LML4804 Assignment 3
(COMPLETE ANSWERS)
Semester 2 2024 (803378) - DUE
25 September 2024
CONTACT:
, LML4804 Assignment 3 (COMPLETE ANSWERS)
Semester 2 2024 (803378) - DUE 25 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) in South Africa is governed by the Eighth Schedule of the Income Tax
Act, which deals with the taxation of capital gains realized from the disposal of assets. In Ms.
Kru's scenario, the following principles apply to each transaction:
1. Primary Residence (Blue Halley House)
(COMPLETE ANSWERS)
Semester 2 2024 (803378) - DUE
25 September 2024
CONTACT:
, LML4804 Assignment 3 (COMPLETE ANSWERS)
Semester 2 2024 (803378) - DUE 25 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) in South Africa is governed by the Eighth Schedule of the Income Tax
Act, which deals with the taxation of capital gains realized from the disposal of assets. In Ms.
Kru's scenario, the following principles apply to each transaction:
1. Primary Residence (Blue Halley House)
