As enacted

Contents

Inland Revenue Act 2006 · As enacted · Chapter VII · Ascertainment of Taxable Income

34. An allowance in respect of qualifying payments

Official English translation. The Sinhala text prevails. Open the official Sinhala text, official PDF on documents.gov.lk

(1)

Subject to the provisions of subsection (4), there shall be deducted, for the purposes of section 33, from the assessable income of a person for any year of assessment in respect of every qualifying payment made by him or deemed to have been made by him in that year of assessment, an allowance equal to the amount of such qualifying payment.

(2)

In this section, “qualifying payment” means–

(a)

a donation made by any person in money to an approved charity;

(b)

a donation made in money or otherwise to–

(i)

the Government of Sri Lanka;

(ii)

a local authority;

(iii)

any Higher Educational Institution established or deemed to be established under the

Universities Act, No. 16 of 1978;

(iv)

the Buddhist and Pali University or any Higher

Educational Institution established by or under the Buddhist and Pali University Act, No. 74

of 1981;

(v)

a fund established by the Government of Sri

Lanka,

(vi)

a fund established by a local authority and approved by the Minister ;

(vii)

the Sevana Fund created and administered by the National Housing Development Authority established by the National Housing

Development Authority Act, No. 17 of 1979.

(viii)

a fund established by a Provincial Council and approved by the Minister:

Provided that such part, if any as is in excess of two million rupees of any donation made otherwise than in money, shall be deemed not to comprise a qualifying payment;

(c)

expenditure incurred by any person on any project included in a development plan of the Government of Sri Lanka, if such expenditure was incurred–

(i)

with prior written approval of the Minister; and

(ii)

in accordance with such terms and conditions as may have been specified by the Minister at the time of granting such approval, such approval being granted and such terms and conditions being specified by the Minister, having regard to the development priorities of the Government;

(d)

any amount paid by an individual as a contribution to a provident fund for self employed persons, approved by the Commissioner-General for such purpose;

(e)

any contribution made by an individual to such provident fund or pension fund as is approved by the Commissioner-General or to a regulated provident fund, no part of the emoluments from which such contributions are made is exempt from income tax under paragraph (b) of section 8 :

Provided that where such contribution exceeds twelve per centum of such emoluments, such excess shall be deemed not to comprise a qualifying payment.

(f)

a donation made by any person in money to–

(i)

the Industrial Technology Institute established by the Science and Technology Development

Act, No. 11of 1994 ;

(ii)

the Sri Lanka Foundation Institute established by the Sri Lanka Foundation Law, No. 31 of 1973;

(iii)

the Tower Hall Theatre Foundation, established by the Tower Hall Theatre

Foundation Act, No. 1 of 1978;

(iv)

the Sri Lanka Inventors Commission, established by the Sri Lanka Inventors

Incentives Act, No. 53 of 1979;

(v)

the SWRD Bandaranaike National Memorial

Foundation, established by the SWRD

Bandaranaike National Memorial Foundation

Law, No. 2 of 1975;

(vi)

the Institute of Fundamental Studies, Sri

Lanka, established by the Institute of

Fundamental Studies, Sri Lanka, Act, No. 55

of 1981;

(vii)

the International Winged Bean (Dambala)

Institute, established by the International

Winged Bean (Dambala) Institute Act, No. 7 of 1982;

(viii)

the Sri Lanka Institute of Printing, established by the Sri Lanka Institute of Printing Act, No.

18 of 1984;

(ix)

the Arthur C. Clarke Institute for Modern

Technologies, established by the Science and

Technology Development Act, No. 11 of 1994;

(x)

the Institute of Policy Studies of Sri Lanka, established by the Institute of Policy Studies of Sri Lanka Act, No. 53 of 1988;

(xi)

the J R Jayawardena Centre, established by the J R Jayawardena Centre Act, No. 77 of 1988;

(g)

any premia in any year of assessment, being premia which have accrued due for payment—

(i)

on a life insurance policy (not being a pure endowment policy) the premia in respect of which are payable annually over a period of not less than three years;

(ii)

on a policy of medical insurance, not being premia paid outside Sri Lanka in respect of any such policy issued outside Sri Lanka;

(h)

expenditure incurred by any person in the production at a cost of not less than five million rupees, of any film :

Provided however that any expenditure referred to in this paragraph shall, for the purposes of subsection (1) be deemed to have been incurred in the year of assessment in which the production of such film is completed.

For the purposes of this paragraph the expression–

(i)

“expenditure” in relation to the production of a film includes any expenditure incurred in the promotion of that film, within a period of ninety days from the date of completion of the production of such film;

(ii)

“film” means any audio-visual presentation of the moving image produced on any form or format whatsoever and which is intended primarily to be exhibited by projection on a screen in a cinema;

(i)

any expenditure incurred, otherwise than out of a loan referred to in paragraph (j) by an individual in either the construction or the purchase of a house, being in either case the first house, constructed or purchased by such individual on or after April 1,

2001;

(j)

any expenditure incurred by an individual on the repayment of the capital of any approved housing loan, either for the construction or the purchase of a house, being in either case the first house constructed or purchased by such individual on or after April 1, 2001.

For the purpose of this paragraph “approved housing loan” means any housing loan obtained from the Government, or any banking institution within the meaning of the Monetary Law Act

(Chapter 422), or from any Provincial Fund, any local authority or any other institution, approved by the Minister in charge of the subject of Housing.

(k)

fifty per centum of any investment of not less than rupees five hundred thousand in any year of assessment in the purchase by any person of ordinary shares, other than the existing shares, issued by a venture capital company during the period that such company is exempted from income tax under section 23 ;

(l)

any sum invested by any company and referred to in paragraph (c) of subsection (2) of section 20 ;

(m)

the expenditure referred to in paragraph (c) of subsection (2) of section 21.

(3)

Where the total statutory income of any child for any year of assessment is aggregated with, and deemed to be a part of, the total statutory income of his parent for that year of assessment, any qualifying payment made by that child in that year of assessment shall be deemed to be a qualifying payment made by such parent.

(4)

The deduction from the assessable income of any—

(a)

person, other than a company, for any year of assessment—

(i)

in respect of all qualifying payments other than those referred to in paragraphs (a), (b), (c), (e), (g), (h), (i), (j) and (k) of subsection (2) made by him or deemed to have been made by him in any year of assessment shall not exceed one third of such assessable income or twenty five thousand rupees whichever is less ;

(ii)

in respect of all qualifying payments referred to in paragraph (c) of subsection (2), made by him or deemed to have been made by him in that year of assessment shall not exceed twenty five thousand rupees ;

(iii)

in respect of any qualifying payment referred to in paragraph (h) of subsection (2), deemed to have been made by him in that year of assessment shall not exceed ten million rupees;

(iv)

in respect of the aggregate of all qualifying payments made and referred to in paragraphs (a), (e) and (g) of subsection (2), shall not exceed seventy five thousand rupees or one third of such assessable income whichever is less ;

(v)

in respect of all qualifying payments referred to in paragraphs (i) and (j) of subsection (2)

made by him in that year of assessment, shall not exceed one third of the assessable income or one hundred thousand rupees whichever is less ;

(vi)

in respect of all qualifying payments referred to in paragraphs (k) of subsection (2) made by him in that year of assessment, shall not exceed one third of his assessable income or such qualifying payment whichever is less ;

(b)

a company, for any year of assessment–

(i)

in respect of all qualifying payments other than those referred to in paragraphs (b), (h), (k) , (l)

and (m) of subsection (2), made by that company or deemed to have been made by that company in that year of assessment shall not exceed one-fifth of such assessable income;

(ii)

in respect of any qualifying payment referred to in paragraph (h) of subsection (2), made by that company in that year of assessment shall not exceed ten million rupees;

(iii)

in respect of all qualifying payments referred to in paragraph (k) of subsection (2), made by that company shall not exceed one-fifth of its assessable income or such qualifying payment, whichever is less ;

(iv)

in respect of all qualifying payments, referred to in paragraph (l) of subsection (2), made by that company, shall not exceed one hundred million rupees, or such qualifying payment, whichever is less.

(5)

The amount of any qualifying payment referred to in paragraph (b), paragraph (c), paragraph (l) or paragraph (m)

of subsection (2), made or deemed to have been made by any person in any year of assessment and which cannot be deducted from his assessable income for that year of assessment, shall be deducted from his assessable income for the next succeeding year of assessment and so on.

(6)

The excess of the allowance in respect of any qualifying payment referred to in paragraph (h) of subsection (2) deemed to have been made in any year of assessment by any person, shall be deducted, to the extent it can be so deducted from the assessable income of that person for the year of assessment immediately succeeding that year of assessment, (hereinafter referred to as “the first succeeding year of assessment”) and any residue of such excess shall be deducted from the assessable income of the year of assessment immediately succeeding the first succeeding year of assessment.

(7)

The excess of the allowance of any qualifying payment referred to in paragraph (i) of subsection (2) which cannot be deducted from the assessable income in the year of assessment in which such expenditure is incurred, may be apportioned over a period of not more than nine years immediately succeeding the year of assessment in which such expenditure was incurred, and such apportioned amount shall be deemed to be a qualifying payment made in each such year of assessment.

(8)

For the purposes of this section—

(a)

an “approved charity” means an approved charity within the meaning of section 16A of the Inland

Revenue Act, No. 4 of 1963, or under paragraph (a)

of subsection (9) of section 31 of the Inland Revenue

Act, No. 28 of 1979 or paragraph (a) of subsection (7) of section 31 of the Inland Revenue Act, No. 38

of 2000 or any such public charitable trust or institution as is declared by the Minister by notice published in the Gazette to be an approved charity for the purposes of this section;

(b)

the amount of a donation made to the Government otherwise than in money, shall be the value of such donation and such value shall–

(i)

be the cost incurred during that year of assessment by the donor of the property donated; or

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(ii)

where the cost incurred by the donor during that year of assessment cannot be ascertained or where no cost was incurred in that year of assessment, be the value of the property donated at the time of such donation.