I need to know can we reduce the proceeds with bond cancellation amount and Levies paid?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
This is dealt with in paragraph 20(2) of the Eighth Schedule to the Income Tax Act. We copied it for ease of reference below:
“The expenditure incurred by a person in respect of an asset does not include any of the following amounts—
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borrowing costs, including any interest as contemplated in section 24J or raising fees;
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expenditure on repairs, maintenance, protection, insurance, rates and taxes, or similar expenditure; and
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the valuation date value of any option or right to acquire any marketable security contemplated in section 8A (1),
other than borrowing costs and expenditure contemplated in subparagraph (1) (g).”
SARS’s view is that “bond registration and cancellation costs are excluded from base cost under para 20(2), since they represent a borrowing cost.” We agree with that view.
We don’t know if the property was used for private or trade purposes, but that is irrelevant. We submit that the levies would fall under expenses similar to rates and taxes, if not a recurring expense relevant to the use of the property.