The scope of the expression ‘necessarily incurred’ in section 18(1) of the Income Tax Act

• Jurisdiction: South Africa
• Published date: 25 May 2019
• Date: 25 May 2019
• Pages: 184-196
• Author: Fareed Moosa
• Citation: (2013) 25 SA Merc LJ 184

THE SCOPE OF THE EXPRESSION

‘NECESSARILY INCURRED’ IN SECTION

18(1) OF THE INCOME TAX ACT

FAREED MOOSA*

Lecturer, Department of Mercantile Law, University of the Western Cape

I INTRODUCTION

Section 23 of the Income Tax Act

1

prohibits, in relation to any year of

assessment,

2

a deduction of ‘the cost incurred in the maintenance of any

taxpayer, his family or establishment’

3

as well as any ‘domestic or private

expenses’.

4

The cumulative effect of these prohibitions is that, for

income tax purposes, it renders non-deductible such expenses as are

in the nature of, for example, medical costs incurred by a taxpayer in

respect of himself or his spouse or child or on behalf of any other

dependant.

5

An exception to this general prohibition is contained in

section 18(1)(d), which is in its current form by virtue of section

43(1)(a)

6

and applicable in respect of years of assessment commencing

on or after 1 March 2012. Section 18(1)(d) states:

‘(1) Notwithstanding the provisions of section 23, there must be

allowed to be deducted from the income

7

of any taxpayer

8

who is a

natural person

9

an allowance in respect of — . . .

* BProc LLB (UWC) LLM (Tax) (UCT). Lecturer, Department of Mercantile Law,

University of the Western Cape.

1

Act 58 of 1962 (‘the Act’). Unless otherwise indicated by the context, sections referred to

in this article denote the relevant section in the Act.

2

The relevant portion of the def‌inition of ‘year of assessment’ in s 1 is: ‘means any year or

other period in respect of which any tax or duty leviable under this Act is chargeable...’.

3

Section 23(a). See, for example, ITC 994 25 SATC 134.

4

Section 23(b). The meaning of ‘private or domestic expenses’ is discussed in Commis-

sioner for Inland Revenue v Hickson 1960 (1) SA 746 (A) and ITC 833 21 SATC 324.

5

L v Commissioner of Taxes 1992 (2) SA 246 (ZH).

6

Taxation Laws Amendment Act 24 of 2011.

7

Section 1 sv ‘income’: income ‘means the amount remaining of the gross income of any

person for any year or period of assessment after deducting therefrom any amounts exempt

from normal tax under Part I of Chapter II’.

8

Section 1 sv ‘taxpayer’: ‘taxpayer’ ‘means any person chargeable with any tax leviable

under this Act and includes every person required by this Act to furnish any return’. The

distinction between ‘means’ and ‘includes’ in a def‌inition is discussed in Rogut v Rogut 1982

(3) SA 928 (A) 937G; Warwick Investments (Pty) Ltd v Maharaj 1954 (2) SA 470 (N) 472B; and

Birkenruth Estates (Pty) Ltd v Unitrans Motors (Pty) Ltd 2005 (3) SA 54 (W).

9

Section 18(5).

184

(2013) 25 SA Merc LJ 184

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