[Date]
LML4804 Assignment
4 Semester 2 2024 -
DUE 30 September
2024
QUESTIONS AND ANSWERS
, LML4804 Assignment 4 Semester 2 2024 - DUE 30 September 2024
QUESTION 1
(CAPITAL GAINS TAX) Ms. Kru, a South African resident worked for O Insure
(Pty) Ltd (“O Insure”) as a specialist for 15 years. As a result of the Covid-19
pandemic that hit the world, O Insure decided to retrench her team including Ms.
Kru. She was given a severance package of R5 million. Ms. Kru is married in
community of property to Lolo and they stay in Blue Halley, Pretoria They bought
the house in 2011 for R900 000. They also own a holiday house in Hermies,
Western Cape which they bought in 2012 for R800 000. The couple also own a
BVM X and a Range Sports Car that Ms. Kru bought for Lolo as a graduation
present. As a result of the retrenchment, the couple decided to downsize their
lifestyle. They therefore embarked on the following transactions:
• They appointed REX Real Estate agents at a cost of R200 000 to sell the house in
Blue Halley for R2,5 million; replaced all bathrooms’ taps with gold plated ones at
a cost of R30 000; appointed Fix It (Pty) Ltd (“Fix it”) to fix the leaking swimming
pool at a cost of R10 000;
• They also sold their holiday house in Hermanes for R2 million;
• They sold Range Sports Car for R1 million;
• They sold their Kruger Rands for R500 000 WHAT IS REQUIRED OF YOU:
Without calculating the capital gain of Ms. Kru, discuss the capital gains tax
principles applicable in the scenario. [25 marks]
1. General Principles of CGT:
Capital gains tax is a tax on the profit realized from the sale or disposal of a
LML4804 Assignment
4 Semester 2 2024 -
DUE 30 September
2024
QUESTIONS AND ANSWERS
, LML4804 Assignment 4 Semester 2 2024 - DUE 30 September 2024
QUESTION 1
(CAPITAL GAINS TAX) Ms. Kru, a South African resident worked for O Insure
(Pty) Ltd (“O Insure”) as a specialist for 15 years. As a result of the Covid-19
pandemic that hit the world, O Insure decided to retrench her team including Ms.
Kru. She was given a severance package of R5 million. Ms. Kru is married in
community of property to Lolo and they stay in Blue Halley, Pretoria They bought
the house in 2011 for R900 000. They also own a holiday house in Hermies,
Western Cape which they bought in 2012 for R800 000. The couple also own a
BVM X and a Range Sports Car that Ms. Kru bought for Lolo as a graduation
present. As a result of the retrenchment, the couple decided to downsize their
lifestyle. They therefore embarked on the following transactions:
• They appointed REX Real Estate agents at a cost of R200 000 to sell the house in
Blue Halley for R2,5 million; replaced all bathrooms’ taps with gold plated ones at
a cost of R30 000; appointed Fix It (Pty) Ltd (“Fix it”) to fix the leaking swimming
pool at a cost of R10 000;
• They also sold their holiday house in Hermanes for R2 million;
• They sold Range Sports Car for R1 million;
• They sold their Kruger Rands for R500 000 WHAT IS REQUIRED OF YOU:
Without calculating the capital gain of Ms. Kru, discuss the capital gains tax
principles applicable in the scenario. [25 marks]
1. General Principles of CGT:
Capital gains tax is a tax on the profit realized from the sale or disposal of a
