CONNECTED PERSON:
Natural persons: relative (3rd degree of consanguinity)/trust of which a natural person is beneficiary
Trust: beneficiary of the trust/any CP of that beneficiary
CP of a trust: any other person who is a connected person to the trust
Partnership/foreign partnership members: any other member/CP in relation to any member of the SA or foreign partnership
Company (incl. portfolio of a collective investment scheme):
Any other company in same group of companies, where:
• group of companies usually means 70% shareholding/voting rights,
• BUT i.t.o. the CP definition then directly holds >50% equity shares/voting rights
and directly/indirectly holds >50% of the equity shares/voting rights in each controlled group company
any person that individually or jointly with their CP, directly or indirectly holds ≥ 20% equity shares or voting rights
any company, holding ≥ 20% equity shares or voting rights and no majority shareholder
any other company managed & controlled by CP of company or their CP (CP of CP)
Close corporation: any member / relative of member or trust that’s a CP in relation to member/ CC that’s a CP to member or their
relative or trust
MACHINERY, PLANT, IMPLEMENT, UTENSIL OR
ARTICLE:
PROCESS OF MANUFACTURE OR PROCESS SIMILAR TO
Machinery, plant, implement, utensil or article: IT:
Any tangible asset
Excludes intangible assets (e.g., trademarks, patents) Process similar to a process of manufacture:
Animals that don’t qualify trading stock, i.e., part of a
circus = ‘machinery, plant…” SIR v Safranmark: Action/ series of actions directed towards
Article: items that can be detached, removed, stored & production of object/thing which is essentially different from the
remounted easily & inexpensively materials or components which went into its making.
Process similar to process of manufacture (Practice Note 42):
DEPRECIABLE ASSET: Annexure A: Processes regarded by SARS similar to a process
of manufacture
(Eighth Schedule) Includes movable/immovable,
corporeal/incorporeal property, coin mainly made from Annexure B: Direct processes of manufacture
gold/platinum, excluding currency,
Annexure C: Lists processes not considered as direct processes
Any right or interest to the aforementioned property, of manufacture nor processes similar to a process of
manufacture
Qualifying for deduction/allowance wholly or partly based on
cost/value,
Excluding trading stock/debt
(BEL300 Lecturers, 2022)
RECOUPMENT AND s11(o) ALLOWANCE:
Proceeds (limited to CP) > Tax value = add recoupment to gross income (par(n))
Proceeds (limited to CP) < Tax value = claim s11(o) allowance
, © Warona Lekoko, 2024
Movable Assets
𝐕𝐚𝐥𝐮𝐞
Wear-and-tear [s11(e)]: 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = × 𝐍𝐨. 𝐦𝐨𝐧𝐭𝐡𝐬 𝐮𝐬𝐞𝐝
𝐄𝐱𝐩𝐞𝐜𝐭𝐞𝐝 𝐮𝐬𝐞𝐟𝐮𝐥 𝐥𝐢𝐟𝐞
Moveable assets used in farming and 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 (𝐠𝐞𝐧𝐞𝐫𝐚𝐥) = 𝐂𝐨𝐬𝐭 × 𝟓𝟎%/× 𝟑𝟎% /× 𝟐𝟎%
renewable energy production [s12B]: 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 (< 𝟏𝐌𝐖) = 𝑪𝒐𝒔𝒕 × 𝟏𝟎𝟎%
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 (𝐧𝐞𝐰) = 𝐂𝐨𝐬𝐭 × 𝟒𝟎% /× 𝟐𝟎% /× 𝟐𝟎%/× 𝟐𝟎%
Manufacturing assets [s12C]:
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 (𝐮𝐬𝐞𝐝) = 𝐂𝐨𝐬𝐭 × 𝟐𝟎%/× 𝟐𝟎% /× 𝟐𝟎%/× 𝟐𝟎%/× 𝟐𝟎%
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 (𝐦𝐚𝐧𝐮𝐟𝐚𝐜𝐭𝐮𝐫𝐢𝐧𝐠 𝐚𝐬𝐬𝐞𝐭𝐬) = 𝐂𝐨𝐬𝐭 × 𝟏𝟎𝟎%
Small Business Corporations [s12E]: 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 (𝐧𝐨𝐧 − 𝐦𝐚𝐧𝐮𝐟𝐚𝐜𝐭𝐮𝐫𝐢𝐧𝐠 𝐚𝐬𝐬𝐞𝐭𝐬) = 𝒔𝟏𝟏(𝒆) 𝐨𝐫 𝐂𝐨𝐬𝐭 × 𝟓𝟎%/× 𝟑𝟎% /× 𝟐𝟎%
𝐌𝐨𝐯𝐚𝐛𝐥𝐞 𝐚𝐬𝐬𝐞𝐭𝐬 = 𝐄𝐪𝐮𝐚𝐥 𝐢𝐧𝐬𝐭𝐚𝐥𝐦𝐞𝐧𝐭𝐬 𝐨𝐯𝐞𝐫 𝐫𝐞𝐦𝐚𝐢𝐧𝐢𝐧𝐠 𝐲𝐞𝐚𝐫𝐬
Immovable Property
Buildings and improvements: annual allowance
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐂𝐨𝐬𝐭 × 𝟓%
[s13]:
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐂𝐨𝐬𝐭 × 𝟓%
Residential units [s13sex]:
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 (𝒍/𝒄) = 𝐂𝐨𝐬𝐭 × 𝟏𝟎%
Commercial buildings [s13quin]: 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐂𝐨𝐬𝐭 × 𝟓%
Leases
𝑻𝒐𝒕𝒂𝒍 𝒍𝒆𝒂𝒔𝒆 𝒑𝒓𝒆𝒎𝒊𝒖𝒎
Lease premiums [s11(f)]: 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = × 𝑷𝒆𝒓𝒊𝒐𝒅 𝒖𝒔𝒆𝒅 𝒊𝒏 𝒀𝑶𝑨
𝑵𝒐. 𝒐𝒇 𝒚𝒆𝒂𝒓𝒔 (𝒎𝒂𝒙 𝟐𝟓)
𝑺𝒕𝒊𝒑𝒖𝒍𝒂𝒕𝒆𝒅 𝒗𝒂𝒍𝒖𝒆 𝒐𝒇 𝒊𝒎𝒑𝒓𝒐𝒗𝒆𝒎𝒆𝒏𝒕𝒔
Lease improvements [s11(g)]: 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = × 𝑷𝒆𝒓𝒊𝒐𝒅 𝒖𝒔𝒆𝒅 𝒊𝒏 𝒀𝑶𝑨
𝑵𝒐. 𝒐𝒇 𝒚𝒆𝒂𝒓𝒔 (𝒎𝒂𝒙 𝟐𝟓)
Relief for the lessor (lessor's special allowance)
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐀𝐦𝐨𝐮𝐧𝐭 𝐢𝐧 𝐆𝐈 (𝐩𝐚𝐫 𝐠 / 𝐡) − 𝐏𝐕 𝐢𝐧𝐜𝐥𝐮𝐝𝐞𝐝 𝐢𝐧 𝐥𝐞𝐬𝐬𝐨𝐫 ′ 𝐬 𝐆𝐈
[s11(h)]:
Intellectual Property
Registration/renewal of intellectual property
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐂𝐨𝐬𝐭 × 𝟏𝟎𝟎%
[s11(gB)]:
𝑰𝒇 𝒄𝒐𝒔𝒕 ≤ 𝑹𝟓 𝟎𝟎𝟎: 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐂𝐨𝐬𝐭 × 𝟏𝟎𝟎%
Acquisition of intellectual property [s11(gc)]:
𝑰𝒇 𝒄𝒐𝒔𝒕 > 𝑹𝟓 𝟎𝟎𝟎: 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐂𝐨𝐬𝐭 × 𝟓% 𝑶𝑹 𝟏𝟎%
Recoupments: general recoupments provisions
𝐑𝐞𝐜𝐨𝐮𝐩𝐦𝐞𝐧𝐭 = 𝐩𝐫𝐨𝐜𝐞𝐞𝐝𝐬 𝐟𝐫𝐨𝐦 𝐬𝐚𝐥𝐞 (𝒍𝒊𝒎𝒊𝒕𝒆𝒅 𝒕𝒐 𝑪𝑷) − 𝐭𝐚𝐱 𝐯𝐚𝐥𝐮𝐞
[s8(4)(a)]:
Recoupments: donations, asset in specie
𝐏𝐫𝐨𝐜𝐞𝐞𝐝𝐬 𝐨𝐧 𝐝𝐢𝐬𝐩𝐨𝐬𝐚𝐥 = 𝐌𝐚𝐫𝐤𝐞𝐭 𝐯𝐚𝐥𝐮𝐞 (𝒍𝒊𝒎𝒊𝒕𝒆𝒅 𝒕𝒐 𝑪𝑷) …
distributions, disposals [s8(4)(k)]:
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐜𝐨𝐬𝐭 − (𝐚𝐦𝐨𝐮𝐧𝐭 𝐫𝐞𝐜𝐞𝐢𝐯𝐞𝐝 𝐨𝐫 𝐚𝐜𝐜𝐫𝐮𝐞𝐝 𝐩𝐥𝐮𝐬 𝐚𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞) OR
Alienation, loss or destruction allowance [s11(o)]:
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐭𝐚𝐱 𝐯𝐚𝐥𝐮𝐞 − 𝐩𝐫𝐨𝐜𝐞𝐞𝐝𝐬
Natural persons: relative (3rd degree of consanguinity)/trust of which a natural person is beneficiary
Trust: beneficiary of the trust/any CP of that beneficiary
CP of a trust: any other person who is a connected person to the trust
Partnership/foreign partnership members: any other member/CP in relation to any member of the SA or foreign partnership
Company (incl. portfolio of a collective investment scheme):
Any other company in same group of companies, where:
• group of companies usually means 70% shareholding/voting rights,
• BUT i.t.o. the CP definition then directly holds >50% equity shares/voting rights
and directly/indirectly holds >50% of the equity shares/voting rights in each controlled group company
any person that individually or jointly with their CP, directly or indirectly holds ≥ 20% equity shares or voting rights
any company, holding ≥ 20% equity shares or voting rights and no majority shareholder
any other company managed & controlled by CP of company or their CP (CP of CP)
Close corporation: any member / relative of member or trust that’s a CP in relation to member/ CC that’s a CP to member or their
relative or trust
MACHINERY, PLANT, IMPLEMENT, UTENSIL OR
ARTICLE:
PROCESS OF MANUFACTURE OR PROCESS SIMILAR TO
Machinery, plant, implement, utensil or article: IT:
Any tangible asset
Excludes intangible assets (e.g., trademarks, patents) Process similar to a process of manufacture:
Animals that don’t qualify trading stock, i.e., part of a
circus = ‘machinery, plant…” SIR v Safranmark: Action/ series of actions directed towards
Article: items that can be detached, removed, stored & production of object/thing which is essentially different from the
remounted easily & inexpensively materials or components which went into its making.
Process similar to process of manufacture (Practice Note 42):
DEPRECIABLE ASSET: Annexure A: Processes regarded by SARS similar to a process
of manufacture
(Eighth Schedule) Includes movable/immovable,
corporeal/incorporeal property, coin mainly made from Annexure B: Direct processes of manufacture
gold/platinum, excluding currency,
Annexure C: Lists processes not considered as direct processes
Any right or interest to the aforementioned property, of manufacture nor processes similar to a process of
manufacture
Qualifying for deduction/allowance wholly or partly based on
cost/value,
Excluding trading stock/debt
(BEL300 Lecturers, 2022)
RECOUPMENT AND s11(o) ALLOWANCE:
Proceeds (limited to CP) > Tax value = add recoupment to gross income (par(n))
Proceeds (limited to CP) < Tax value = claim s11(o) allowance
, © Warona Lekoko, 2024
Movable Assets
𝐕𝐚𝐥𝐮𝐞
Wear-and-tear [s11(e)]: 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = × 𝐍𝐨. 𝐦𝐨𝐧𝐭𝐡𝐬 𝐮𝐬𝐞𝐝
𝐄𝐱𝐩𝐞𝐜𝐭𝐞𝐝 𝐮𝐬𝐞𝐟𝐮𝐥 𝐥𝐢𝐟𝐞
Moveable assets used in farming and 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 (𝐠𝐞𝐧𝐞𝐫𝐚𝐥) = 𝐂𝐨𝐬𝐭 × 𝟓𝟎%/× 𝟑𝟎% /× 𝟐𝟎%
renewable energy production [s12B]: 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 (< 𝟏𝐌𝐖) = 𝑪𝒐𝒔𝒕 × 𝟏𝟎𝟎%
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 (𝐧𝐞𝐰) = 𝐂𝐨𝐬𝐭 × 𝟒𝟎% /× 𝟐𝟎% /× 𝟐𝟎%/× 𝟐𝟎%
Manufacturing assets [s12C]:
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 (𝐮𝐬𝐞𝐝) = 𝐂𝐨𝐬𝐭 × 𝟐𝟎%/× 𝟐𝟎% /× 𝟐𝟎%/× 𝟐𝟎%/× 𝟐𝟎%
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 (𝐦𝐚𝐧𝐮𝐟𝐚𝐜𝐭𝐮𝐫𝐢𝐧𝐠 𝐚𝐬𝐬𝐞𝐭𝐬) = 𝐂𝐨𝐬𝐭 × 𝟏𝟎𝟎%
Small Business Corporations [s12E]: 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 (𝐧𝐨𝐧 − 𝐦𝐚𝐧𝐮𝐟𝐚𝐜𝐭𝐮𝐫𝐢𝐧𝐠 𝐚𝐬𝐬𝐞𝐭𝐬) = 𝒔𝟏𝟏(𝒆) 𝐨𝐫 𝐂𝐨𝐬𝐭 × 𝟓𝟎%/× 𝟑𝟎% /× 𝟐𝟎%
𝐌𝐨𝐯𝐚𝐛𝐥𝐞 𝐚𝐬𝐬𝐞𝐭𝐬 = 𝐄𝐪𝐮𝐚𝐥 𝐢𝐧𝐬𝐭𝐚𝐥𝐦𝐞𝐧𝐭𝐬 𝐨𝐯𝐞𝐫 𝐫𝐞𝐦𝐚𝐢𝐧𝐢𝐧𝐠 𝐲𝐞𝐚𝐫𝐬
Immovable Property
Buildings and improvements: annual allowance
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐂𝐨𝐬𝐭 × 𝟓%
[s13]:
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐂𝐨𝐬𝐭 × 𝟓%
Residential units [s13sex]:
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 (𝒍/𝒄) = 𝐂𝐨𝐬𝐭 × 𝟏𝟎%
Commercial buildings [s13quin]: 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐂𝐨𝐬𝐭 × 𝟓%
Leases
𝑻𝒐𝒕𝒂𝒍 𝒍𝒆𝒂𝒔𝒆 𝒑𝒓𝒆𝒎𝒊𝒖𝒎
Lease premiums [s11(f)]: 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = × 𝑷𝒆𝒓𝒊𝒐𝒅 𝒖𝒔𝒆𝒅 𝒊𝒏 𝒀𝑶𝑨
𝑵𝒐. 𝒐𝒇 𝒚𝒆𝒂𝒓𝒔 (𝒎𝒂𝒙 𝟐𝟓)
𝑺𝒕𝒊𝒑𝒖𝒍𝒂𝒕𝒆𝒅 𝒗𝒂𝒍𝒖𝒆 𝒐𝒇 𝒊𝒎𝒑𝒓𝒐𝒗𝒆𝒎𝒆𝒏𝒕𝒔
Lease improvements [s11(g)]: 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = × 𝑷𝒆𝒓𝒊𝒐𝒅 𝒖𝒔𝒆𝒅 𝒊𝒏 𝒀𝑶𝑨
𝑵𝒐. 𝒐𝒇 𝒚𝒆𝒂𝒓𝒔 (𝒎𝒂𝒙 𝟐𝟓)
Relief for the lessor (lessor's special allowance)
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐀𝐦𝐨𝐮𝐧𝐭 𝐢𝐧 𝐆𝐈 (𝐩𝐚𝐫 𝐠 / 𝐡) − 𝐏𝐕 𝐢𝐧𝐜𝐥𝐮𝐝𝐞𝐝 𝐢𝐧 𝐥𝐞𝐬𝐬𝐨𝐫 ′ 𝐬 𝐆𝐈
[s11(h)]:
Intellectual Property
Registration/renewal of intellectual property
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐂𝐨𝐬𝐭 × 𝟏𝟎𝟎%
[s11(gB)]:
𝑰𝒇 𝒄𝒐𝒔𝒕 ≤ 𝑹𝟓 𝟎𝟎𝟎: 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐂𝐨𝐬𝐭 × 𝟏𝟎𝟎%
Acquisition of intellectual property [s11(gc)]:
𝑰𝒇 𝒄𝒐𝒔𝒕 > 𝑹𝟓 𝟎𝟎𝟎: 𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐂𝐨𝐬𝐭 × 𝟓% 𝑶𝑹 𝟏𝟎%
Recoupments: general recoupments provisions
𝐑𝐞𝐜𝐨𝐮𝐩𝐦𝐞𝐧𝐭 = 𝐩𝐫𝐨𝐜𝐞𝐞𝐝𝐬 𝐟𝐫𝐨𝐦 𝐬𝐚𝐥𝐞 (𝒍𝒊𝒎𝒊𝒕𝒆𝒅 𝒕𝒐 𝑪𝑷) − 𝐭𝐚𝐱 𝐯𝐚𝐥𝐮𝐞
[s8(4)(a)]:
Recoupments: donations, asset in specie
𝐏𝐫𝐨𝐜𝐞𝐞𝐝𝐬 𝐨𝐧 𝐝𝐢𝐬𝐩𝐨𝐬𝐚𝐥 = 𝐌𝐚𝐫𝐤𝐞𝐭 𝐯𝐚𝐥𝐮𝐞 (𝒍𝒊𝒎𝒊𝒕𝒆𝒅 𝒕𝒐 𝑪𝑷) …
distributions, disposals [s8(4)(k)]:
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐜𝐨𝐬𝐭 − (𝐚𝐦𝐨𝐮𝐧𝐭 𝐫𝐞𝐜𝐞𝐢𝐯𝐞𝐝 𝐨𝐫 𝐚𝐜𝐜𝐫𝐮𝐞𝐝 𝐩𝐥𝐮𝐬 𝐚𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞) OR
Alienation, loss or destruction allowance [s11(o)]:
𝐀𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 = 𝐭𝐚𝐱 𝐯𝐚𝐥𝐮𝐞 − 𝐩𝐫𝐨𝐜𝐞𝐞𝐝𝐬
