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Division of Revenue Act, 2024 (Act No. 24 of 2024)

Chapter 3 : Conditional Allocations to Provinces and Municipalities

Part 3 : Matters relating to Schedule 4 to 7 allocations

16. Expenditure in terms of purpose and subject to conditions

 

(1) Despite any other legislation to the contrary, an allocation referred to in Schedules 4 to 7 may only be used for the purpose stipulated in the Schedule concerned and in accordance with the applicable framework.

 

(2)
(a) A framework may provide for components within a conditional allocation that are subject to specific conditions.
(b) A transferring officer may shift funds from one component to another—
(i) after consulting the relevant receiving officer;
(ii) with the approval of the National Treasury; and
(iii) in accordance with the applicable appropriation legislation.
(c) The National Treasury must publish a notice in the Gazette of a shift of funds in terms of paragraph (b) and include in the notice, the effective date of the shift.

 

(3) A receiving officer may not allocate any portion of a Schedule 4 or 5 allocation to any other organ of state for the performance of a function, unless the receiving officer and the organ of state agree on the obligations of both parties and a payment schedule, the receiving officer has notified the transferring officer, the relevant provincial treasury and the National Treasury of the agreed payment schedule and—
(a) the allocation—
(i) is approved in the budget for the receiving provincial department or municipality; or
(ii) if not already so approved—
(aa) the receiving officer notifies the National Treasury that the purpose of the allocation is not to artificially inflate the expenditure estimates of the relevant provincial department or municipality and indicates the reasons for the allocation; and
(bb) the National Treasury approves the allocation; or
(b) the allocation is for the payment for goods or services procured in accordance with the procurement prescripts applicable to the relevant province or municipality and, if it is an advance payment, paragraph (a)(ii) applies with the necessary changes.

 

(4) Section 21(1) and (2) applies to funds referred to in subsection (3).

 

(5) The receiving officer must—
(a) submit a copy of the agreement envisaged in subsection (3) to the transferring officer and the National Treasury; and
(b) publish by notice in the Gazette, the allocations envisaged in subsection (3) before payment is made.

 

(6)
(a) For purposes of the implementation of a Schedule 6 allocation to a municipality—
(i) Eskom Holdings Limited may receive funds directly from the transferring officer of the Department of Mineral Resources and Energy; or
(ii) a water board, as defined in section 1 of the Water Services Act, 1997 (Act No. 108 of 1997), may receive funds directly from the transferring officer of the Department of Water and Sanitation.
(b) A transferring officer may withhold the funds allocated in terms of paragraph (a), or any portion thereof, for a period not exceeding 30 days, if—
(i) Eskom Holdings Limited or the relevant water board does not comply with this Act;
(ii) roll-overs of conditional allocations approved by the National Treasury in terms of section 21 have not been spent; or
(iii) there is significant under-expenditure on previous transfers during the 2024/25 financial year.
(c) A transferring officer must, at least seven working days before withholding an allocation in terms of paragraph (b)—
(i) give Eskom Holdings Limited or the relevant water board—
(aa) notice of the intention to withhold the allocation; and
(bb) an opportunity to submit written representations as to why the allocation should not be withheld; and
(ii) inform the relevant municipality, the National Treasury, the relevant provincial treasury and the provincial department responsible for local government of the withholding.
(d) A notice envisaged in paragraph (c)(i)(aa) must include the reasons for withholding the allocation and the intended duration of the withholding.

(e)

(i) The National Treasury may instruct, or approve a request from, the transferring officer to withhold an allocation in terms of paragraph (b) for a period of 30 to 120 days, if the withholding shall—
(aa) facilitate compliance with this Act; or
(bb) minimise the risk of under-spending by Eskom Holdings Limited or the relevant water board.
(ii) When requesting the withholding of an allocation in terms of this subsection, a transferring officer must submit to the National Treasury proof of compliance with paragraph (c) and any representations received from Eskom Holdings Limited or the relevant water board.
(iii) The transferring officer must comply with paragraph (c) when the National Treasury instructs or approves a request by the transferring officer in terms of paragraph (e)(i).
(f) Despite paragraph (b), a transferring officer may reallocate funds in terms of section 19(3).
(g)
(i) Section 21(1) and (2) applies to funds referred to in paragraph (a).
(ii) Eskom Holdings Limited or the relevant water board must ensure that any funds that must revert to the National Revenue Fund in terms of section 21(1) are paid into that Fund by the date determined by the National Treasury.
(iii) Eskom Holdings Limited or the relevant water board must request the roll-over of unspent funds through the relevant transferring officer.

 

(7)

(a) For purposes of the Human Settlements Development Grant and the Informal Settlements Upgrading Partnership Grant: Provinces, a receiving officer and a municipality with level one or two accreditation or functions assigned in terms of section 126 of the Constitution to administer all aspects, including financial administration of a national housing programme (herein called ‘‘assigned functions’’) as at 1 April 2024, must, by the date determined by the National Treasury—
(i) agree on a payment schedule; and
(ii) submit, through the relevant provincial treasury, the payment schedule to the National Treasury.
(b) If a municipality receives accreditation after 1 April 2024, the National Treasury may approve that paragraph (a) applies.
(c) If the transfer of the Human Settlements Development Grant and the Informal Settlements Upgrading Partnership Grant: Provinces to a municipality with assigned functions is withheld or stopped in terms of section 17 or 18, the receiving officer must request the National Treasury to amend the payment schedule in terms of section 23.

 

(8) If a function, which is partially or fully funded by a conditional allocation to a province, is assigned to a municipality, as envisaged in section 10 of the Municipal Systems Act
(a) the funds from the conditional allocation for the province for the function must be stopped in terms of section 18 and reallocated in terms of section 19 to the municipality, which has been assigned the function;
(b) if possible, the province must finalise any project or fulfil any contract regarding the function before the date the function is assigned and, if not finalised, the province must notify the relevant municipality and the National Treasury;
(c) any project or contract regarding the function not finalised or fulfilled at the date at which the function is assigned, must be subjected to an external audit and the province and the municipality must enter into an agreement to complete the project or fulfil the contract through ceding it to the municipality;
(d) money that is retained by the province for any contract related to the function that is not ceded to the municipality must be spent by 31 March 2025 and shall not be available in terms of section 30 of the Public Finance Management Act or section 22(2) of this Act;
(e) the receiving officer of the province must, within seven days after the function is assigned, submit to the transferring officer and the National Treasury a list of liabilities that are attached to the function, but that were not transferred to the municipality, to provide for the adjustment of the applicable allocations; and
(f) the receiving officer of the municipality must, within one month from the date of the stopping of funds in paragraph (a), submit to the transferring officer a revised plan for its planned expenditure.