LML4804
ASSIGNMENT 3 (SEMESTER 2)
DUE DATE: 25 September 2024
Written Assignment Submission Guidelines:
Please ensure that your assignment is submitted electronically through the myUnisa platform no
later than September 2024. Kindly note that fax or email submissions will not be accepted.
NB: Assignment submitted to the lecturer(s) through email will not be considered.
QUESTION 1
Without calculating the capital gain of Ms. Kru, discuss the capital gains tax principles applicable
in the scenario. [25 marks]
ANSWER:
Capital Gains Tax Principles Applicable in the Scenario
1. Overview of Capital Gains Tax (CGT): Capital Gains Tax is levied on the profit made from
selling assets. This profit, known as the capital gain, is calculated by subtracting the base cost
of the asset from its selling price. The base cost encompasses the original purchase price plus
any enhancements that increase the asset’s value, but does not include regular maintenance
expenses.
2. Determination of Base Cost:
o Primary Residence: For the primary residence, the base cost is calculated as the original
purchase price plus any capital improvements. Capital improvements are defined as
expenditures that significantly enhance the asset's value or extend its useful life.
ASSIGNMENT 3 (SEMESTER 2)
DUE DATE: 25 September 2024
Written Assignment Submission Guidelines:
Please ensure that your assignment is submitted electronically through the myUnisa platform no
later than September 2024. Kindly note that fax or email submissions will not be accepted.
NB: Assignment submitted to the lecturer(s) through email will not be considered.
QUESTION 1
Without calculating the capital gain of Ms. Kru, discuss the capital gains tax principles applicable
in the scenario. [25 marks]
ANSWER:
Capital Gains Tax Principles Applicable in the Scenario
1. Overview of Capital Gains Tax (CGT): Capital Gains Tax is levied on the profit made from
selling assets. This profit, known as the capital gain, is calculated by subtracting the base cost
of the asset from its selling price. The base cost encompasses the original purchase price plus
any enhancements that increase the asset’s value, but does not include regular maintenance
expenses.
2. Determination of Base Cost:
o Primary Residence: For the primary residence, the base cost is calculated as the original
purchase price plus any capital improvements. Capital improvements are defined as
expenditures that significantly enhance the asset's value or extend its useful life.