Linda Ensor

Political Correspondent

CAPE TOWN — Last-minute amendments to the draft Revenue Laws Amendment Bill will result in a wider application for an urban development-zone incentive aimed at fostering refurbishment of inner-city areas.

This offers refurbishers in designated development zones a five-year accelerated depreciation allowance for their investment in construction or building refurbishment.

In later years this will offset maintenance and repair costs, resulting in a level effect on earnings throughout the useful life of the asset. Designated development zones include the main metropolitan areas such as Cape Town, Johannesburg and Tshwane.

The incentive is currently restricted to owners who undertake or commission construction or refurbishment, and applies only if the owners use the building for trade.

South African Revenue Service (SARS) assistant GM of legislation Frans Tomasek said yesterday an amendment was proposed to extend the incentive to first-time purchasers who buy from bona-fide developers, and to allow subdivision of buildings.

Tomasek said a problem had emerged when refurbished buildings were sold after development as neither the developer nor the purchaser could claim the incentive.

SARS briefed Parliament’s finance committee on the proposed bill that gives effect to the tax proposals contained in Finance Minister Trevor Manuel’s budget. Public hearings on the bill will be held later this week for tax specialists to submit their views.

An amendment to the Income Tax Act has been proposed to give tax concessions to nonstatutory force members who engaged in the struggle against apartheid and who are entitled to special pensions.

The draft bill includes provisions related to the tax treatment of the medical scheme contributions by employers for their employees to make medical insurance more affordable.

Other issues include a withholding tax on nonresident entertainers; the tax treatment of company car fringe benefits; broad-based employee share plans; Value Added Tax, transfer and excise duty amendments; film allowances; and changes to capital gains tax, controlled foreign company rules, donations tax and estate duty.