Section 11A of the Income Tax Act provides a deduction for certain expenditure and losses actually incurred by a person prior to the commencement of and in preparation for carrying on a trade. But it contains certain anomalies. To qualify for the deduction, the expenditure and losses must have been ones that would have been allowed as a deduction in terms of s 11 (other than s 11 (x), which brings deductions allowed in any other provisions of Part I of Chapter 2 of the Act into s 11)), 11B (research and development), 11D (scientific or technological research and development) or 24J (interest)), had the expenditure or losses been incurred after the person commenced carrying on the trade and were not allowed as a deduction in that year or a previous year of assessment. My first question is why the deduction under s 11A is restricted to these particular deductions and losses. Then, so much of the relevant expenditure and losses as exceeds the income derived during the year of assessment from carrying on the relevant trade, after deduction of any amounts allowable in that year of assessment under any other provision of the Act, may not be set off against any income of the person that is derived otherwise than from carrying on the particular trade, notwithstanding the assessed loss provisions of s 20(1)(b). There may be some rationale for ring-fencing the deduction of the expenditure and losses in question to the income from the trade for which they were incurred, but there is no provision for the carry forward of the amount by which the expenditure and losses exceed the income from the particular trade in the year of assessment in which the trade commences. There is, for instance, provision for the carrying forward of a ring-fenced deduction in s 20B, which deals with the successor to the scrapping allowance. This, too, is anomalous and I can only assume is a mistake. But it ought to be corrected by an appropriate amendment.
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.