Tax treatment of insurance claims arising from the July riots
KwaZulu-Natal and parts of Gauteng were severely affected by the unrest in July 2021 with many businesses seriously impacted or completely destroyed. Whilst insurance claims are still being finalised there may be some who have received such insurance proceeds and are unsure as to how to treat this income for tax purposes.
With most companies’ provisional tax being due on 28 February 2022, it is imperative that consideration be given to this to ensure that your provisional tax estimate is accurate.
In terms of paragraph 65 of the Eight Schedule to the Income Tax which deals with “involuntary disposals”, where movable or immovable assets are disposed of by way of operation of law, theft or destruction, taxpayers can defer taxable recoupments and capital gains.