| (1) | For purposes of determining the taxable income derived by a person from carrying on any trade, any cash paid during any year of assessment commencing on or after 2 November 2006 by that person to a company or trust shall be deducted from that person’s income if— |
[Words preceding section 37A(1)(a) substituted by section 28(1)(a) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
| (a) | the sole object of that company or trust is to apply its property solely for rehabilitation upon premature closure, decommissioning and final closure, and post closure coverage of any latent and residual environmental impacts on the area covered in terms of any permit, right, reservation or permission contemplated in paragraph (d)(i)(aa) to restore one or more areas to their natural or predetermined state, or to a land use which conforms to the generally accepted principle of sustainable development; |
| (b) | that company or trust holds assets solely for purposes contemplated in paragraph (a); |
[Section 37A(1)(b) substituted by section 28(1)(b) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
| (c) | that company or trust makes distributions solely for purposes contemplated in paragraph (a), or subsection (3) or (4); and |
[Section 37A(1)(c) substituted by section 28(1)(c) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
(i)
| (aa) | holds a permit or right in respect of prospecting, exploration, mining or production, an old order right or OP26 right as defined in item 1 of Schedule II or any reservation or permission for or right to the use of the surface of land as contemplated in item 9 of Schedule II to the Mineral and Petroleum Resources Development Act; or |
[Section 37A(1)(d)(i)(aa) substituted by section 84(a) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (bb) | is engaged in prospecting, exploration, mining or production in terms of any permit, right, reservation or permission as contemplated in item (aa); or |
| (ii) | after approval by the Commissioner, paid any cash to that company or trust and that payment was not part of any transaction, operation or scheme designed solely or mainly for purposes of shifting the deduction contemplated in this subsection from another person to that person. |
| (2) | The company or trust contemplated in subsection (1) may only hold— |
[Section 37A(2)(a)(i) substituted by section 84(b) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
[Section 37A(2)(a)(ii) substituted by section 84(b) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (iii) | bank as regulated in terms of the Banks Act; or |
[Section 37A(2)(a)(iii) substituted by section 84(b) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (iv) | mutual bank as regulated in terms of the Mutual Banks Act, 1993 (Act No. 124 of 1993); |
| (i) | those financial instruments are issued by a person contemplated in subsection (1)(d); or |
[Section 37A(2)(b)(i) substituted by section 28(1)(e) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
| (ii) | those financial instruments are issued by a person that is a connected person in relation to a person contemplated in subsection (1)(d); |
[Section 37A(2)(b)(ii) substituted by section 28(1)(e) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
| (c) | financial instruments issued by any sphere of government in the Republic; or |
| (d) | any other investments which were held by that company or trust before 18 November 2003. |
| (3) | To the extent that the Cabinet member responsible for mineral resources is satisfied that all of the areas in terms of any permit, right, reservation or permission contemplated in subsection (1)(d)(i)(aa) that have been rehabilitated as contemplated in subsection (1)(a), the company or trust in respect of those areas must be wound-up or liquidated and its assets remaining after the satisfaction of its liabilities must be transferred to— |
[Words preceding section 37A(3)(a) substituted by section 84(c) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (a) | another company or trust as contemplated in this section as approved of by the Commissioner; or |
[Section 37A(3)(a) substituted by section 28(1)(f) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
| (b) | if no such company or trust has been established, to an account or trust prescribed by the Cabinet member responsible for mineral resources as approved of by the Commissioner if the Commissioner is satisfied that such company or trust satisfies the objects of subsection (1)(a). |
[Section 37A(3)(b) substituted by section 84(d) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013)
| (4) | If the Cabinet member responsible for mineral resources is satisfied that a company or trust as contemplated in subsection (1)(a)— |
[Words preceding subsection (4)(a) substituted by section 84(e) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (a) | will be able to satisfy all of the liabilities of that company or trust; and |
| (b) | such company or trust has sufficient assets to rehabilitate and restore, as contemplated in subsection (1)(a), all areas to which any permit, right, reservation or permission contemplated in subsection (1)(d)(i)(aa) relates, as the case may be, |
that company or trust may transfer assets not required for purposes of paragraphs (a) and (b) to another company or trust established in terms of this section as approved by the Commissioner.
(5)
| (a) | The constitution of a company or the instrument establishing a trust contemplated in this section must incorporate the provisions of this section and any amendments thereto. |
[Section 37A(5) renumbered to (5)(a) by section 28(1)(h) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
| (b) | Where the constitution of a company or the instrument establishing a trust contemplated in this section does not comply with this section, it shall be deemed to comply for a period not exceeding two years, if the person responsible in a fiduciary capacity for the funds and the assets of that company or trust, furnishes the Commissioner with a written undertaking that that company or trust will be administered in compliance with this section. |
[Section 37A(5)(b) inserted by section 28(1)(i) of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
| (6) | If a company or trust holds a financial instrument or investment during any year of assessment— |
| (a) | other than a financial instrument contemplated in subsection (2); and |
| (b) | other than an investment contemplated in subsection (2)(d), |
an amount equal to 50 per cent of the highest market value of that other financial instrument or other investment during that year of assessment must be deemed to be an amount of normal tax payable by the person contemplated in subsection (1)(d), subject to subsection (8), to the extent that the financial instrument or investment is directly or indirectly derived from any amount in cash paid by that person to that company or that trust.
[Section 37A(6)(b) substituted by section 49 of the Taxation Laws Amendment Act, 2017 (Act No. 17 of 2017)]
| (7) | If a company or trust contemplated in subsection (1) during any year of assessment— |
| (a) | distributes property from that company or trust for a purpose other than— |
| (i) | rehabilitation upon premature closure; |
| (ii) | decommissioning and final closure; |
| (iii) | post closure coverage of any latent or residual environmental impacts; or |
| (iv) | transfer to another company, trust, or account established for the purposes contemplated in subsection (1)(a); or |
| (b) | uses property from that company or trust as security for any debt for a purpose other than a purpose contemplated in paragraph (a)(i) or (ii), |
an amount equal to 50 per cent of the highest market value during that year of assessment of the property so distributed or used as security must be deemed to be an amount of normal tax payable by the person contemplated in subsection (1)(d), subject to subsection (8), in respect of that year of assessment.
[Section 37A(7) substituted by section 49 of the Taxation Laws Amendment Act, 2017 (Act No. 17 of 2017)]
| (8) | Any amount deemed to be an amount of normal tax payable by the person contemplated in subsection (1)(d) in terms of subsection (6) or (7) must, to the extent that the amount cannot be recovered from that person, be recovered from the trust or company contemplated in this section. |
[Section 37A(8) substituted by section 49 of the Taxation Laws Amendment Act, 2017 (Act No. 17 of 2017)]
| (9) | Subsection (7) does not apply in respect of any amount deemed to be an amount of normal tax that is paid to the Commissioner by a company or trust contemplated in this section. |
[Section 37A(6)(b) substituted by section 49 of the Taxation Laws Amendment Act, 2017 (Act No. 17 of 2017)]
| (10) | A company or trust contemplated in this section must— |
| (a) | within three months after the end of any year of assessment submit a report to the Director-General of the National Treasury in respect of that year of assessment providing the Director-General of the National Treasury with information comprising— |
| (i) | the total amount of contributions to the company or the trust; |
| (ii) | the total amount of withdrawals from the company or the trust; and |
| (iii) | the purposes for which any amount of those withdrawals were applied; and |
| (b) | within seven days after receiving a request from the Director-General of the National Treasury provide such information as the Director-General may require. |
[Section 37A(10) substituted by section 49 of the Taxation Laws Amendment Act, 2017 (Act No. 17 of 2017)]
[Section 37A inserted by section 27 of the Revenue Laws Amendment Act, 2006 (Act No. 20 of 2006)]
