Income Tax Act, 1962 (Act No. 58 of 1962)

Chapter II : The Taxes

Part II : Special Provisions Relating to Companies

40D. Communications licence conversions
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(1)Where existing licences referred to in Chapter 15 of the Electronic Communications Act, 2005 (Act No. 36 of 2005), are converted to new licences in terms of section 93 of that Act, a licensee of an existing licence or licences must not recover, recoup or include in the licensee’s income for the year of assessment in which that conversion takes place any allowance allowed to the licensee in respect of the existing licence or licences.

 

(2)The licensee of a new licence contemplated in subsection (1) is deemed to have acquired the new licence—
(a)in the case where an existing licence is converted to a new licence, at a cost equal to the amount taken into account by the licensee in respect of the existing licence;
(b)in the case where two or more existing licences are converted to a new licence, at a cost equal to the aggregate of the amounts taken into account by the licensee in respect of each of the existing licences; and
(c)in the case where an existing licence is converted to two or more new licences, at a cost equal to an amount that bears to the amount taken into account by the licensee in respect of the existing licence the same ratio as the value of that new licence bears to the aggregate value of the new licences,

which cost must be treated as expenditure actually incurred by the licensee in respect of the new licence or licences for the purposes of sections 11 and 22(1) and (2).

 

(3)For the purposes of subsection (2) the new licence or licences must be deemed to have been acquired by the licensee on the day immediately after the conversion.

 

[Section 40D inserted by section 46(1) of the Taxation Laws Amendment Act, 2009 (Act No. 17 of 2009)]