1.1 Without considering the different years of assessments, discuss the capital gains tax consequences of the assets belonging to Mario.
[10 marks]
1.2 Discuss the capital gains tax consequences of an asset belonging to Buhle.
[5 marks]
SUB-TOTAL FOR QUESTION 1 [15 marks]
LML4804 September/Nov...
I,………………………………………………………………(Full name/s and surname)
Student number: …………………………………………………..
declare that I am the author of this examination in TLI4801. I further declare that the
entire examination is my own, original, correct work and that where I used other
information and resources, I did so in a responsible manner. I did not plagiarise in
any way and I have referenced and acknowledged any legal resources that I
have consulted and used to complete this examination. By signing this declaration, I
acknowledge that I am aware of what plagiarism is, and the consequences
thereof. Furthermore, I acknowledge that I am aware of UNISA’s policy on plagiarism
and understand that if there is evidence of plagiarism within this document, UNISA may
take the necessary action.
Date: ……………………………………………………..
Place:………………………………………………………
Signature:…………………………………………………….
(provide an electronic signature or type or write your name or surname again)
, QUESTION 1
(1.1) Without considering the different years of assessments, discuss
the capital gains tax consequences of the assets belonging to Mario. (10 marks)
For taxpayers, it usually comes down to what profit they will make when a home or investment
is sold, as they do not want to make a loss. This means that the proceeds/selling price is more
than the base cost.
This capital gain, or profit is taxed at a lower-than-normal rate of income because only a
portion of the capital gain, currently 40% is included in taxable income and not the full profit.
The Tax Act makes provision for a R2 million primary residence exclusion for those taxpayers
who sell their primary residence.
This means that the first R2 million of the capital gain is exempted from tax. The capital gain
is calculated as follows:
Base costs = R4.5 million.
Proceeds = R6.5 million.
Capital gain = R6.5 million – R4.5 million = R2 million.
Therefore, Taxable capital gain is nil because the capital gain is R2 million.
The Hubber SUV which he has bought for R3.5 million. Will have the capital gains tax
consequences will be as follows: The base cost of an asset must be reduced by an allowance
claimed, for instance wear and tear. On disposal of the asset the amount recouped on sale
(exceeds base cost) must be reduced from base cost unless it was included in income in terms
of section 8(4)(a) of the Income Tax Act.1 The recouped amount will also not form part of
proceeds on disposal if included in income. In this instance, Mario purchased the Hubber SUV
for R3.5
1 Income Tax Act 58 of 1962.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller StudyAssistant036. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £6.68. You're not tied to anything after your purchase.
