Extension of the window period to apply for the 12I allowance from 31 December 2015 to 31 December 2017. The purpose of this extension is, inter alia, to align the 12I incentive period with the Manufacturing Competitiveness Enhancement Program (MCEP) incentive period, given the announcement that MCEP will no longer apply to projects with an investment value in excess of R50 million.
The current requirements for section 12I require that an approved industrial project meets all the qualifying criteria every year during the life span of the industrial policy project. The problem with this requirement in terms of current legislation is that very few of the approved industrial policy projects were able to meet all the criteria every year.
To alleviate the above practical constraint in relation to 12I, it has been proposed in the TLAB that a Compliance Period be introduced into the legislation. The Compliance Period is defined as the period commencing from the year of assessment following the year of assessment during which the assets are brought into use and ending at the end of the third year of assessment thereafter.
The intention is that taxpayers will be required to comply with all the requirements under section 12I, by the end of the Compliance Period and are only required to provide annual reports during the Compliance Period. The additional training allowance may be claimed from the year of assessment prior to the year in which the assets are brought into use until the end of the compliance period.
The introduction of the compliance period is deemed to have come in to effect on 8 January 2009, while the extension of the application of 12I, as well as the new rules relating to the training allowance will come in to effect on 1 January 2016.