The income of any fund in respect of any tax period shall be an amount determined in accordance with the formula—
A = I + (R – E) + D
in which formula—
| (a) | "A" represents the income to be determined; |
| (b) | "I" represents the gross amount of any interest received by or accrued to such fund during such tax period; |
| (c) | "R" represents the gross amount of any rental income received by or accrued to such fund during such tax period; |
| (d) | "E" represents, in relation to such tax period, the sum of— |
| (i) | any expenditure actually incurred by such fund during such tax period directly in the production of the rental income represented by symbol "R"; and |
| (ii) | the appropriate portion of any allowance calculated in respect of any asset (whether movable or immovable, corporeal or incorporeal) from which such rental income arises, |
which would have been allowed as a deduction in terms of the provisions of the Income Tax Act had the provisions of such last-mentioned Act been applicable for the purposes of this Act: Provided that—
| (aa) | where the sum of such expenditure and allowance exceeds the income represented by symbol "R", the sum of such expenditure and allowance shall be limited to the amount represented by symbol "R"; and |
| (bb) | any excess as contemplated in subparagraph (aa) shall not be set-off against the amount represented by symbol "I", but shall be carried forward to the tax period immediately following such tax period and shall be deemed to be expenditure actually incurred by such fund directly in the production of rental income or an allowance calculated in respect of, as the case may be, such immediately following tax period; and |
| (e) | "D" represents the amount of any foreign dividends received by or accrued to such fund during such tax period as determined in accordance with the provisions of section 9E of the Income Tax Act, 1962 (Act No. 58 of 1962). |
