Prior to its
deletion, section 14(1)(c) of the Income Tax Act No. 58 of 1964 ("the Act”)
provided for an allowance on expenditure to be incurred in respect of future
repairs to ships. The allowance was calculated based on a method provided in
Practice Note No 1 dated April 1996. Section 14(1)(c) was then inadvertently
repealed by the 2013 Taxation Amendment Act and section 24P was inserted into
the Act the following year to effectively reinstate section 14(1)(c).
This gave rise
to some uncertainty regarding whether the section 24P allowance should be
calculated based on the method prescribed in Practice Note 1.
The SAIT was
requested to obtain clarity from SARS regarding the matter and the following
non-binding private opinion was obtained. In short, SARS are of the opinion
that the section 24P allowance must be calculated based on the method provided
in Practice Note 1.
Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.