LML4804 Assignment 4
Semester 2 2024 - DUE 30
September 2024
QUESTIONS WITH ANSWERS
[School]
[Course title]
, 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]
Capital Gains Tax (CGT) Principles Applicable in the Scenario
Semester 2 2024 - DUE 30
September 2024
QUESTIONS WITH ANSWERS
[School]
[Course title]
, 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]
Capital Gains Tax (CGT) Principles Applicable in the Scenario
