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

Schedules

Tenth Schedule : Oil and Gas Activities

5. Deductions from income derived from oil and gas activities
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(1)For purposes of determining the taxable income of an oil and gas company during any year of assessment, there must be allowed as deductions from the oil and gas income of that company all expenditure and losses actually incurred (other than any expenditure or loss actually incurred in respect of the acquisition of any oil and gas right, except as allowed in paragraph 7(3)) in that year in respect of exploration or post-exploration.

[Paragraph 5(1) of the Tenth Schedule substituted by section 157(1)(a) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013  - effective 1 April 2014]

 

(2)In addition to any other deductions (as contemplated in subparagraph (1) other than any expenditure or loss actually incurred in respect of the acquisition of any oil and gas right) allowable in terms of this paragraph, for purposes of determining the taxable income of an oil and gas company during any year of assessment, there must be allowed as deductions from the oil and gas income of that company derived in that year—
(a)100 per cent of all expenditure of a capital nature actually incurred in that year of assessment in respect of exploration in terms of an oil and gas right; and
(b)50 per cent of all expenditure of a capital nature actually incurred in that year of assessment in respect of post-exploration in respect of an oil and gas right.

[Paragraph 5(2) of the Tenth Schedule  substituted by section 157(1)(b) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013 - effective 1 April 2014]

 

(2A)For the purposes of determining the taxable income of an oil and gas company during the first year of assessment of that oil and gas company commencing on or after 2 November 2006, there will be brought forward and allowed as a deduction from the oil and gas income of that oil and gas company the amount determined in terms of section 36(7E) in respect of the immediately preceding year of assessment.

[Paragraph 5(2A) of the Tenth Schedule inserted by section 115 of the Taxation Laws Amendment Act, 2010 (Act No. 7 of 2010) - effective 3 November 2006]

 

(3)For purposes of determining the taxable income of an oil and gas company during any year of assessment, any assessed losses (as defined in section 20) in respect of exploration or post-exploration may only be set off against—

[Words preceding paragraph 5(3(a) of the Tenth Schedule substituted by section 157(1)(c) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013 - effective 1 April 2014]

(a)the oil and gas income of that company, and
(b)income from the refining of gas derived in respect of any oil and gas right held by that company,

to the extent that those assessed losses do not exceed that income.

[Words following paragraph 5(3)(b) of the Tenth Schedule  substituted by section 157(1)(d) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]

 

 

(4)To the extent that any assessed losses remain after the set-off contemplated in subparagraph (3), an amount equal to 10 per cent of those remaining assessed losses may be set off against any other income derived by that company.

[Paragraph 5(4) of the Tenth Schedule substituted by section 157(1)(e) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]

 

(5)To the extent that any assessed loss remains after the set-offs contemplated in subparagraphs (3) and (4), those losses may be carried forward to the succeeding year of assessment of that oil and gas company.

[Paragraph 5(5) of the Tenth Schedule substituted by section 157(1)(f) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]