Tax Focus - June 2026 Issue

1. Claiming Tax relief for future expenditure (Section 24C allowance)

Businesses often receive income upfront while the costs to deliver on that income are only incurred in future years. This timing difference can create unnecessary tax pressure as the income is taxed before the related expenditure is incurred. Section 24C of the South African Income Tax Act (”the Act) provides relief by allowing taxpayers to claim an allowance for future expenditure that will be incurred in fulfilling contractual obligations in the future.

Section 24C(1) of the Act provides that future expenditure in relation to any year of assessment means an amount of expenditure which will be incurred after the end of that year , either in such a manner that such amount will be allowed as a deduction from income in a subsequent year of assessment ; or in respect of the acquisition of any asset in respect of which any deduction will be admissible under the provisions of this Act.