Exam (elaborations)
TAX3703 ASSIGNMENT 2 SEMESTER 1 OF 2022
- Institution
- University Of South Africa (Unisa)
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TAX3703 ASSIGNMENT 2 SEMESTER 1 OF 2022Question 1
Calculation of the Value of usufruct for Estate Duty
Fair Value of the farm 6 000 000
Annual Value (6000 000*12%) 720 000
Lungile’s next birthday 46 years
Capitalisation factor 7.81924
Value of Usufruct per general rule (7.81924*720 000) 5 629 853
1st proviso (Lungilo paid bequest price)
Consideration amount 1 000 000
Period from when consideration was paid 7
Value of Consideration plus 6% interest (1000 000*(1.06) ^7 1 503 630
Value of usufruct is therefore limited to (5629853-1503630) 4 126 223
2nd Proviso (Baredominium holder acquired full ownership)
Value of usufruct when Anno died (4000 000*12%*7.25457) 3 482 194
Therefore, Value of Baredominium (6000 000-3482 194) 2 517 806
Value of Usufruct is the smallest 2 517 806
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