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 th...
Started on Monday, 4 September 2023, 11:28 PM
State Finished
Completed on Monday, 4 September 2023, 11:43 PM
Time taken 14 mins 56 secs
Marks 7.00/13.00
Grade 53.85 out of 100.00
Question 1
Correct
Mark 1.00 out of 1.00
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. ii and iv
b. ii and iii
c. i and ii
d. i and iv
Your answer is correct.
The correct answer is:
i and iv
, Question 2
Incorrect
Mark 0.00 out of 1.00
Which ONE of the following statements is INCORRECT with reference to the Tax Court?
a. The decisions of the Tax Court have persuasive force in another court of law.
b. The Tax Court is bound by its own previous decisions.
c. A taxpayer is allowed to appeal against a decision of the Tax Court by lodging an appeal to the High Court.
d. The decisions of the Tax Court bind only those parties to which the particular finding applies.
Your answer is incorrect.
The correct answer is:
The Tax Court is bound by its own previous decisions.
Question 3
Incorrect
Mark 0.00 out of 1.00
Zoe is the sole proprietor of a cosmetic store, but she is also employed as a teacher. Her taxable income derived from her
teacher’s salary amounts to R145 000 for the 2022/2023 year of assessment. For the 2022/2023 year of assessment. Zoe
suffers a R5 000 loss in her cosmetics business. Zoe’s taxable income for the 2022/2023 tax year would be...
Select the ONLY option that will CORRECTLY complete the previous sentence:
a. R145 000, since assessed losses can only be deducted from the income from the specific trade where the loss was
suffered (Ring-fenced).
b. R145 000 less R5 000, since assessed losses may be deducted from the taxpayer’s income.
c. R145 000 less R5 000, since losses are regarded as an expenditure incurred by the taxpayer.
d. R145 000, since assessed losses are only deductible where the taxpayer is a person other than a natural person.
Your answer is incorrect.
The correct answer is:
R145 000, since assessed losses can only be deducted from the income from the specific trade where the loss was suffered
(Ring-fenced).
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