[Section 26]
1.
In this Schedule—
| (a) |
a reference to a year of assessment shall in the case of any taxpayer who has under the provisions of section 66(13A) of this Act been permitted to furnish accounts in respect of the income derived by him from pastoral, agricultural or other farming operations made up to a date other than the last day of the relevant year of assessment, be construed as a reference to the period covered by such accounts; and |
[Paragraph 1(a) of the First Schedule substituted by section 78 of the Revenue Laws Amendment Act, 2003 (Act No. 45 of 2003)]
| (b) |
a reference to the end of a year of assessment includes, where the period assessed ends on a date other than the last day of the year of assessment, a reference to the end of that period. |
2.
Every farmer shall include in his return rendered for income tax purposes the value of all livestock or produce held and not disposed of by him at the beginning and the end of each year of assessment.
3.
| (1) |
Subject to the provisions of subparagraphs (2) and (3), the value of livestock or produce held and not disposed of at the end of the year of assessment shall be included in income for such year of assessment, and there shall be allowed as a deduction from such income the value of livestock or produce, as determined in accordance with the provisions of paragraph 4, held and not disposed of at the beginning of the year of assessment. |
| (2) |
For the purposes of subparagraph (1), the value of livestock or produce held and not disposed of at the end of any year of assessment by any person who discontinued farming operations during such year, shall be included in his income for such year and for all subsequent years of assessment so long as such livestock or produce, or any portion thereof, is so held and not disposed of. |
[Paragraph 3(2) of the First Schedule substituted by section 16 of the Income Tax Act, 1978 (Act No. 101 of 1978]
| (3) |
Any livestock which is the subject of any "sheep lease" or similar agreement concerning livestock, and any produce which is the subject of a similar agreement, shall be deemed to be held and not disposed of by the grantor of such lease or agreement. |
[Paragraph 3(3) of the First Schedule substituted by section 16 of the Income Tax Act, 1978 (Act No. 101 of 1978)]
4.
| (1) |
The values of livestock and produce held and not disposed of at the beginning of any year of assessment shall, subject to the provisions of subparagraph (2), be deemed to be— |
| (a) |
in the case of a farmer who was carrying on farming operations on the last day of the year immediately preceding the year of assessment, the sum of— |
| (i) |
the values of livestock and produce held and not disposed of by him at the end of the year immediately preceding the year of assessment; and |
| (ii) |
the market value of livestock or produce— |
| (aa) |
acquired by such farmer during the current year of assessment otherwise than by purchase or natural increase or in the ordinary course of farming operations; or |
| (bb) |
held by such farmer otherwise than for purposes of pastoral, agricultural or other farming operations, which such farmer during such year of assessment commenced to hold for purposes of pastoral, agricultural or other farming operations; or |
[Paragraph 4(1)(a)(ii) of the First Schedule substituted by section 35(a) of the Taxation Laws Amendment Act, 2001 (Act No. 5 of 2001)]
| (b) |
in the case of any person commencing or recommencing farming operations during the year of assessment, the sum of— |
| (i) |
the value of any livestock or produce held and not disposed of by him at the end of the day immediately preceding the date of such commencement or recommencement; and |
| (ii) |
the market value of livestock or produce (other than livestock or produce to which sub-item (i) refers) |
| (aa) |
acquired by such person during the year of assessment otherwise than by purchase or natural increase or in the ordinary course of farming operations, or |
| (bb) |
held by such person otherwise than for purposes of pastoral, agricultural or other farming operations, which such person during such year of assessment commenced to hold for purposes of pastoral, agricultural or other farming operations. |
[Paragraph 4(1)(b)(ii) of the First Schedule substituted by section 35(b) of the Taxation Laws Amendment Act, 2001 (Act No. 5 of 2001)]
| (2) |
[Paragraph 4(2) of the First Schedule deleted by section 30 of the Income Tax Act, 1996 (Act No. 36 of 1996)] |
| (3) |
[Paragraph 4(3) of the First Schedule deleted by section 42 of the Income Tax Act, 1983 (Act No. 42 of 1983)] |
5.
| (1) |
The value to be placed upon livestock for the purposes of this Schedule shall, subject to the provisions of paragraph 4(1) as respects livestock held and not disposed of at the end of the year of assessment, be the standard value applicable to the livestock. |
[Paragraph 5(1) of the First Schedule substituted by section 55 of the Revenue Laws Amendment Act, 2002 (Act No. 74 of 2002)]
| (1A) |
[Paragraph 5(1A) of the First Schedule deleted by section 31(b) of the Income Tax Act, 1996 (Act No. 36 of 1996)] |
| (2) |
[Paragraph 5(2) of the First Schedule deleted by section 36 of the Taxation Laws Amendment Act, 2001 (Act No. 5 of 2001)] |
| (3) |
[Paragraph 5(3) of the First Schedule deleted by section 28(d) of the Income Tax Act, 1976 (Act No. 103 of 1976)] |
6.
| (1) |
The standard value applicable to any class of livestock shall be— |
| (a) |
in the case of any farmer (other than a company or the estate of a deceased person) who on or after the first day of July, 1955, and before the first day of July, 1962, rendered returns of income in respect of farming operations, the standard value which in relation to such farmer applied to that class of livestock in accordance with the provisions of paragraph 13 of the Third Schedule to the Income Tax Act, 1941; |
| (b) |
in the case of any other farmer (other than a company or the estate of a deceased person) or in the case of any farmer (other than a company or the estate of a deceased person) who on or after 1 July 1962 includes that class of livestock in his return of income for the first time, either— |
| (i) |
such standard value as may be fixed for that class of livestock by regulation made under this Act; or |
| (ii) |
such other standard value as the farmer may, subject to the provisions of subparagraphs (2) and (3), adopt for that class of livestock when rendering his first return of income on or after the said date in respect of farming operations, or when so including in any return of income such a class of livestock for the first time; |
| (c) |
in the case of any company or estate of a deceased person the return or income of which in respect of farming operations for the first year of assessment of that company or estate ending on or after 1 January 1977 including that class of livestock, either— |
| (i) |
such standard value as may be fixed for that class of livestock by regulation made under this Act; or |
| (ii) |
such other standard value as such company or the executor of such estate, as the case may be, may, subject to the provisions of subparagraphs (2) and (3), adopt for that class of livestock when rendering the said return of income; |
| (d) |
in the case of any company or estate of a deceased person the return of income of which in respect of farming operations for a year of assessment subsequent to the year of assessment referred to in item (c), includes that class of livestock for the first time, either— |
| (i) |
such standard value as may be fixed for that class of livestock by regulation made under this Act; or |
| (ii) |
such other standard value as such company or the executor of such estate, as the case may be, may subject to the provisions of subparagraphs (2) and (3), adopt for that class of livestock when rendering the said return of income. |
| (2) |
No standard value adapted under subparagraph (1)(b)(ii), (1)(c)(i) or (1)(d)(ii) in respect of any class of livestock shall be more than twenty per cent higher or lower than the standard value fixed by regulation under this Act in respect of livestock of that class. |
| (3) |
Any farmer who classifies any kind of his livestock on a basis other than that applied by a regulation referred to in subparagraph (1)(b)(i), (1)(c)(i) or (1)(d)(i), may adopt in respect of any class into which he so classifies that livestock such a standard value as may be approved by the Commissioner with due regard to the values fixed by regulation. |
7.
The exercise of an option under subparagraph (1)(b)(ii), (1)(c)(ii) or (1)(d)(ii) of paragraph 6 shall be binding upon the farmer in respect of all subsequent returns for income tax purposes, and no standard value fixed by any farmer whether under this Act or any previous Income Tax Act may be varied by him in respect of any subsequent year of assessment.
[Paragraph 7 of the First Schedule substituted by section 71(a) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
8.
| (1) |
Where any farmer has during any year of assessment incurred expenditure in respect of the acquisition of livestock, the deduction which may be allowed to him under section 11(a) of this Act in respect of the cost price of such livestock shall be limited to an amount which, together with the value of livestock held and not disposed of by him at the beginning of such year, does not exceed the income received by or accrued to him from farming during such year and the value of livestock held and not disposed of by him at the end of such year. |
[Paragraph 8(1) of the First Schedule substituted by section 79 of the Revenue Laws Amendment Act, 2003 (Act No. 45 of 2003)]
| (2) |
Any amount which has been disallowed under the provisions of subparagraph (1) shall be carried forward and be deemed to be expenditure incurred by the farmer in respect of the acquisition of livestock during the succeeding year of assessment. |
| (3) |
The provisions of this paragraph shall not apply— |
| (a) |
in any case where it is shown by the farmer that livestock the cost of which falls to be dealt with under such provisions is no longer held and not disposed of by him; and |
| (b) |
to so much of any expenditure (including any amount which has been carried forward under the provisions of subparagraph (2)) which falls to be disallowed under subparagraph (1) as, together with the value of livestock held and not disposed of by him at the beginning of the year of assessment, exceeds such amount as is shown by him to be market value of all livestock held and not disposed of by him at the end of such year. |
9.
The value to be placed upon produce included in any return shall be a fair and reasonable value.
[Paragraph 9 of the First Schedule substituted by section 77 of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
| 10. |
[Paragraph 10 of the First Schedule substituted by section 19 of the Income Tax Act, 1963 (Act No. 72 of 1963)] |
11.
If during any year of assessment livestock or produce—
| (a) |
has been applied by the farmer for his private or domestic consumption; |
| (b) |
has, for purposes other than that of the production to the farmer of income from sources within the Republic, been removed by him from the Republic; or |
| (i) |
has been donated by the farmer; |
| (ii) |
has been disposed of by the farmer, other than in the ordinary course of his farming operations, for a consideration less than the market value thereof; |
| (iii) |
where the farmer is a company, has on or after 21 June 1993 been distributed in specie, to a holder of a share in such company; or |
[Paragraph 11(c)(iii) of the First Schedule substituted by section 109 of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (iv) |
has been applied by the farmer for any other purpose other than the disposal thereof in the ordinary course of his farming operations and under circumstances other than those contemplated in subparagraph (a) or (b) or item (i), (ii) or (iii) of this subparagraph, |
there shall be included in the income of such farmer for that year of assessment—
| (A) |
where such livestock or produce has been applied in a manner contemplated in subparagraph (a), an amount equal to the cost price to him of such livestock or produce, or where the cost price cannot be readily determined, the market value of such livestock or produce; or |
| (B) |
where such livestock or produce has been applied, disposed of or distributed in a manner contemplated in subparagraph (b) or (c), an amount equal to the market value of such livestock or produce: |
Provided that where—
| (a) |
any livestock or produce so applied, is used or consumed by the farmer in the ordinary course of his farming operations, the amount included in his income under this paragraph shall for the purposes of this Act be deemed to be expenditure incurred in respect of the acquisition by him of such livestock or produce; or |
| (b) |
the provisions of subparagraph (c)(ii) are applicable and an amount of consideration as contemplated in such subparagraph has been received by or accrued to the farmer, the amount included in his income in terms of this paragraph shall be reduced by such consideration. |
[Paragraph 11 of the First Schedule substituted by section 32 of the Income Tax Act, 1996 (Act No. 36 of 1996)]
12.
| (1) |
Subject to the provisions of subparagraphs (2) to (6), inclusive, there shall be allowed as deductions in the determination of the taxable income derived by any farmer the expenditure incurred by him during the year of assessment in respect of— |
| (a) |
the eradication of noxious plants and alien invasive vegetation; |
[Paragraph 12(1)(a) of the First Schedule substituted by section 57(1)(a) of the Revenue Laws Amendment Act, 2008 (Act No. 60 of 2008)]
| (b) |
the prevention of soil erosion; |
| (d) |
dams, irrigation schemes, boreholes and pumping plants; |
| (f) |
the erection of, or extensions, additions or improvements (other than repairs) to, buildings used in connection with farming operations, other than those used for domestic purposes; |
[Paragraph 12(1)(f) of the First Schedule substituted by section 57(1)(b) of the Revenue Laws Amendment Act, 2008 (Act No. 60 of 2008)]
| (g) |
the planting of trees, shrubs or perennial plants for the production of grapes or other fruit, nuts, tea, coffee, hops, sugar, vegetable oils or fibres, and the establishment of any area used for the planting of such trees, shrubs or plants; |
[Paragraph 12(1)(g) of the First Schedule substituted by section 27 of the Income Tax Act, 1966 (Act No. 55 of 1966)]
| (h) |
the building of roads and bridges used in connection with farming operations; |
| (i) |
the carrying of electric power from the main transmission lines to the farm apparatus or under an agreement concluded with the Electricity Supply Commission in terms of which the farmer has undertaken to bear a portion of the cost incurred by the said Commission in connection with the supply of electric power consumed by the farmer wholly or mainly for farming purposes; |
[Paragraph 12(1)(i) of the First Schedule substituted by section 28(1)(a) of the Income Tax Act, 1982 (Act No. 91 of 1982)]
| (j) |
[Paragraph 12(1)(j) of the First Schedule substituted by section 345(a) of the Income Tax Act, 1993 (Act No. 113 of 1993)] |
| (1A) |
For purposes of this Schedule, expenditure incurred in respect of any matter contemplated in subparagraph (1)(a), (b), (d) or (e) to conserve and maintain land owned by the taxpayer shall be deemed to be expenditure incurred in the carrying on of pastoral, agricultural or other farming operations if— |
| (a) |
conservation and maintenance is carried out in terms of a biodiversity management agreement that has a duration of at least five years; and |
| (b) |
the agreement contemplated in item (a) is entered into by the taxpayer in terms of section 44 of the National Environmental Management: Biodiversity Act, 2004 (Act No. 10 of 2004); and |
| (c) |
land utilised by the taxpayer for purposes of carrying on the pastoral, agricultural or other farming operations consists or includes or is in the immediate proximity of the land that is the subject of the agreement contemplated in item (a). |
[Paragraph 12(1A) of the First Schedule inserted by section 57(1)(c) of the Revenue Laws Amendment Act, 2008 (Act No. 60 of 2008)]
(1B)
| (a) |
Where any asset in respect of which any deduction has been allowed to a farmer under the provisions of subparagraph (1) or (1A) (whether in the current or any previous year of assessment) and which is or has become a movable asset, is disposed of by the farmer, there shall be included in his income so much of the amounts received by or accrued to or in favour of the farmer in respect of such disposal as does not exceed the expenditure in respect of such asset allowed under subparagraph (1) or the original cost to him of such asset taken into account under subparagraph (1A), as the case may be, less any amounts which in terms of item (c) of this subparagraph are not allowable as deductions under subparagraph (1A) in respect of such asset in respect of the succeeding year or years of assessment referred to in the said item. |
| (b) |
Where any allowance was granted in respect of such asset under the provisions of section 11(e) of this Act the provisions of section 8(4)(a) of this Act shall not apply in respect of any amount recovered or recouped in respect of such allowance. |
| (c) |
[Paragraph 12(1B)(c) of the First Schedule deleted by section 45(c) of the Income Tax Act, 1993 (Act No. 113 of 1993)] |
| (1C) |
For the purposes of this paragraph, where any asset in respect of which any deduction has been allowed to a farmer under the provisions of subparagraph (1) or (1A) (whether in the current or any previous year of assessment) and which is or has become a movable asset, is disposed of by the farmer to any other person by way of donation or for a consideration which is not an adequate consideration or is not readily capable of valuation, a consideration equal in value to the fair value of such asset shall be deemed to have been received by the farmer in respect of his disposal of the asset and to have been paid by such other person in respect of his acquisition of the asset: Provided that the last-mentioned consideration shall not exceed the cost to the farmer of such asset. |
[Paragraph 12(1C) of the First Schedule substituted by section 45(d) of the Income Tax Act, 1993 (Act No. 113 of 1993)]
| (1D) |
If during the current or any previous year of assessment deductions are allowed to the taxpayer in terms of subparagraph (1A) in respect of capital expenditure incurred to conserve or maintain land in terms of an agreement contemplated in that subparagraph and the taxpayer is in breach of that agreement or violates that declaration, an amount equal to the deductions allowed in respect of expenditure incurred within the period of five years preceding the breach of violation must be included in the income of the taxpayer for the current year. |
[Paragraph 12(1D) of the First Schedule inserted by section 57(1)(d) of the Revenue Laws Amendment Act, 2008 (Act No. 60 of 2008)]
| (2) |
No deduction under section 11(e) or (o) of this Act shall be allowed in respect of any machinery, implements, utensils or articles for which a deduction is allowable under subparagraph (1) or (1A) of this paragraph. |
[Paragraph 12(2) of the First Schedule substituted by section 47 of the Taxation Laws Amendment Act, 2019 (Act No. 34 of 2019), GG 42951, dated 15 January 2020]
| (3) |
The amount by which the total expenditure incurred by any farmer during any year of assessment in respect of the matters referred to in items (c) to (i), inclusive, of subparagraph (1)exceeds the taxable income (as calculated before allowing the deduction of such expenditure and before the inclusion as hereinafter provided of the said amount in the farmer's income) derived by him from farming operations during that year of assessment shall be included in his income from such operations for that year and be carried forward and be deemed for the purposes of subparagraph (1) to be expenditure which has been incurred by him during the next succeeding year of assessment in respect of the matters referred to in the said items. |
[Paragraph 12(3) of the First Schedule substituted by section 64 of the Taxation Laws Amendment Act, 2018 (Act No. 23 of 2018), GG 42172, dated 17 January 2019]
| (3A) |
For the purposes of subparagraph (3) any amount which has been carried forward from the year of assessment ended 30 June 1961 in terms of the proviso to paragraph 17(3) of the Third Schedule to the Income Tax Act, 1941, shall be deemed to be an amount which has been so carried forward in terms of the said subparagraph. |
[Paragraph 12(3A) of the First Schedule substituted by section 27(1)(e) of the Income Tax Act, 1981 (Act No. 96 of 1981)
| (3B) |
Where an amount (hereinafter referred to as the recoupment) fails to be included in a farmer's income for any year of assessment under the provisions of subparagraph (1B) and an amount (hereinafter referred to as the qualifying balance) has in terms of subparagraph (3) been carried forward to the year of assessment in question from the preceding year of assessment the recoupment shall to the extent that it does not exceed the qualifying balance be deducted therefrom, and in such case— |
| (a) |
the recoupment shall, to the extent that it has been deducted from the qualifying balance, not be included in the farmer's income under subparagraph (1B); and |
| (b) |
only so much of the qualifying balance as remains after the deduction therefrom of the recoupment shall be taken into account for the purposes of subparagraph (3) as expenditure incurred during the year of assessment in question in respect of the matters mentioned in that subparagraph. |
[Paragraph 12(3B) of the First Schedule substituted by section 27(1)(f) of the Income Tax Act, 1981 (Act No. 96 of 1981)
| (3C) |
The amount of any expenditure carried forward and deemed to be incurred by a person in the next succeeding year in terms of subparagraph (3) must be reduced by any amount of expenditure in respect of which an election has been made in terms of paragraph 20A(1) of the Eighth Schedule. |
[Paragraph 12(3C) of the First Schedule inserted by section 80 of the Revenue Laws Amendment Act, 2003 (Act No. 45 of 2003)]
(4)
| (a) |
For the purposes of this paragraph "employees", in relation to any farmer, means persons employed by that farmer in connection with his or her farming operations, but does not include his or her relatives or, where the farmer is a company, the holders of shares (or the relatives of holders of shares) in that company or in any company which is associated with it by virtue of the holding of shares. |
| (b) |
For the purposes of item (a) "holders of shares" in relation to any company does not include persons who hold all their shares in that company solely because they are employed by that company and who will, in terms of the articles of association of that company, not be entitled to hold those shares after they cease to be so employed. |
[Paragraph 12(4) of the First Schedule substituted by section 110 of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]
| (5) |
[Paragraph 12(5) of the First Schedule deleted by section 57(1)(3) of the Revenue Laws Amendment Act No. 60 of 2008] |
| (6) |
If any year of assessment any building in relation to which a deduction has been allowed to any farmer under item (f) of subparagraph (1) of this paragraph or item (f) of subparagraph (1) of paragraph 17 of the Third Schedule to the Income Tax Act, 1941, whether in the current or in any previous year of assessment, is used for the domestic purposes of any person other than an employee of that farmer, there shall be included in the income of that farmer for the current year of assessment the amount of such deduction less one-tenth of the said amount in respect of each completed period of one year, but not exceeding ten years, during which such building was used by the said farmer in connection with his farming operations other than for the domestic purposes of persons who are not his employees. |
13.
| (i) |
has in any year of assessment sold livestock on account of drought, stock disease or damage to grazing by fire or plague; and |
| (ii) |
has within four years after the close of the said year of assessment purchased livestock to replace the livestock so sold; or |
| (i) |
has in any year of assessment (other than a year of assessment in respect of which the normal tax chargeable in the case of such farmer is required to be determined under paragraph 19) sold livestock by reason of his participation in a livestock reduction scheme organised by the Government; and |
| (ii) |
has within nine years after the close of the said year of assessment purchased livestock to replace the livestock so sold, |
the cost of the livestock so purchased shall, notwithstanding anything in this Schedule contained, be allowed. at the option of such farmer. as a deduction in the determination of his taxable income for the year of assessment during which the livestock was so sold, provided the claim for such deduction is made within five years after the close of that year of assessment in the case of a farmer referred to in item (a), or within ten years after the close of that year of assessment in the case of a farmer referred to in item (b).
[Paragraph 13(1) of the First Schedule substituted by section 79(a) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
| (2) |
The cost of livestock so allowed as a deduction shall not be allowed as a deduction in the year of assessment in which the purchases were made. |
| (3) |
Every farmer who desires to claim a deduction in terms of subparagraph (1), shall for the year of assessment in which he or she sold livestock on account of conditions of drought or stock disease or by reason of his or her participation in a livestock reduction scheme organised by the Government notify the Commissioner accordingly in such form and within such time as may be prescribed and obtain and retain full particulars in regard to the livestock so sold. |
[Paragraph 13(3) of the First Schedule substituted by section 79(a) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
| (4) |
[Paragraph 13(4) of the First Schedule deleted by section 79(b) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)] |
| (5) |
The provisions of this paragraph shall not apply to the cost of any livestock purchased to replace livestock sold if the proceeds derived from the sale of such last-mentioned livestock have been dealt with under the provisions of paragraph 13A. |
[Paragraph 13(5) of the First Schedule inserted by section 43 of the Income Tax Act, 1983 (Act No. 94 of 1983)]
| (6) |
The Commissioner may, notwithstanding the provisions of sections 93, 99(1) and 100 of the Tax Administration Act, raise an assessment for any year of assessment with respect to which a deduction in terms of subparagraph (1) is allowed. |
[Paragraph 13(6) of the First Schedule substituted by section 12 of the Tax Administration Laws Amendment Act, 2023, GG49947, dated 22 December 2023]
| (7) |
Where a deduction in terms of subparagraph (1)(a) or (b) may be claimed in respect of a year of assessment, the period prescribed under section 29(3) of the Tax Administration Act after which records, books of account or documents need not be retained shall be extended to six years or eleven years respectively for such year of assessment. |
[Paragraph 13(7) of the First Schedule inserted by section 5 of the Tax Administration Laws Amendment Act, 2021 (Act No. 21 of 2021), Notice No. 771, GG45788, dated 19 January 2022]
| (8) |
Where a deduction in terms of subparagraph (1)(b) may be claimed in a year of assessment, the period prescribed under section 97(4) of the Tax Administration Act after which a record of assessment may be destroyed shall be extended to eleven years for such year of assessment. |
[Paragraph 13(8) of the First Schedule inserted by section 5 of the Tax Administration Laws Amendment Act, 2021 (Act No. 21 of 2021), Notice No. 771, GG45788, dated 19 January 2022]
13A.
| (1) |
If any farmer has on or after 1 March 1982 disposed of any livestock on account of drought, and the whole or any portion of the proceeds of such disposal has as soon as possible, but in any case within three months after the receipt thereof by the farmer, been deposited by him in an account in his name with the Land and Agricultural Bank of South Africa, so much of such proceeds as has been so deposited by him shall, notwithstanding the provisions of section 23(e) of this Act but subject to the provisions of subparagraph (3), be deemed not to be gross income derived by such farmer. |
[Paragraph 13A(1) of the First Schedule substituted by section 46(1)(a) of the Income Tax Act, 1993 (Act No. 113 of 1993)]
| (2) |
Every farmer who desires that the proceeds derived by him or her from the disposal of livestock be dealt with under the provisions of this paragraph shall notify the Commissioner in such form and within such time as may be prescribed by the Commissioner. |
[Paragraph 13A(2) of the First Schedule substituted by section 19(1) of the Taxation Laws Second Amendment Act, 2008 (Act No. 4 of 2008)]
| (3) |
Any amount being the whole or any portion of a sum deposited in an account following the disposal of livestock as contemplated in subparagraph (1), shall— |
| (a) |
if it is withdrawn from such account before the expiration of a period of six months after the last day of the year of assessment in which such disposal took place, be deemed to be gross income derived by the taxpayer from the disposal of livestock on the date of such disposal; or |
[Paragraph 13A(3)(a) of the First Schedule substituted by section 46(1)(b) of the Income Tax Act, 1993 (Act No. 113 of 1993)]
| (aA) |
if it is withdrawn from such account after the expiration of a period of six months but before the expiration of a period of six years after the last day of the year of assessment in which such disposal took place, be deemed to be gross income derived by the taxpayer from the disposal of livestock on the date of such withdrawal; or |
[Paragraph 13A(3)(aA) of the First Schedule inserted by section 46(1)(b) of the Income Tax Act, 1993 (Act No. 113 of 1993)]
| (b) |
in the event of the taxpayer's death or insolvency before the expiration of the said period, be deemed to be gross income so derived on the day before the date of his death or insolvency, as the case may be; or |
| (c) |
if it is not so withdrawn and the taxpayer does not die or become insolvent before the expiration of such period, be deemed to be gross income so derived on the last day of such period. |
| (4) |
[Paragraph 13A(4) of the First Schedule deleted by section 46(1)(c) of the Income Tax Act, 1993 (Act No. 113 of 1993)] |
14.
| (1) |
Any amount received by or accrued to a farmer in respect of the disposal of any plantation shall. whether such plantation is disposed of separately or with the land on which it is growing, be deemed not to be a receipt or accrual of a capital nature and shall form part of such farmer's gross income. |
| (2) |
Where any plantation is disposed of by a farmer with the land on which it is growing the amount to be included in such farmer's gross income in terms of subparagraph (1) shall— |
| (a) |
if the amount representing the consideration payable in respect of the disposal of the plantation is agreed to between the parties to the transaction, be the amount so agreed to; or |
| (b) |
failing such agreement, be such portion of the consideration payable in respect of the disposal of the land and the plantation as represents the consideration payable for the plantation. |
[Paragraph 14(2)(b) of the First Schedule substituted by section 80 of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
15.
| (1) |
In the determination of the taxable income of any farmer there shall be allowed as a deduction— |
| (a) |
any expenditure incurred by such farmer during the year of assessment in respect of the establishment and maintenance of plantations; |
| (b) |
any expenditure incurred by such farmer prior to the first day of July, 1948, in respect of the establishment and maintenance of any plantation or the cost of acquisition of any plantation purchased by such farmer whether before or after the first day of July, 1948: Provided that— |
| (i) |
any deductions allowed under this item in respect of any plantation shall not in respect of any year of assessment exceed the gross income derived by such farmer in that year from the said plantation; |
| (ii) |
the aggregate of the deduction allowed in terms of this item or the corresponding provisions of the Income tax Act, 1941, or by virtue of any other provisions of the last-mentioned Act or the Income Tax Act, 1925 (Act No. 40 of 1925), in respect of plantations shall not exceed the amount of such expenditure or such cost of acquisition. |
| (2) |
For the purpose of calculating the cost of acquisition of any plantation the provisions of subparagraph (2) of paragraph 14 shall apply mutatis mutandis in the case of any plantation acquired by any farmer with the land on which it is growing. |
| (3) |
If in any year of assessment the income of any farmer other than a company includes income derived from the disposal of plantations or forest produce and the taxable income derived by him in that year from the disposal of plantations and forest produce (determined as though the income derived by him from that source were his only income) exceeds the annual average taxable income derived by him from that source (as so determined) over the three years of assessment immediately preceding the said year of assessment, the normal tax chargeable in the case of such farmer for the said year of assessment shall, subject to the provisions of section 5 of this Act, be determined in accordance with the provisions of subsection (10) of that subsection: Provided that— |
| (i) |
the provisions of this subparagraph shall not apply unless the disposal of plantations or forest produce forms part of the normal farming operations of the farmer concerned; |
[Paragraph 15(3)(i) of the First Schedule substituted by section 47 of the Income Tax Act, 1993 (Act No. 113 of 1993)]
| (ii) |
for the purposes of this subparagraph, where the farmer has in respect of any of the aforesaid years of assessment derived any excess plantation farming profits determined under paragraph 20(3)(g) such excess plantation farming profits shall— |
| (aa) |
where such excess plantation farming profits have been derived during the first-mentioned year of assessment, be excluded from the farmer's taxable income derived in that year from the disposal of plantations and forest produce; |
| (bb) |
where such excess plantation farming profits have been derived during any of the aforesaid three years of assessment, not be taken into account in the determination of the aforesaid average taxable income derived by the farmer over those years; |
| (iii) |
the Commissioner's determination as to what portion of a farmer's taxable income is derived from the disposal of plantations and forest produce shall be final; |
| (iv) |
nothing in this paragraph contained shall be construed as relieving any farmer from liability for taxation under this Act upon any portion of his taxable income; |
| (v) |
the provisions of this subparagraph shall not apply if the normal tax chargeable in the case of such farmer in respect of the first-mentioned year of assessment is required to be determined under the provisions of paragraph 19. |
16. For the purposes of paragraphs 14, 15 and 20—
"plantation"
means any artificially established tree as ordinarily understood (not being a tree of the nature described in paragraph 12(1)(g)) or any forest of such trees and includes any natural extension of such trees;
"forest produce"
means trees (other than trees of the nature described in paragraph 12(1)(g)) and anything derived from such trees, including timber, wood, bark, leaves, seeds, gum, resin and sap.
| 17. |
Where the sugar cane fields of any farmer other than a company have been damaged by fire and the taxable income of such farmer for any year of assessment includes taxable income derived from the disposal of sugar cane as a result of such fire which but for such fire would not have been derived by him in such year, the normal tax chargeable in the case of such farmer in respect of such year shall, subject to the provisions of section 5 of this Act, be determined in accordance with the provisions of subsection (10) of that section, but nothing in this paragraph contained shall be construed as relieving such farmer from liability for taxation under this Act upon any portion of his taxable income: Provided that the provisions of this paragraph shall not apply if the normal tax chargeable in the case of such farmer in respect of the said year of assessment is required to be determined under the provisions of paragraph 19. |
[Paragraph 17 of the First Schedule substituted by section 41 of the Income Tax Act, 1991 (Act No. 129 of 1991)]
| 18. |
[Paragraph 18 of the First Schedule deleted by section 33 of the Income Tax Act, 1996 (Act No. 36 of 1996)] |
19.
| (1) |
If any taxpayer has made an election as provided in subparagraph (5) which is binding upon him in respect of any period of assessment (hereinafter referred to as the relevant period) during which he or his spouse has carried on farming operations or has derived income from farming operations, and his taxable income derived during the relevant period from farming exceeds his average taxable income from farming as determined in relation to the relevant period in accordance with subparagraph (2), the normal tax chargeable in respect of his taxable income for the relevant period shall, subject to the provisions of section 5 of this Act, be determined in accordance with section 5(10). |
[Paragraph 19(1) of the First Schedule substituted by section 34(a) of the Income Tax Act, 1995 (Act No. 21 of 1995)]
| (2) |
For the purposes of subparagraph (1) the taxpayer's average taxable income from farming in relation to the relevant period shall be deemed to be— |
| (a) |
where the taxpayer or his spouse carried on farming operations before the commencement of the relevant period, such amount as represents the taxpayer's annual average taxable income (if any) from farming in respect of the periods of assessment— |
| (aa) |
for which the taxpayer was assessable under this Act and which fall within the period of five years ending on the last day of the relevant period; and |
| (bb) |
during which such farming operations were carried on or farming income was derived by the taxpayer: |
Provided that any excess farming profits derived by the taxpayer in any of the said periods of assessment shall not be taken into account in the determination of such annual average taxable income: Provided further that in the case of the estate of an insolvent person any farming operations carried on by such person prior to insolvency, any income derived by him from such operations and any deductions allowable against such income under this Act shall, so far as such estate is concerned, be deemed for the purposes of this item to be respectively operations, income or deductions of such estate, and the annual average taxable income derived by such estate from farming shall be determined accordingly; or
[Paragraph 19(2)(a) of the First Schedule substituted by section 81 of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
| (b) |
where the taxpayer is a person referred to in subparagraph (5)(a) and did not carry on farming operations before the commencement of the relevant period, an amount equal to two-thirds of such taxable income. |
[Paragraph 19(2)(b) of the First Schedule substituted by section 44 of the Taxation Laws Amendment Act, 2007 (Act No. 8 of 2007)]
| (3) |
Where the taxpayer's assessment for a relevant period has in terms of section 100 of the Tax Administration Act, become final and conclusive, the Commissioner shall not merely by reason of the fact that the amount determined under subparagraph (2)(a), as the taxpayer's annual average taxable income from farming in relation to such period is incorrect, be required to make a further assessment upon the taxpayer for such period in terms of section 99 of that act or to authorize a refund under section 190 of that act of any tax overpaid in respect of such period, unless it appears that such annual average taxable income from farming should be increased or reduced by at least six hundred rand. |
[Paragraph 19(3) of the First Schedule substituted by section 271, read with paragraph 75 of Schedule 1, of the Tax Administration Act, 2011 (Act No. 28 of 2011)]
| (4) |
In determining under this paragraph any amount of normal tax which is or would be chargeable no regard shall be had to the deductions provided for in section 6 of this Act, and nothing in this paragraph contained shall be construed as relieving any person from liability for taxation under this Act upon any portion of that person’s taxable income. |
[Paragraph 19(4) of the First Schedule substituted by section 81 of the Revenue Laws Amendment Act, 2003 (Act No. 45 of 2003)]
| (a) |
who is a natural person and whose taxable income for any period of assessment consists of or includes taxable income derived from farming operations carried on by him for his own benefit or by his spouse for such spouse's own benefit; or |
[Paragraph 19(5)(a) of the First Schedule substituted by section 34(d) of the Income Tax Act, 1995 (Act No. 21 of 1995)]
| (b) |
who is the executor of the estate of any deceased person or the trustee of the insolvent estate of a natural person and who in his capacity as such has during the period of assessment commencing immediately after the death or insolvency of the said person continued farming operations commenced by such deceased or insolvent person prior to his death or insolvency, |
may, within three months after the end of such period of assessment or within such further time as the Commissioner may approve and in such form as the Commissioner may prescribe, elect that the normal tax chargeable in respect of his taxable income if item (a) is applicable or the taxable income of such estate if item (b) is applicable, be determined as provided in subparagraph (1), and such election shall be binding upon such natural person or estate, as the case may be, in respect of the said period of assessment and every succeeding period of assessment:
Provided that—
| (i) |
no election may be made under this subparagraph by any person in respect of any period of assessment referred to in item (a) if during such period such person was married and such person's income for such period is in terms of section 7(2) of this Act deemed to be income accrued to such person's spouse; |
| (ii) |
where an election has been made by such person in respect of any period of assessment referred to in item (a) and such person's income for any succeeding period of assessment is in terms of section 7(2) of this Act deemed to be income accrued to such persons spouse, such election shall, with effect from such succeeding period, cease to have any force or effect. |
[Proviso to paragraph 19(5) of the First Schedule substituted by section 34(3) of the Income Tax Act, 1995 (Act No. 21 of 1995)]
| (6) |
[Paragraph 19(6) of the First Schedule deleted by section 45(b) of the Income Tax Act, 1983 (Act No. 94 of 1983)]. |
20.
| (1) |
If a taxpayer (other than a company) who derives income from farming operations makes an election as provided in subparagraph (6) and if— |
| (a) |
the taxpayer's income was in whole or in part derived from farming operations carried on any land acquired— |
| (i) |
by the State (including the Railways Administration and any provincial administration) or any local authority as defined in section 1 of the Expropriation Act, 1975 (Act No. 63 of 1975); or |
| (ii) |
by any juristic person or body mentioned in section 3(2) of the said Act, if such juristic person or body acquired the land by expropriation or, where the owner of the land agreed to dispose of it, the Minister referred to in subparagraph (6)(b)(ii) has given a certificate as contemplated therein; |
| (b) |
in consequence of the acquisition of such land as aforesaid the farming undertaking on such land (hereinafter referred to as the undertaking) has been or is being wound up; and |
| (c) |
the taxpayer's income for any year of assessment (being the year of assessment during which the said land was acquired as aforesaid or the first or the second year of assessment succeeding the first mentioned year of assessment) includes any abnormal farming receipts or accruals referred to in subparagraph (2) which relate to the aforesaid farming operations, |
the normal tax chargeable (as determined before the deduction of any rebate) in respect of the taxpayer's taxable income for such year of assessment shall, notwithstanding any other provisions of this Act to the contrary, be determined at an amount equal to the sum of—
| (i) |
an amount equal to the taxpayer's excess farming profits for the year of assessment (as determined in accordance with subparagraph (3)(a)) multiplied by the relevant rate of tax fixed for the year of assessment in terms of section 5(2) in respect of the first rand of taxable income; and |
| (ii) |
an amount equal to the amount of normal tax (as determined before the deduction of any rebate) which would have been payable by the taxpayer in respect of the year of assessment if his or her taxable income for that year had been an amount equal to the balance of his or her taxable income for that year (as determined in accordance with subparagraph (4)). |
[Paragraph 20(1) of the First Schedule substituted by section 82(a) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
| (1A) |
Where the land referred to in subparagraph (1) was acquired as contemplated in item (a) of that subparagraph within the period of twelve months after the owner accepted an offer to purchase the land, it shall be deemed for purposes of that subparagraph that such land was acquired on the date on which the offer was accepted. |
[Paragraph 20(1A) of the First Schedule substituted by section 82(a) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
| (2) |
For the purposes of subparagraph (1)(c), the taxpayer's abnormal farming receipts or accruals for any year of assessment referred to in subparagraph (1)(c) shall be deemed to be such amounts as consist of— |
| (a) |
any amounts derived from disposals, in the course of the winding-up of the undertaking, of livestock normally held for the purposes of the undertaking; or |
| (b) |
any amounts derived from the disposal of any plantation together with the land referred to in subparagraph (1)(a) or from the disposal in the course of the winding-up of the undertaking of any plantation on such land or any forest produce from such plantation. |
[Paragraph 20(2) substituted by section 82(a) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
(3)
| (a) |
For the purposes of this paragraph the taxpayer's excess farming profits for any year of assessment referred to in subparagraph (1)(c) shall be deemed to be the sum of the taxpayer's excess livestock profits (if any) for such year. as determined under item (b), and the taxpayer's excess plantation farming profits (if any) for such year, as determined under item (g): Provided that the amount of such excess farming profits shall not be determined at an amount exceeding the amount of the taxpayer's taxable income for such year. |
| (b) |
The taxpayer's excess livestock profits for such year shall be so much of the sum of the amounts referred to in subparagraph (2)(a) which have been derived by the taxpayer during such year as does not exceed the taxpayer's abnormal livestock profits for such year, as determined under item (c). |
| (c) |
The taxpayer's abnormal livestock profits for such year shall be the amount by which his livestock profits for such year. as determined under item (d) or (f), exceed his average livestock profits (as determined under item (e) or (f)) for the years of assessment (but not exceeding five years of assessment) which immediately precede the said year and during which the undertaking was carried on. |
| (d) |
For the purposes of this subparagraph, the taxpayer's livestock profits for any year of assessment shall be the amount by which the sum of the amounts included in his income from farming for such year in respect of disposals of livestock during such year and the value (as determined under this Schedule) of the livestock held and not disposed of by him at the end of such year exceeds the sum of the amounts allowed to be deducted from such income in respect of livestock acquired by him during such year and the value (as determined under this Schedule) of the livestock held and not disposed of by him at the beginning of such year. and the taxpayer's livestock loss for such year shall be determined accordingly. |
| (e) |
The taxpayer's average livestock profits for the years of assessment referred to in item (c) shall be the sum of his livestock profits for the said years, as determined under item (d) (reduced by any livestock loss as determined under that item in respect of any such years), divided by the number of such years of assessment. |
| (f) |
If by reason of disposals of livestock otherwise than in the ordinary course of farming or because of any unusual circumstances the taxpayer's livestock profits or loss for any year of assessment cannot be determined in a satisfactory manner under item (d) or the taxpayer's average livestock profits for the years of assessment referred to in item (c) cannot be determined in a satisfactory manner under item (e), such livestock profits or loss or such average livestock profits shall be determined by the Commissioner on application by the taxpayer. |
[Paragraph 20(3)(f) of the First Schedule substituted by section 82(b) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]
| (g) |
The taxpayer's excess plantation farming profits for any year of assessment referred to in item (a) shall be so much of the sum of the amounts referred to in subparagraph (2)(b) which have been derived by the taxpayer during such year, as does not exceed the amount by which the taxpayer's taxable income (as determined under subparagraph (3) of paragraph 15 before applying paragraph (ii) of the proviso to the said subparagraph) derived during such year from the disposal of plantations and forest produce exceeds the annual average taxable income (as determined under paragraph 15(3)) derived by him from that source over the three years of assessment immediately preceding the said year of assessment. |
| (4) |
For the purposes of this paragraph, the balance of the taxpayer's taxable income for a year of assessment referred to in subparagraph (1)(c) shall be deemed to be the amount remaining after deducting the taxpayer's excess farming profits for that year (as determined under subparagraph (3)(a)) from the full amount of the taxpayer's taxable income for such year, as determined under this Act. |
| (5) |
[Paragraph 20(5) of the First Schedule deleted by section 26 of the Income Tax, 1980 (Act No. 104 of 1980]. |
(6)
| (a) |
Any taxpayer (other than a company) may elect for the normal tax payable by the taxpayer to be determined under this paragraph. |
[Paragraph 20(6)(a) substituted by section 271, read with paragraph 76(b) of Schedule 1, of the Tax Administration Act, 2011 (Act No. 28 of 2011)]
| (b) |
For purposes of such election the following records must be obtained and retained: |
[Words preceding paragraph 20(6)(a)(i) substituted by section 271, read with paragraph 76(c) of Schedule 1, of the Tax Administration Act, 2011 (Act No. 28 of 2011)]
| (i) |
a certificate by the head of the department of State or the administration concerned in the acquisition by the State or such administration of the land referred to in item (a) of subparagraph (1), or where such land was acquired by a local authority, juristic person or body referred to in the said item, by the chief executive officer of such local authority, juristic person or body, to the effect that the State or such administration, local authority, juristic person or body, as the case may be, has acquired such land; and |
| (ii) |
Where such land was acquired by such juristic person or body, a certificate by a Minister referred to in section 3(1) of the Expropriation Act, 1975, to the effect that the land was acquired by such juristic person or body by expropriation or, where the owner of the land agreed to dispose of it, to the effect that, if the owner had not so agreed, steps would have been taken for the expropriation of the land. |
Gas Regulator Levies Act, 2002
