By Michael Stein (Friday Page)
Section 11(e)(iiA) of the Income Tax Act, which deals with the wear-and-tear allowance, provides for the situation when any machinery, implement, utensil or article qualifying for the allowance is mounted on or affixed to any concrete or other foundation or supporting structure. While the allowance is generally unavailable for structures or works of a permanent nature, there is an exception when the Commissioner is satisfied that the foundation or supporting structure is designed for the machinery, implement, utensil or article and constructed in such manner that it is or should be regarded as being integrated with the machinery, implement, utensil or article and that the useful life of the foundation or supporting structure is or will be limited to the useful life of the machinery, implement, utensil or article mounted on it or affixed to it. In these circumstances the foundation or supporting structure will, for the purposes of s11(e), not be deemed to be a structure or work of a permanent nature but will for the purposes of the Act be deemed to be a part of the machinery, implement, utensil or article mounted on it or affixed to it.
Well, the Taxation Laws Amendment Bill 2012 proposes a change in the law. An amendment will remove the Commissioner’s discretion about the existence of the relevant circumstances.
This means that as long as you are satisfied that you meet the criteria, you may claim the allowance for qualifying foundations or supporting structures without consulting the Commissioner. And the same rule has been made applicable to certain other allowances.
Once the Bill becomes law, this amendment will become effective from 1January 2013 and apply to years of assessment commencing on or after that date.