,Contents
MODULE NOTES ............................................................................................................................................ 3
Introduction .............................................................................................................................................. 3
Application and Interpretation of the Law ............................................................................................... 3
The Tax Board ........................................................................................................................................... 4
The Tax Court ............................................................................................................................................ 5
Constitutional Court .................................................................................................................................. 5
What is Income (Tax formula) ................................................................................................................... 6
Tax Formula............................................................................................................................................... 9
General deduction Formula .................................................................................................................... 10
Segments of the General deduction fomular ......................................................................................... 11
In The Production of Income .................................................................................................................. 11
Joffe and Co. (Pty) Ltd vs CIR................................................................................................................... 12
Specific deduction ................................................................................................................................... 13
Registration of Patents, Acquisitions of patents, copyrights and trademarks ....................................... 14
Pension fund and Benefit fund Contributions by the employer ............................................................. 15
Trading Stock ........................................................................................................................................... 15
Prohibited Deduction .............................................................................................................................. 15
Prepaid Expenses .................................................................................................................................... 16
Capital Allowance .................................................................................................................................... 16
Used Assets ............................................................................................................................................. 17
Small business corporations (section 12E) ............................................................................................. 17
Buildings used in a process of manufacture section 13 (1) .................................................................... 18
Commercial Building s13 (quoin) ............................................................................................................ 18
Residential units and sale of low cost units on loan account ................................................................. 18
Disposal of Assets on which allowance have been claimed ................................................................... 19
Types of Tax payers ................................................................................................................................. 20
Companies .............................................................................................................................................. 20
Close Corporations .................................................................................................................................. 21
1
, Taxable Turnover .................................................................................................................................... 21
Collection of taxes from taxpayers ......................................................................................................... 22
Provisional tax Payment.......................................................................................................................... 22
Capital Gains tax ..................................................................................................................................... 23
Assets acquired after 1 October ............................................................................................................. 24
FEEDBACK ON PREVIOUS EXAM PAPERS .................................................................................................... 27
OCTOBER/ NOVEMBER 2014 .................................................................................................................. 27
OCT/NOV 2013 ........................................................................................................................................ 35
MAY/JUNE 2013 ...................................................................................................................................... 41
MAY/JUNE 2014 ...................................................................................................................................... 46
2
, MODULE NOTES
Introduction
As Benjamin Franklin once part it “if you do not want to be taxed, never get born.”
Governments exist to fill the void that would exist if everything was left to private individuals. No
one would concerned with other people’s issues so long as it does not affect them. Think of
goods like provisions of road and e-toll, if you can pay you will not be able to use the road
governments exist so that everyone in society is concerned for. To provide those essential
services government need money to do that and governments get their money through taxation,
which is part of the laws government use.
To be proficient in taxation are needs to understand the law and how the various governmental
agencies apply them and how courts interpret those laws whenever a question of the law arises
between a person and the Governmental agencies charged with Enforcing those laws. Tax
laws are enforced by SARS through the commissioner.
The Laws of the country are subject to the Constitution of the South Africa and the Bill of Rights
of South Africa, that is all Laws and regulations must obey the spirit of the Constitution or they
will be void. Law are enacted by parliament after they have been debated as bills, after they
have been enacted by parliament they are signed by the President into Law. Parliament enacts
Laws by statute.
Application and Interpretation of the Law
When Laws are being interpreted, they are interpreted literally unless such literal
interpretation would lead to an ambiguous result.
Laws that are clear in legislation that need no courts to interpret them are called statute
or statutory law.
Where a question of the interpretation of the law arises between a personal
government agencies that enforces them, where that happens, that would leave the
interpretation of that Law to the courts who are the authority on the interpretation of the
3
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