) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014) - effective 1 April 2015]
| (a) |
| (i) | any new and unused affected asset; or |
| (ii) | in the case of an asset contemplated in paragraph (c) of the definition of "affected asset" any asset, |
owned by the taxpayer that is brought into use for the first time by the taxpayer; and;
[Section 12D(2)(a) substituted by section 19(1)(b) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014) - effective 1 April 2015]
| (b) | the asset as contemplated in paragraph (a) which is used directly by such taxpayer for purposes contemplated in the definition of "affected asset", |
[Section 12D(2)(b) substituted by section 19(1)(b) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014) - effective 1 April 2015]
to the extent that such affected asset is used in the production of his income.
| (2A) | For the purposes of this section, if a taxpayer completes an improvement as contemplated in section 12N, the expenditure incurred by the taxpayer to complete that improvement shall be deemed to be the cost actually incurred by the taxpayer in respect of the acquisition of any new and unused affected asset contemplated in subsection (2). |
[Section 12D(2A) inserted by section 22(1) of the Taxation Laws Amendment Act, 2010 (Act No. 7 of 2010)]
| (3) | The allowance contemplated in subsection (2) shall not for any one year exceed— |
| (a) | 10 per cent of the cost incurred in respect of any asset contemplated in paragraph (a) of the definition of "affected asset"; |
[Section 12D(3)(a) substituted by section 19(1)(c) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014) - effective 1 April 2015]
| (b) | 5 per cent of the cost incurred in respect of any asset contemplated in paragraph (aA), (b) or (d) of the definition of "affected asset"; or |
[Section 12D(3)(b) substituted by section 19(1)(d) of the Taxation Laws Amendment Act, 2014 (Act No. 43 of 2014) - effective 1 April 2015]
| (c) | 10 per cent of the cost incurred in respect of any asset contemplated in paragraph (c) of the definition of "affected asset". |
[Section 12D(3)(c) substituted by section 28(1) of the Taxation Laws Amendment Act, 2018 (Act No. 23 of 2018), GG 42172, dated 17 January 2019 - effective 1 April 2019 (section 28(2)]
| (3A) | Where any affected asset in respect of which any deduction is claimed in terms of this section was during any previous year of assessment used by the taxpayer 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, any deduction which could have been allowed in terms of this section during such previous year or any subsequent year in which such asset was used by such taxpayer shall for the purposes of this section be deemed to have been allowed during such previous year or years as if the receipts and accruals of such trade had been included in the income of such taxpayer. |
[Section 12D(3A) substituted by section 21 of the Revenue Laws Amendment Act, 2008 (Act No. 60 of 2008)]
| (4) | For the purposes of this section the cost to a taxpayer of any affected asset shall be deemed to be the lesser of— |
| (a) | the actual cost of the asset incurred by the taxpayer; or |
| (b) | the cost which the taxpayer would, if the taxpayer had acquired or improved the said asset under a cash transaction concluded at arm’s length on the date on which the transaction for the acquisition or improvement of the said asset was in fact concluded, have incurred in respect of the direct cost of acquisition or improvement of the asset (including the direct cost of the installation or erection thereof). |
[Section 12D(4) substituted by section 24 of the Taxation Laws Amendment Act, 2017 (Act No. 17 of 2017)]
| (5) | No deduction shall be allowed under this section in respect of any affected asset which has been disposed of by the taxpayer during any previous year of assessment. |
| (6) | The deductions which may be allowed or deemed to have been allowed in terms of this section and any other provision of this Act in respect of the cost of any affected asset shall not in the aggregate exceed the amount of such cost. |
[Section 12D(6) substituted by section 19(1)(c) of the Revenue Laws Amendment Act, 2000 (Act No. 59 of 2000)]
[Section 12D inserted by section 23(1) of the Taxation Laws Amendment Act, 2000 (Act No. 30 of 2000)]