LML4804
Assignment 2 Semester 2 2024
Detailed Solutions, References & Explanations
Unique number: 803320
Due Date: 10 September 2024
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Question 1
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A dissatisfied customer of Lee, a motor vehicle dealer, instituted an action for damages
in respect of an alleged defect in a vehicle purchased from Lee. The dispute was settled
out of court on 1 September 2023. In terms of the settlement agreement, Lee undertook
to pay an amount of R30 000 to the customer as full and final settlement of the claim.
The attorney’s account for legal costs, payable by Lee, amounts to R10 000.
Choose the correct combination below in relation to the facts above:
i Damages can be deducted from one’s income when they are actually incurred and they
are, in terms of section 23(f), closely related to the nature of the taxpayer’s trade.
ii Legal costs may as a rule not be deducted from the taxpayer’s income.
iii Damages may not be deducted from the taxpayer’s income where the taxpayer
undertook to settle a matter without intervention of a court.
iv Legal costs in respect to a claim for damages will, according to PE Electric Tramway
Company Ltd v CIR ,only be deductible from the taxpayer’s income where such costs
were incurred in the furtherance of business and where such costs are closely related to
the taxpayer’s trade.
a.
i and ii
b.
ii and iii
c.
ii and iv
d.
i and iv
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Question 2
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Question text
Which ONE of the following statements is INCORRECT with reference to the Tax Court?
Disclaimer
Extreme care has been used to create this document, however the contents are provided “as is” without
any representations or warranties, express or implied. The author assumes no liability as a result of
reliance and use of the contents of this document. This document is to be used for comparison, research
and reference purposes ONLY. No part of this document may be reproduced, resold or transmitted in any
form or by any means.
