3.2 Ava is considering purchasing a piece of land adjoining her business premises to use as parking for her clients for an amount of R350 000. Advise Ava on whether the cost of the land would qualify as an allowable deduction. (4 Marks) 3.3 Discuss which pensions are exempt from tax. (4 Marks)
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Step 1
The first step is to identify whether the cost of the land is a capital expense or a revenue expense. Generally, the purchase of land is considered a capital expense. Show more…
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QUESTION FOUR [25] 4.1. John Doe is a resident of the republic. He has an assessed capital loss of R13,000 brought forward from the 2018 year of assessment. During the 2019 year of assessment, he suffered a capital loss of R45,000 on the sale of his domestic motor car. He made capital gains on the sale of the following capital assets: • R80,000 from a rent-producing property; • R7,000 from dividend-yielding shares; • R5,000 from units in a so-called real estate investment trust; and • R20,000 from a six-meter yacht (a personal-use asset). It must be noted that John Doe does not deal in the above assets. Required: Determine John Doe's taxable capital gain for the 2019 year of assessment. (15) 4.2 On 1 December 2017, Suvi Singh, a resident of the republic, purchased a primary residence for R2,300,000. She used the granny flat portion of her primary residence as her consulting rooms. (In other words, she traded from a portion of her primary residence.) The granny flat portion of this primary residence comprises 20% of the total primary residence. She lived in this primary residence and practiced from its granny flat for the 14-month period from 1 December 2017 until 31 January 2019. On 1 February 2019, she sold her primary residence for R4,000,000. Required: Determine the capital gains tax consequences that result from the purchase and sale by Suvi Singh of her primary residence. (10)
Akash M.
QUESTION 1 (10 marks, 12 minutes) You are a registered tax practitioner at "Experts in Tax" and are currently busy with the review of the taxable income calculation prepared by one of your clients: Investprops (Pty) Ltd ("Investprops"), a South African resident. Investprops owns investment properties from which rental income is earned. Investprops holds a 30% shareholding in Miniprops (Pty) Ltd (Miniprops), also a South African resident. Investprops has provided you with an extract of the items making up its "income" (as they interpret it) reflected in the company's taxable income calculation for the year of assessment ending 31 March 2022. Extract from the taxable income calculation: Income Amount Notes Additional information Rental income received from tenants R11,570,000 Amount received from XP (Pty) Ltd R240,000 1. XP (Pty) Ltd is one of Miniprops' tenants and they erroneously paid this amount into Investprops' bank account. Dividends received R700,000 2. The R700,000 is the net amount of dividends received of R1.2 million from Miniprops and dividends paid of R500,000 to Investprops' shareholders. Leasehold improvements R860,000 3. Leasehold improvements were incurred by a tenant in accordance with the lease agreement. The lease agreement stipulated that improvements of R600,000 were to be effected. However, the tenant incurred costs of R860,000. Total R13,370,000 REQUIRED: MARKS Explain whether each amount should be included or not in Investprops (Pty) Ltd's "income" (as defined in the Income Tax Act) for the 31 March 2022 year of assessment. No calculations are required, but reasons should be provided in your discussion. You do not need to refer to any case law.
3.2 Ronald has been granted the right of use of a motor vehicle from his employer and he does not receive a travel allowance. He is responsible for bearing the maintenance costs which amounted to R38 000 for the 2024 year of assessment. The company is responsible for the fuel costs. Ronald kept an accurate record of kilometres travelled for private purposes. He travelled 27 000 kilometres for private purposes of his total of 45 000 kilometres travelled for the year. The employer purchased the vehicle for R345 000 including VAT. REQUIRED: Calculate the cash equivalent of the benefit for the current year of assessment. (6 Marks)
Sheryl E.
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Cost Accounting A Managerial Emphasis
Principles of Accounting Volume 1: Financial Accounting
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