Income Tax Act, 1962 (Act No. 58 of 1962)Chapter II : The TaxesPart I : Normal Tax20. Set-off of assessed losses |
| (1) | For the purpose of determining the taxable income derived by any person from carrying on any trade , there shall, subject to section 20A, be set off against the income so derived by such person— |
[Words preceding section 20(1)(a) substituted by section 35(1)(a) of the Revenue Laws Amendment Act, 2003 (Act No. 45 of 2003) - effective 1 March 2004]
| (a) |
| (i) | that is a company, other than a company referred to in subparagraph (ii), any balance of assessed loss incurred by that person in any previous year which has been carried forward from the preceding year of assessment, to the extent that the amount of such set-off does not exceed the higher of R1 million and 80 per cent of the amount of taxable income determined before taking into account the application of this section; |
| (ii) | that is a company carrying on mining operations as contemplated in section 15, any balance of assessed loss incurred by that person in any previous year which has been carried forward from the preceding year of assessment, to the extent that the amount of such set-off does not exceed the higher of R1 million and 80 per cent of the amount of taxable income determined before taking into account the application of— |
| (A) | this section; and |
| (B) | the provisions of section 36(7C); or |
| (iii) | that is not a company, any balance of assessed loss incurred by that person in any previous year which has been carried forward from the preceding year of assessment: Provided that no person whose estate has been voluntarily or compulsorily sequestrated shall be entitled to carry forward any assessed loss incurred prior to the date of sequestration, unless the order of sequestration has been set aside, in which case the amount to be so carried forward shall be reduced by an amount which was allowed to be set off against the income of the insolvent estate of such person from the carrying on of any trade; |
[Section 20(1)(a) substituted by section 42(1) 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 19 January 2022 (section 42(2)) -comes into operation on 31 March 2023 and applies in respect of years of assessment ending on or after that date (per section (9) of the Rates and Monetary Amounts and Amendment of Revenue Laws Act, 2022 (Act No. 19 of 2022), Notice No. 1540, GG47825, dated 5 January 2023)]
| (b) | any assessed loss incurred by a person during the same year of assessment in carrying on any other trade either alone or in partnership with others, otherwise than as a member of a company the capital whereof is divided into shares: |
[Section 20(1)(b) substituted by section 39(b) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]
Provided that there shall not be set off against any amount
| (a) | [Paragraph (a) of the proviso to section 20(1)(b) deleted by section 32(1) of the Taxation Laws Amendment Act, 2009 (Act No. 17 of 2009)] |
| (b) | derived by any person from a source within the Republic, any— |
| (i) | assessed loss incurred by such person during such year; or |
| (ii) | any balance of assessed loss incurred in any previous year of assessment, |
in carrying on any trade outside the Republic; or
[Paragraph (b) of the proviso to section 20(1)b) substituted by section 20(1) of the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)]
| (c) | that is a retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit or severance benefit included in taxable income, any— |
| (i) | balance of assessed loss; |
| (ii) | "assessed loss" as defined in subsection (2) incurred in such year before taking into account that retirement fund lump sum benefit or retirement fund lump sum withdrawal benefit. |
[Section 20(1)(c) substituted by section 54(1)(b) of the Taxation Laws amendment Act, 2013 (Act No. 31 of 2013) - effective 1 March 2013]
(1)bis [Section 20(1)bis deleted by section 18 of the Income Tax Act, 1965 (Act No. 88 of 1965)
| (2) | For the purposes of this section "assessed loss" means any amount by which the deductions admissible under section 11 exceeded the income in respect of which they are so admissible |
[Section 20(2) substituted by section 32(b) of the Revenue Laws Amendment Act, 2007 (Act No. 35 of 2007)]
| (2A) | In the case of any person other than a company— |
| (a) | the provisions of subsections (1) and (2) shall mutatis mutandis apply for the purpose of determining the taxable income derived by such person otherwise than from carrying on any trade, the reference in subsection (1) to "taxable income derived by any person from carrying on any trade" and the reference in that subsection to "the income so derived" being respectively construed as including a reference to taxable income derived by that person otherwise than from carrying on any trade and a reference to income so derived; and |
| (b) | the said person shall, subject to the provisos to subsection (1), not be prevented from carrying forward a balance of assessed loss merely by reason of the fact that he has not derived any income during any year of assessment. |
[Section 20(2A) substituted by section 39(c) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]
(3) [Section 20(3) deleted by section 19(b) of the Income Tax Act, 1990 (Act No. 101 of 1990)
(4) [Section 20(4) deleted by section 18 of the Income Tax Act, 1983 (Act No. 94 of 1983)]
(5) [Section 20(5) deleted by section 18 of the Income Tax Act, 1983 (Act No. 94 of 1983)