Tax 399
Lexi Shtein
, TABLE OF CONTENTS
GENERAL ...................................................................................................................................................... 3
CHAPTER 12: SPECIAL DEDUCTIONS .............................................................................................................. 4
CHAPTER 13: CAPITAL ALLOWANCES .......................................................................................................... 22
2
, GENERAL
YEAR OF ASSESSMENT:
NP and trust: 1 March 2020 – 28 Feb 2021
Company: financial year ends in 2021 calendar year
eg: 1 July 2019 – 30 June 2020
eg: 1 Jan 2020 – 31 Dec 2020
3
, CHAPTER 12: SPECIAL DEDUCTIONS
Answer a company question:
- begin with accounting profit before tax
- make adjustments to end with taxable income
- non-taxable amounts must be deducted (amounts included in PBT but do not satisfy requirements of gross
income)
- non-deductible amounts must be added back
- no specific order except for the section 18A donation deduction
- show each item in SCI
- do not have to provide reasons / section references for answers unless asked
- round to nearest Rand
- ANNEXURE A OF MODULE FRAMEWORK
Statement of comprehensive income
NOTE
Sales 1 100 000
(Cost of Sales) (30 000)
GROSS INCOME 70 000
Other income:
Interest Received 2 5 000
Local dividends received 3 10 000
Trading costs:
Rent paid (14 500)
SARS fine paid (500)
Section 18A donation made 4 (7 500)
PROFIT BEFORE TAXATION 62 500
Calculation of normal tax liability for the year ending 31 March 2020
Profit before taxation always the starting point ! 62 500
Sales no adjustment, gross income 100 000
(already included in PBT)
Cost of Sales no adjustment, deductible expense -
(already deducted)
Interest no adjustment, not a natural person therefore -
no section 10(1)(i) exemption is available
Local dividends exempt in terms of section 10 (1)(k)(i) (10 000)
Rent paid Deductible in terms of section 11(a) -
SARS fine Deduction specifically prohibited by section 500
23(d) ð add back
Donation Add back accounting entry 7 500
SUB-TOTAL 60 500
Donation R7 500 limited to 10% of sub-total = R60 500 = (6 050)
R6 050
TAXABLE INCOME 54 450
NORMAL TAX LIABILITY R54 450 x 28% = R15 246 15 246
• CANNOT DEDUCT AN AMOUNT WHICH IS MORE THAN WHAT WAS ACTUALLY INCURRED
4
Lexi Shtein
, TABLE OF CONTENTS
GENERAL ...................................................................................................................................................... 3
CHAPTER 12: SPECIAL DEDUCTIONS .............................................................................................................. 4
CHAPTER 13: CAPITAL ALLOWANCES .......................................................................................................... 22
2
, GENERAL
YEAR OF ASSESSMENT:
NP and trust: 1 March 2020 – 28 Feb 2021
Company: financial year ends in 2021 calendar year
eg: 1 July 2019 – 30 June 2020
eg: 1 Jan 2020 – 31 Dec 2020
3
, CHAPTER 12: SPECIAL DEDUCTIONS
Answer a company question:
- begin with accounting profit before tax
- make adjustments to end with taxable income
- non-taxable amounts must be deducted (amounts included in PBT but do not satisfy requirements of gross
income)
- non-deductible amounts must be added back
- no specific order except for the section 18A donation deduction
- show each item in SCI
- do not have to provide reasons / section references for answers unless asked
- round to nearest Rand
- ANNEXURE A OF MODULE FRAMEWORK
Statement of comprehensive income
NOTE
Sales 1 100 000
(Cost of Sales) (30 000)
GROSS INCOME 70 000
Other income:
Interest Received 2 5 000
Local dividends received 3 10 000
Trading costs:
Rent paid (14 500)
SARS fine paid (500)
Section 18A donation made 4 (7 500)
PROFIT BEFORE TAXATION 62 500
Calculation of normal tax liability for the year ending 31 March 2020
Profit before taxation always the starting point ! 62 500
Sales no adjustment, gross income 100 000
(already included in PBT)
Cost of Sales no adjustment, deductible expense -
(already deducted)
Interest no adjustment, not a natural person therefore -
no section 10(1)(i) exemption is available
Local dividends exempt in terms of section 10 (1)(k)(i) (10 000)
Rent paid Deductible in terms of section 11(a) -
SARS fine Deduction specifically prohibited by section 500
23(d) ð add back
Donation Add back accounting entry 7 500
SUB-TOTAL 60 500
Donation R7 500 limited to 10% of sub-total = R60 500 = (6 050)
R6 050
TAXABLE INCOME 54 450
NORMAL TAX LIABILITY R54 450 x 28% = R15 246 15 246
• CANNOT DEDUCT AN AMOUNT WHICH IS MORE THAN WHAT WAS ACTUALLY INCURRED
4
