Income Tax Act
GOVERNMENT GAZETTE EXTRAORDINARY, 7mJULY,l9M 79
No. 90. 1964.]
ACT To fix the rates of normal tax payable by persons other than
compaoles in respect of the years of assessment ending the twenty-eighth day of February, 1965, and the thirtieth day of June, 1965, and by companies in respect o( yean of asse~ mcnt ending during the period of twelve months ending the thirty.first day or Decem~r, 1964, to provide for the pay- ment of a portion of the normal tax payable by certain compaoles into provincial revenue funds, to provide for the basis or caiculatJon of any tax levied by a provincial council on the incomes or persons other than companies, and to amend the Income Tax Act, 1962.
--- (Afrikaans text signed by the State President.)
(Assented to 24th June, 1964.)
BE IT ENACTED by the State President, the Senate and the House of Assembly of the Republic of South Africa, as
follows:-
1. The rates of normal tax to be levied in terms of sub- Rates of . section (2) of section ft•·e of the Income Tax Act, 1962 (Act No. normal tax. 58 of 1962), hereinafter referred to as the principal Act, in respect of any year of assessment ending-
(a) in the case of any person other than a company, on the twenty--eighth day of February, 1965, or the thir· tieth day of June, 1965; and
(b) in the case of any company, during the period of twelve months ending on the thirty-first day of December, 1964,
· shall be as set forth in the Schedule to this Act.
2. (1) Notwithstanding the provisions of sub.section (1) Portions or of sectionft~·e of the principal Act but subject to the provisions no~l tbx of any law providing tor tnc payment of monies into the Trans- :~!incco~panies keian Revenue Fund, a portion equal to one-sixth of any to be paid into amount of tax determined in accordance with item {b) of para- provincial graph 1 of the Schedule to this Act shaU accrue for the benefit revenue funds. of the respective provincial revenue funds in the proportions set forth in Proclamation No. 310 of 1957, but subject to such modifications as may be determined by the State President by proclamation in the Gazette, and shall in the said proportions be paid into the said provincial revenue funds in accordance with the laws relating to the collection, banking and custody of provincial revenues as though it were a tax imposed by the provincial councils of the said provinces on the incomes of companies.
(2) The provisions of this section shall be deemed to have come into operation on the first day of March, 1964.
3. For the pu~oses of assessing any tax imposed by a Calc~a~io~ or provincial council m the exercise of its powers under the Finan· r,:ov~ctal mcotme cial Relations Consolidati~n and Amendment Act, 1945 (Act 0r'y~ oTpec No. 38 of 1945), on the mcomes of persons, the amount of assessment ending normal tax payable under this Act by any person other than a 28th February, company in respect of the year of assessment ending the twenty. }965, r~lsOth eighth day of February, 1965, or the thirtieth day of June, une, · 1965, whichever is applicable, shall notwithstanding the provisions of the first-mentioned Act, be deemed to be equal to the amount which would have been payable as normal tax ir the proviso to item (a) of paragraph 1 of the Schedule to this Act had not been enacted.
4. Section one of the principal Act is hereby amended- Am~ndment of (a) by the inserti?n after .t~e definition of .. benefit fund" ~·~s !tl962,
of the followmg defiru~ton: as amended by '"child', in relation to any person, includes any person section J of
adopted by him- Act.90 or 1962, (a) und7r the provisions of the Adoption of ~~~: fl63
Children Act, 1923 (Act No. 25 of 1923}, or and section 4 of Act 72 of 1963.
Please note that most Acts are published in English and another South African official language. Currently we only have capacity to publish the English versions. This means that this document will only contain even numbered
pages as the other language is printed on uneven numbered pages.
GOVERNMENT OAZETIB EXTRAORDINARY, 7TH JULY, 1964 Sl
the Children's Act, .1937- (Act No. 31 of 1937), or the Children's Act, 1960 (Act No. 33 of 1960); or
(b) under the law of any country. other than the ' - Republic, provided· the adopted person is
under such law accorded the status of a legitimate child of the adoptive parent and the adoption was. made at a time when the adoptive parent was -ordinarily resident in such country;"; - · ......
(b) by the deletion of the definition of ._.Commissioner";
(c) by the insertion after the definition of ._.regulation" of _the following definition: ,
~··relative', in relation to any person, means the spouse of such person or anybody related to him or his spouse within the third degree of consanguinity, or any spouse of anybody so related, and for the purpose of determining the relationship between any child referred to in the definition of 'child' in this section and any other person, such child shall be deemed to be . related to its -adoptive parent within the first degree of consanguinity;";
(d) by the substitution in sub-paragraph (i) of paragraph -- (b) of the definition of "retirement annuity fund" for
the words "and for additional .. of the word .. or";
(e) by the insertion after the definition of .. scientific research" of the following'definition: · .•:•secretary• means the Secretary for Inland Reve-
. nue;"; and-
. (f) by the substitution for ·the definition of .. year of assessment" of the following definition:
. - . ·.• •year of assessment' means any year or other period
in respect of which any tax or duty leviable under this Act is chargeable, and any reference in this Act or any other Income Tax Act to any year of
_ assessment ending the last or the twenty~eighth or. the twenty·ninth day of February shall, unless
. the context otherwise indicates, be construed-
(a) in the case of:l company, as a reference to any financial year of that company ending during the calendar year in question; and ' . . . - .
(b) in the case of any person (other than a com- pany) whose year of assessment ends on the thirtieth day of June of the calendar year in question, as a reference to such year of assessment." •
. S. Scction.fi•·e of the principal Act is hereby amended by the Am~odmeot of substituti~n for sub-section (1) of the following ~ub-scction: ~~s ~/'{962,
. · "(1) Subject to the provisions ~f the Fourth Schedule as subs.tituted · "d I ,. fi f h C 1. by section 2 of there shall be pat annual y a or the bene 1t o t e onso 1- Act 6 or 1963 .
. dated Revenue Fund, an income tax (in this Act referred to as the normal tax) in respect of the taxable income received by or accrued to or in favour of-
(a) any person. during the year of assessment ended the. thirtieth day of June, 1962; · . . .
(b) any person who on the twenty-eighth day of February. 1963, carried on farming, fishing or diamond digging operations and who under . the . provisions of sub~ paragraph (2) of paragraph 18 of the Fourth Schedule made an election not to be a provisional taxpayer-
(i) during the year of assessment ended the thirtieth · day of June. 1963, and each succeeding year of
assessment during which such election remains in force; and · · - · -
(ii} during the period of eight months ending the last day of February immediately succeeding the last year of assessment referred to in sub-paragraph (i) during which any such election which. has lapsed was in force; and
GOVERNMENT GAZETTE EXTRAORDINARY, 7TH JULY, 1964 83
(iii} during the year of assessment commencing immediately after the said last day of February, and each succeeding year of assessment:
(c) any person (other than a person referred to in para- graph (b) or a company) in respect of- . (i) the period of eight months ended the twenty-eighth
day of February, 1963; (ii) the year of assessment ended the last day of
February, 1964, and each succeeding year of assessment: and
(cl) any company during every financial year of such company.".
6. (I) Section eight of the principal Act is hereby amended- A~ndment or (a) by the insertion in paragraph (a) of sub-section (4) ~ugg !rlf962
after the word "ele•·m .. where it occurs for the second as amended b/ · time of the words "section elew1 quin."; and section 6 of
(b) by the deletion in paragraph (e) of that sub·section of Act 90 of 1962. the words .. by water or fire".
(2) The amendment effected by paragraph (a) of sub-section (I) shall apply in respect of assessments for years of assessment ending on or after the first day of May, 1964.
7. Section nine of the principal Act is hereby amended by the Am~odment of substitution for paragraph (e) of sub-section (1) of the following ActuSS ~r ~~62, paragraph: as amended by
.. (e) any services rendered by such person to or work or section 7 of labour done by such person for or on behalf of the Act 90 or 1962 G t · 1 d' h Rail Ad · · · and section 6 or ovemmen , 1~c l! mg t : . v:ay mmtstratlon Act 72 or 1963• and any provmc1al admm1Strat1on, or any local authority in the Republic or the South African Tourist Corporation or the Council for Scientific and Industrial Research, notwithstanding that such sen·ice) are rendered or that such work or labour is done outside the Republic, provided such services are rendered or such
. work or labour is done in accordance with a contract of employment entered into with the Government or such administration or local authority or that Corpora- tion or that Council: Provided that nothing in this paragraph shall be construed as imposing liability for taxation under this Act upon any salary or emolument paid to any person in the employment of the Govern- ment, includmg the Railway Administration, in respect of any period for which such person is stationed in the territory of South-West Africa (excluding the Eastern Caprivi Zipfel referred to in section three of the South- West Africa Affairs Amendment Act, 1951 (Act No. 55 of 1951)).".
8. Section ten of the principal Act is hereby amended with Am~odmcnt of effect from the commencement of the year of assessment ended ~~g ~~ f/62 the twenty-ninth day of February, 1964- as amended by'
{a) by the substitution for paragraph (i) of sub-section section 8 or (1) of the following paragraph: Act 90 o,r 1962
.. (i) interest received from any deposit in the Post and secuon 7 or Offi S . B k . I d' . p Act 12 or 1963. ce avmgs an , me u mg mterest on ost Office Savings Bank Certificates or on Tax Re- demption Certificates, or annual interest accrued in respect of any Union Loan Certificates or National Savings Certificates, or interest received in respect of any loan portion of the normal and super tax imposed under the Income Tax Act, 1953, or any subsequent Act of Parliament, or annual interest accrued in respect of Five per cent Five Year Treasury Bonds, Five per cent Seven Year Treasury Bonds, Four and a half per cent Seven Year Treasury Bonds, Four and a half per cent Seven Year Treasury Bonds (Conversion Issue) and any amount credited as interest in respect of any subscription share, but not in respect of any amount paid or credited on any paid-up share in any building society: Provided that the exemption in respect of interest-
(i) on deposits in the Post Office Savings Bank and on Post Office Savings Bank Certificates made or held by any one person shall be limited in each case to the sum of one hundred rand;
GOVERNMEN~ GAZETTB EXTRAORDINARY., 7mJULY, 1964 SS
(ii): on· :rax: Redemption: .Certificates· held by any · one: pe~sanlshall .be-limited:to the sum of
fifty rand; .. l1Jfll f! ::r; :1i ·:· l''~H>)r•i ')'
(iil) ·on1Five per.cent Fivo: Year Treasury Bonds, • : ~ 1 shall be: limited to: tbc ;sum of one thousand , _. :.·rand in the ca~e.of any.taxpayer;
(iv)' 1on' Fiv~ per' ce~t Se\:e'ri 'Y~af Treasury Bonds and. Four and a : half per· cent Seven Year -Treasury Bonds 1 shall be! limited to the sum Of ' One 'thOUSand 1 rand I iri I the aggregate in
'the case· 'of'any' taxpayer;•'and :· .--··; !t i ~ •. ;. p_lj ,-,j ,. p·~' •• . 1 1 .,,,...f)"' ~v) on F:our and a half. per ~nt Seven Yea~
!I LTTreasnry' Bonds' (Conversion Issue) shall' be .:1 rrJimited to 1the- sum of'nincHiundred 'rand'.iri
i-'the' case' of any ·taxpayer;n;: and . (~} by the a~dition at the ·e_nd o(p~rilgraph1 (t) o(.the' ~ai~
·sub-section 1of-the words ~and· of: the South·Afncan Inventions Development Corporation". ·
: r J
9. Section 'tlereri ·or the :prilidpal:Acds hereby amended-- Am~ndment or · 1-; ,_.,, .. , ,, .,.,~ .. , .,· •", , section ll of
(a) by the deletion in ·paragraph .{iv). of, the proviSO to Act ss of 1962, "pa"ragraph'(e) 'o( the,'-words .. ·~b)"water'O~~~- .~r ·water supplied to · the taxpayer in. the said area and used by him
·in the course of;the said .trade; or (b)' the cost' or the. transpor~tion in the Republic
for : the purposes of''the :·said·trade of raw material~ goods; l animals . or· articles used by the taxpayer m· the course:of'such trade or of goods ot articles manufactured or produced by the taxpayer in the course of such trade,
•
GOVERNMENT GAZETTE EXTRAORDINARY, 7TH JULY, 1964 87
Allowance to manu· facturers in Bantu and border areas in respect of increased adroinistra• tive and maoufac· turing costs.
Allowance to manu· facturen in Bantu and border areas in respect of expenditure on housing for em· ployees.
provided such cost ranks for deduction from the taxpayer's income under the provisions of section ele1·en.
(2) (a) The allowance under sub-section (I) shall be made in respect of such year or years of assessment as the Minister of Finance, having regard to the circumstances of the case, may direct.
(b) No allowance shall be made under sub-section (I) in respect of the cost of electric power, water or transportation incurred before the first day of May, 1964.
llquat. (I) Subjectto the provisions of sub-section (2), where any taxpayer has on or after the first day of May, 1964- ·
(a) transferred to any Bantu area or any area adjoining a Bantu area any factory formerly situated elsewhere than in such an area; or
(b) under any scheme of expansion of any factory situated elsewhere than in such an area, estab- lished any factory in such an area,
there shall, if the Minister of Finance, having regard to the circumstances of the case and to the recom· men dation of the Secretary for Bantu Administration and Development in the case of a Bantu area or the Secretary for Commerce and Industries in the case of an area adjoining a Bantu area, so directs, be allowed to be deducted from the taxpayer's income for any of the years of assessment referred to in paragraph (b) of sub-section (2) an amount determined by the Secretary for Bantu Administra· tion and Development or the Secretary for Com· merce and Industries, as the case may be, as representing the additional or abnormal administra· tive or manufacturing costs incurred by the taxpayer during the relevant year in consequence of such transfer or establishment, provided such costs rank for deduction from the taxpayer's income under the provisions of section eleren.
(2) (a) For the purposes of sub-section (I) "manufacturing costs" include expenditure incurred by the taxpayer in the course. of operations which in the opinion of the Secretary are similar to manufacturing operations.
(b) An allowance may be made under sub-section (I) in respect of any or all of the following years of assessment, namely, the year of assess· ment of the taxpayer during which he has transferred or established a factory in the circumstances contemplated by that sub-section, and the first four succeeding years of assessment of the taxpayer.
llquin, (I) In the case of any taxpayer who carries on in a Bantu area or an area adjoining a Bantu area the trade of a manufacturer or any trade which in the opinion of the Secretary is of a similar nature, and who in the course of such trade incurs expenditure in connection with the erection or acquisition of any dwelling for the exclusive occupation of persons or the households of persons who are the taxpayer's exployees and are employed by him for the purposes of such trade, there shall, if the Minister of Finance, having regard to the circumstances. of the case and the recommendation of the Secretary for Bantu Administration and Development in the case of a Bantu area or the Secretary for Commerce and Industries in the case of an area adjoining a Bantu area, so directs, but subject to the provisions of sub-sections (2) and (3), be deducted from the taxpayer's income an allowance (in lieu of any allowance in respect of such expenditure under the provisions of paragraph (I) of section eleven)-
GOVERNMENT GAZETTE EXTRAORDINARY. 7tH JULY, 1964 89
(a) for the year of. assessment ~uring which the erection of such dwelling is completed or such
·dwelling- is acquired,- of such amount, not exceeding thirty-five per cent of such expenditure as the Minister of Finance may direct; and
(b) for each of the succeeding nine years of assess- -ment, of such amount. not_ exceeding ten per cent_ of such · expenditure;. as· the· Minister of Finance may direct. - . · . .. · _ . ·
__ (2) For the purp_oses of sub-~ectio_n (1)-
(a) the employees of any person who is the sole or · principal shareholder in any company which
Is engaged mainly in the provision of housing facilities for such employees, shall be deemed to be employees also of the said company;
(b) 'employee•, in relation to any taxpayer, does not include any person who is a relative of that taxpayer, or who, if the taxpayer is a company, is a shareholder (or a relative of a shareholder) in that company or in any company which is
·associated with that company by virtue of shareholding,. not being a shareholder who holds all his shares in that company solely because he is employed by that c;:ompany and who will, in terms of the articles of association of that company, not be entitled to continue
. to . hold those shares after he ceases to be so ·employed. · ··
. (3) The allowance under sub-section (1) shall not be made in respect of any year of assessment referred to in that sub-section in respect of expenditure incurred in connection with the erection or acquisi- tion of any dwelling if-
(a) prior to or during such year the taxpayer ceased , to be the owner of such dwelling; or
(b) such. dwelling was during any portion of such year occupied by any person other than an employee of the taxpayer or a member of the household of such employee ....
(2) The amendm-ent effected by sub-section (1) shall apply in respect of assessments for years of assessment ending on or after the first day of May, 1964.
11. (1) The following section is hereby substituted for section Substitution of twel1•e of the principal Act: · section 12 of · · Act 58 or 196.< ~~::-. : · 12.
1 (l)bln rcsghpc:ct of newb or unused ma;hinethry :!:tir:;~o1d1c~~l
respect of or pant rou t mto usc y any taxpayer jor e Act 90 of 1962 machinery purposes of his trade and used by him directly in section 4 of or plant a proCc:ss of manufacture or any other process which Act 6 or 1963 used in in the opinion of the Secretary is of a similar nature, and section IO of a process . there shall be allowed to be deducted from the in· Act 12 of 1963. of manu- facture or come of such taxpayer for the year of assessment by hotel during which such machinery or plant is so brought keepers. into use an allowance equal to fifteen per cent
of the cost to him of such machinery or plant: Provided that in the case of machinery or plant which has been acquired to replace machinery or plant which was damaged or destroyed. the allow- ance shall be calculated on such cost less any amount which has been recovered or recouped in respect of the damaged or destroyed machinery or plant . and has been excluded from the tax· payer• a · income in terms · of paragraph (e) of sub-section (4) of section eight or the corresponding provisions of any previous Income Tax Act, whether in the current or any previous year of assessment: Provided further thcit · where such machinery or plant has been brought into use in a Bantu area or an area adjoining a Bantu area on or after the first day of May, 1964, the Minister of Finance may with due regard to the circumstances of the case and to the recommendation of the Secretary for Bantu Administration and Development in the case of a Bantu area or the Secretary for Commerce and
GOVERNMENT GAZETTE EXTRAORDINARY 1111 JL:LY, 1964 91
Industries in the case of an area adjoining a llantu area, direct that the allowance be increased to a sum not exceeding thirty per cent of such cost.".
(2) There shall further be allowed to be deducted from the income of any taxpayer, in respect of new or unused machinery or plant brought into use by him for the purposes of his trade and used by him directly in a process of manufacture or any other process which in the opinion of the Secretary is of a similar nature, an allowance, to be known as a machinery investment allowance, for the year of assessment (not being later than that ending on the twenty-eighth day of February, 1966) during which such machinery or plant was so brought into use, equal to twenty per cent of the cost to the taxpayer of such machinery or plant: Provided that the Minis- ter of Finance may, in the case of any such ma- chinery or plant brought into use in a Bantu area or an area adjoining a Bantu area, with due regard to the circumstances of the case and to the recom- mendation of the Secretary for Bantu Administra- tion and Development in the case of a Bantu area or the Secrelary for Commerce and Industries in the case of an area adjoining a Bantu area, direct that the allowance be increased to a sum not ex- ceeding-
(a) thirty per cent of such cost if the machinery or plant was brought into use before the first day of May, 1964; or
(b) thirty-five per cent of such cost if the machinery or plant was brought into usc on or after that date.
(3) The provisions of sub-sections (I) and (2) shall mutatis mutandis apply- (a) with reference to new or unused machinery,
implements, utensils and articles (other than vehicles and other than equipment for managers' and servants' rooms and offices) brought into use by a taxpayer for the purposes of his trade as hotelkeeper; and
(b) where the Minister of Finance, having regard to the circumstances of the case and to the recommendation of the Secretary for Bantu Administration and Development in the case of a Bantu area or the Secretary for Commerce and Industries in the case of an area adjoining a Bantu area, so directs, with reference to-
(i) used machinery or plant brought into use and used directly in a process of manufac- ture or any other process which in the opinion of the Secretary is of a similar nature, in a Bantu area or an area adjoining a Dantu area;
(ii) used machinery, implements, utensils and articles (other than vehicles and other than equipment for managers' and ser- vants' rooms and offices) brought into use for the purposes of his trade by an hotel keeper in such an area:
Provided that- (i) the allowance provided for in sub-section (!),
as applied by this sub-section- (aa) shall not be permitted to be deducted
in respect of any used machinery, plant, implements, utensils or articles brought into use as aforesaid before the first day of May, 1964, if an allowance has already been deducted in respect thereof for the year of assessment during which such machinery, plant, implements, utensils or articles were brought into use and used as new or unused machinery, plant, imple- ments, utensils or articles, either under sub- section (I) or under the corresponding provisions of any previous Income Tax Act;
GOVERNMENT GAZETTE EXTRAORDINARY, 7rn JULY, 1964 93
(bb) in .respect of any used machinery, plant, _ . implements, utensils or articles brought
into. use as aforesaid on or after the first day of May, 1964, shall,.if an allowance
. has . already . been deducted in respect thereof. for the year of assessment during which such machinery, plant, implements, utensils or articles were. brought into usc and used as new or. unused machinery, plant, implements, utensils or articles, either under sub-section (1) or under that
. sub-section as applied by this sub-section or under the corresponding provisions of any previous Income Tax Act, be such a proportion, not exceeding fifteen per cent, of the cost thereof as the Minister of Finance may direct; · ·
(ii) where an allowance has been permitted to be deducted under sub-section (2) or the corres- ponding provisions of any previous Income Tax Act, in the case of new or unused machinery, plant, implements, utensils or articles, the allowance under that sub-section, as applied by this sub-section, in respect thereof as used machinery, plant, implements, utensils or articles shall if such used machinery, plant, implements, utensils or articles were brought into use- · (aa) before the first day of May, 1964, be such
a proportion, not .exceeding ten per cent, of the cost thereof as the Minister of Finance may direct; or ·
(bb) on or after that date, be such a proportion, not exceeding fifteen per cent, of the cost thereof as the Minister of Finance may direct. ·
· ( 4) The cost of used machhiery, plant, implements, utensils or articles shall, for the purpose of deter- mining the allowance to be deducted in respect thereof under sub-section (I) as applied by sub· section (3), or under sub-section (2) as so applied, be deemed to be the actual cost thereof less the aggregate of the amoun.ts allowed to be deducted
· in respect thereof under paragraph (e) of section eleven and the corresponding provisions of any previous Income Tax Act, whether in the current or in any previous year of assessment, and any amount allowed to be deducted in respect thereof as new or unused machinery, plant, implements, utensils. or articles_ under sub-section (l) or under that sub- section as so applied or under the corresponding provjsions of any previous Income Tax Act, whether in the current or in any previous year of asse_ssment.
(2) The amendments effected by · sub-section (l) shall be deemed to have first taken effect in respect of assessments for · the year of assessment ended the twenty-ninth day of February. 1964.
12. Section thirteen of the principal Act is· hereby amended ~dmcnt of with effect from the commencement of the year of assessment ~1ss ~~ t/62 ended the twenty-ninth day of February, 1964, by the substi- as amended by' tution for sub-section (6) of the following sub-section: section 12 of
"(6) Tl build' · · all h 11 b . Act 90 of 1962, te JDg mvestment owance s a e a sum section .5 of equal to ten per cent of the cost of the buildings or improve- Act 6 of 1963 ments in question for the year of assessment (but not later and ~tion 1 1 or than that ending on the twenty-eighth. day of February, Act 72 of 1963. 1967) during which-
(a) in the case of the cost of erection of a building used . by the taxpayer or the lessee, the building was first
so used;
(b) in ~he case of the cost of any improvements to a building, · the impr~vements were completed:
Provided that the Minister of Finance may. having regard to the circumstances of the case and to the recommendation
· of the Secretary for Bantu Administration and Develop- ment in the case of a Bantu area or :the Secretary for
GOVERNMENT GAZETTE EXTRAORDINARY, 7TK JULY,l964 95
Commerce and Industries in the case of an area adjoining a Bantu area, direct that the allowance in respect of any building referred to in paragraph (b) of sub-section (5) which has been used in the manner aforesaid in a Bantu area or an area adjoining a Bantu area, or in respect of improve- ments to such building,· shall be increased to a sum not exceeding-
(i) twenty per cent of such cost if the erection of such building was, or such improvements were, commenced before the first day of May, 1964; or
(ii) twenty-five per cent of such cost if the erection of such building was, or such improvements were, commenced on or after that date.".
13. Section twenty of the principal Act is hereby amended Amfn~0ntror with effect from the commencement of the year of assessment ~: ~: or {962. ended the twenty-ninth day of February, 1964, by the insertion after sub-section (I) of the following sub-section:
"(l)bis If the Secretary is satisfied that the circumstances of the case warrant the concession and it is proved to his satisfaction-
( a) that any company (hereinafter referred to as the sub- sidiary company) which is registered, managed and controlled in the Republic has under an arrangement with any other company (hereinafter referred to as the parent company) which is registered, managed and controlled outside the Republic, acquired all the assets and assumed all the liabilities of the parent company relating to any industrial, commercial or other business undertakmg of the parent company in the Republic which has been transferred by the parent company to the subsidiary company as a going concern; and
(b) that at the time such arrangement was implemented the parent company held for its own benefit all the issued shares of the subsidiary company,
so much of any balance of assessed loss incurred by the parent company to the date on which the parent company ceased to carry on the said undertaking as the Secretary is satisfied relates to that undertaking sh:tll for the purposes of sub-section (1) be deemed to be an assessed loss incurred by the subsidiary company on the date on which that undertaking was taken over by the subsidiary company and the said balance shall for purposes of assessment of the parent company's liability for tax be reduced accor- dingly.". ·
14. Section llrenty-tu·o of the principal Act is hereby amended Am~ndment or with effect from the commencement of the year of assessment Ac~SS 211°:62 ended the twenty-ninth day of February, 1964, by the addition as ame~dcd by' at the end of sub-section (4) of the following proviso: section 8 or
"Provided further that options or any other rights to Act 6 or 196J. acquire shares in any company which have been acquired as aforesaid shall have no value.".
15. S~ction thirty-six of the principal Act is hereby amended =~nd36ottr with effect from the commencement of the year of assessment Act'gg of 1°962 ended the twenty-eighth day of February, 1963- as amended by'
(a) by the su~stitution for sub-section (3)bis of the following ~~i72 ~f 1°/63• sub-section:
.. (3)bis The amount to be deducted under paragraph (a) of section fiftem from income derived from the working of any other deep level gold mine shall be- (a) where such mine became any other deep level
gold mine before the commencement of the year of assessment ended the twenty-eighth day of February, 1963-
(i) in respect of that year of assessment, the sum of the unredeemed balance of capital expenditure at the beginning of that year of assessment and the actual capital expenditure incurred during that year; and
(ii) in respect of any subsequent year of assess- ment, the actual capital expenditure incurred during such subsequent year; or
GOVERNMENT GAZETTE EXTRAORDINARY, 7nt JULY, 1964 97
(b) where such mine became any other deep level gold mine during or after the year of assessment ended the twenty-eighth day of February, 1963-
(i) in respect of the year of assessment during which such mine became any other deep level gold mine, the sum of the unredeemed balance of capital expenditure at the begin- ning of the year of assessment during which it became any other deep level gold mine and the actual capital expenditure incurred during such last-mentioned year; and
(ii) in respect of any year of assessment subse- quent to the year of assessment during which such mine became any other deep level gold mine, the actual capital expenditure incurred during such subsequent year:
Provided that if in the case of any such mine (not being a new gold mine) the taxpayer informs the Secretary in writing on or before the thirtieth day of September, 1964, or within six months of such mine becoming any other deep level gold mine or within such further period as the Secretary having regard to the circum- stances of the case may allow, that he elects not to be allowed any deductions under the preceding provisions of this sub-section, there shall in lieu of such deductions be deducted from the income derived by the taxpayer during the year of assessment from the working of such mine an amount equivalent to twenty-seven and a half per cent of the sum of the unredeemed balance of capital expenditure at the beginning of the year of assessment and the capital expenditure incurred during that year, or an amount equal to the quotient resulting from dividing the said sum by the life of the mine, whichever is the greater amount; or";
(b) by the insertion in sub-section (6) after the word "mine" where it occurs for the third time of the words "or any natural oil deposit";
(c) by the addition to sub-section (6) of the following paragraph, the existing sub-section becoming para- graph (a):
.. (b) The deduction under this sub-section shall be allowed for the year of assessment during which the capital expenditure in question is incurred or, if at the end of that year of assessment the mine has not yet commenced production, for the year of assessment during which the mine commences production."; and
(d) by the substitution in sub-section (11) for the definition of .. capital expenditure" of the following definition: '"capital expenditure' means-
(a) expenditure on shaft sinking and equipment, including any single renewal or replacement of equipment which together with the accessories thereto exceeds in cost forty thousand rand; and
(b) expenditure on development, general adminis- tration and management (including any interest and other charges payable after the thirty-first day of December, 1950, on loans utilized for mining purposes) prior to the commencement of production or during any period of non-production: and
(c) in the case of any new gold mine, any new deep level gold mine or any other deep level gold mine, an amount calculated as nearly as may be in the manner prescribed for the calculation of the capital allowance provided for in sub-section (3) of section nineteen of the Precious and Base Metals Act, 1908 (Act No. 35 of 1908), of the Transvaal (in this paragraph referred to as the Gold Law), at the rate of six per cent per annum in the case of any new gold mine or five per cent per annum in the case of any new deep level gold mine or any other deep level gold mine on the amount of the unredeemed balance of the aggregate of- ' (i) the expenditure referred to in para-
graphs (a) and (b), excluding any interest and other charges on loans referred to in paragraph (b), if the mine is a new gold mine or a new deep level gold
GOVERNMENT OAZETIE EXTRAORDINARY, 7rn JULY, 1964 99
mine, or the balance of capital expen· diture unredeemed in terms of sub-section (1) at the commencement of the year of assessment during which the mine is recognized as any other deep level gold mine, and the expenditure referred to in paragraph (a), if the mine is any other deep level gold mine;
(ii) the amount (if any) allowed to rank as capital expenditure in terms of section thirty-seven;
(iii) any expenditure incurred during any period of production on development on any reef on which at the date of such development stopiog has not yet commenced; and
(iv) the amount calculated in terms of this paragraph up to the end of the year of assessment under this Act or the Income Tax Act, 1941, immediately preceding the year of assessment under charge,
if the mine is a new gold mine or a new deep level gold mine, for the period from the end
' of the month in which the expenditure is actually incurred or is in terms of proviso (dd) to this paragraph deemed to be incurred, up to the end of the year of assessment immediately preceding the first year of assessment in respect of which the deter· mination of the taxable income derived from the working of such mine does not result in an assessed loss, and, if the mine is any other deep level gold mine, for a period of ten years from the commencement of the year of assessment during which the mine is recognized as any other deep level gold mine: Provided that- (aa) the amount under this paragraph shall
not be calculated for any period during which mining operations are not carried on in accordance with the terms of the relevant lease;
(bb) notwithstanding anything to the contrary in any Jaw contained, the amount under this paragraph shall not be taken into account for the purpose of calcu- lating the capital allowance provided for in sub-section (3) of section nineteen of the Gold Law or for the purpose of determining the profits of which a share is payable to the State in terms of any mining lease;
(cc) the provisions of sub-sections (4) and (4)his of section nineteen of the Gold Law shall, in so far as they can be applied, apply mutatis mutandis for the purpose of determining the unredeemed balance of the aggregate of the amounts referred to in sub-paragraphs (i) to (iv), inclusive. of this paragraph;
(del) for the purposes of sub-sections (3) and (3)b/J of this section any amount calculated under this paragraph in respect of any year of assessment shall be deemed to be capital expenditure incurred on the last day of such year of assessment;
(ee) the amount under this paragraph in respect of any new gold mine shall not be calculated in respect of any period occurring before the twentieth day of March, 1963;".
16. Section thirty-eight of the principal Act is hereby amended Amendment or with effect from the commencement of the year of assessment scctio: 3: f/
62 ended the twenty-ninth day of February, 1964-- ~ci~e~ded by' (a) by th~ substitution for sub-paragraph (iv) of paragraph section 21 of
(a) of sub-section (2) of the following sub-paragraph: Act 90 or 1962. .. (iv) that the general public was throughout the year
of assessment in question interested either directly a..'l shareholders in the company or indirectly
GOVERNMENT GAZETIE EXTRAORDINARY, 7TH JULY, 1964 101
as shareholders in any other company, in more than forty per cent of every class of equity shares issued by the company;";
(b) by the substitution for sub-paragraph (i) of paragraph (b) of the said sub-section of the following sub- paragraph: "(i) that the general public was throughout the year
of assessment in question interested either directly as shareholders in the company or indirectly as shareholders in any other company, in more than fifty per cent of every class of equity shares issued by the company; and";
(c) by the deletion in sub-section (3) of the words "at the specified date"; and
(d) by the addition of the following sub-section: "(4) For the purposes of this section-
(a) the general public in relation to any company (in this paragraph referred to as the company) shall be deemed not to include- (i) any director of the company; or
(ii) any relative of any director of the company, unless it is shown to the satisfaction ofthe Secretary that such relative, if he is not the spouse or minor child of such director, has at all times which the Secretary considers relevant exercised his rights as a shareholder in the company or in any other company through which such relative is interested in the shares of the company, independently of such director; or
(iii) the executor of the deceased estate or the trustee of the insolvent estate of any person referred to in sub-paragraph (i) or (ii); or
(iv) any person to the extent that he acts in a fiduciary capacity, or as a nominee, for the benefit of any person who is not in fact or in terms of any other provision of this sub-section a member of the general public in relation to the company; or
(v) any man or his wife or any minor child of any man or his wife, if one or more of such persons are directly or indirectly interested (otherwise than by virtue of any share- holding in any public company or any private company which is interested in the shares of the company through a direct or indirect interest in the issued share capital of a public company) in altogether more than fifteen per cent of any class of equity shares issued by the company;
(b) the general public in relation to any company (in this paragraph referred to as the company) shall be deemed to include-
(i) any benefit fund, pension fund, provident fund or retirement annuity fund or any trust or institution which in the opinion of the Secretary is of a public character; and
(ii) any person to the extent that he acts in a fiduciary capacity, or as a nominee, for the benefit of any person who is in fact or in terms of any other provision of this sub- section a member of the general public in relation to the company;
(c) where any person- (i) being a public company, is indirectly in-
terested in any shares of any other company; or
(ii) being a member of the general public in relation to any company, is indirectly in- terested in any shares of that company,
by virtue of his being a shareholder in any private company and such interest is not attribut- able to a direct or indirect interest of such private company in the issued share capital of a public company, the said person shall be deemed to
GOVERNMENT OAZETTB EXTRAORDINARY, 7mJULY,1964 103
be interested in only that portion of such shares as the Secretary is satisfied such person would be entitled to receive if every company through which that person is interested in those shares were to be wound up or liquidated and the assets of each such company were, without regard to its liabilities, to be distributed among its shareholders;
(d) where persons are jointly interested, whether directly or indirectly, but otherwise than through a direct or indirect interest in the issued share capital of a public company, in the shares of any company, each such person shall be deemed to be interested in only such proportion of those shares as the Secretary is satisfied he would be entitled to receive if the joint interest of all such persons in such shares were to be divided between such persons."'.
17. Section forty-nine of the principal Act is hereby amended Amendment of with effect from the commencement of the year of assessment ~g~ 4? 1~f62 ended the twenty-ninth day of February, 1964, by the substi- as amc~dcd by' tution for paragraph (ii) of the defirution of .. distributable section 22 of income" of the following paragraph: Act 90 ~r 1962
"(ii) an allowance equal to forty-five per cent of so much and section 9 or • Act 6 of 1963. of the sum of the amounts referred to 10 paragraphs (a) and (b) of this definition as is not attributable
. to the inclusion in the profits of such company of any dividends received by or accrued to it; and".
18. Section fifty-six of the principal Act is hereby amended- Am~ndmcnt or (a) by the insertion in paragraph (a) of sub-section (1) ~u~: ~: ~:62.
after the word 11to" of the words "or for the benefit or•; .
(b) by the insertion in paragraph (b) of the said sub-section after the word .. to" of the words 110r for the benefit or·; and
(c) by the substitution for paragraph (g) of the said sub-section of the following paragraph:
"(g) if such property consists of any right in property situated outside the Republic and was acquired by the donor-
(i) before the donor, being a person other than a company, became ordinarily resident in the Republic for the first time or was, in the case of a company, for the first time registered, managed or controlled in the Republic; or
(ii) by inheritance or by way of a donation if at the date of the donation the person who made the donation was a person (other than a company) not ordinarily resident in the Republic; or
(iii) out of funds derived by him from the disposal of any property referred to in sub-paragraph (i) or (ii) or, if the donor disposed of such last-mentioned property and replaced it successively with other properties (all situated outside the Republic and acquired by the donor out of funds derived by him from the disposal of any of the said properties), out of funds derived by him from the disposal of, or from revenue from any of those properties; or
(iv) out of funds derived by him from any trade carried on by him outside the Republic; or
(v) in the case of immovable property, not less than ten years before the date on which the donation takes effect;".
19. Section sixty-six of the principal Act is hereby amended- Amendment of (a) by the su.bs~tution for sub-section (13) of the following ~~s!: ~:62.
sub-secuon. as amended by section I 0 of Act 6 of 1963.
GOVERNMENT GAZETTE EXTRAORDINARY, 7nt JULY. 1964 105
(13) The· return of income to· be made by any person in respect of the year of assessmer.t ended the thirtieth day of June, 1962, or by any person (other than a company) in respect of any year of assessment referred to in sub-paragraph (i) of paragraph (b) of sub-section (1) of section ji1·e shall be a full and true return for the whole period of twelve months ending upon· the last day of the year of assessment under charge: Provided that where it is established to the satisfaction of the Secretary that the income of a
· · person cannot be conveniently returned for that period, the Secretary may accept returns made up to a date agreed to by him which returns shall be deemed for an · purposes of this Act to be returns for the periods . covered by the years of assessment under charge, and the taxpayer shall not without the consent of the Secretary be entitled to make a· return in respect of any subsequent year of assessment to a date other than the date so agreed to.";· · ·
·. (b) by the substitution for sub-section (13)bis of the foltowing sub-section.: ·
.. (13)bis The return· of income to be made by any _person (oth~.r than a com~any)-
(a)' in respect of the period (hereinafter referred to as the transition period) referred to in su \>.para- graph (ii) of paragraph (b) of sub-section (1) of section ji11e or sub-paragraph (i) of paragraph (c) of that sub-section, · shall be a full and true return for the whole period under charge and where in terms of the proviso to sub-section (13) a return in respect of the year of assessment (hereinafter referred to as the preceding year) which immediately precedes the transition period has in respect of the whole or any portion of the taxpaye~·s income been acc~pted t