Summary
Summary Trading stock Tax Notes
- Course
- BEL705 (BEL705)
- Institution
- University Of Pretoria (UP)
This document provides a detailed summary of the trading stock found in the tax legislation.
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Trading stockTrading Stock
S(1) Definition 1.] Anything produced, manufactured, constructed, assembled
for purposes of manufacture sale or exchange (parjA)
2.] proceeds from disposal other than
- par(m) keyman policies
-par(n) recoupments
3.] consumable stores and spare parts (no intention to sell =
only to use.
EXCLUDES
- Currecy option
- Forward exchange contract
S11(a) Deduction If taxable supplies – can claim input tax
Earlier of incurred = date loaded FOB = transaction date
S22(1) Closing Stock a.] Normal trading stock
Must be held @ YE and not be disposed of.
Added Included in Gross Income
Lower of cost and MV
Volkswagen case: Trading stock cannot be held @ NRV but
cost. NRV takes future costs into account, but we only want
base line costs which is the cost price.
S22(2) Opening stock Did form part of prev CB = value as per s22(1)
Did not form part of prev CB (purchased this year) = cost as
Deducted per s22(3)
Ernest Best trust case: trading stock when ready to use/
dispose
S22(2)(b) Purchases Can only go under s11(a) if used in trade
S22(3) Cost price (a). cost + further costs incurred (exclu foreign exchange
difference)
(b). include discounts
(c). MV if change in intention ito par12(2)(c) Capital Asset
TS
S22(4) Acquired for no Inherited/ donated
consideration MV used
N/A to
Government grant
S8(5) discount
S22(5) LIFO Method is prohibited
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