Draft Interpretation Note 78 was published on 21 July 2023 providing guidance on the interpretation and application of section 24C when income is received in advance while the expenditure under the contract will only be incurred in a subsequent year of assessment.
Section 24C caters for situations which often arises in the construction industry and sometimes in manufacturing concerns, where a large advance payment is made to a contractor before the commencement of the contract work, to enable the contractor to purchase materials, equipment etc. In several instances such advance payments are not matched by deductible expenditure, resulting in the full amounts of the advance payments being subject to tax.
The draft Interpretation Note explains the principles and provides examples for the application of section 24C.
Read Interpretation Note 78 (Issue 2) here.
Send your comments on the draft IN 78 to technical@saiba.org.za by 5 September 2023.
