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. Capital Gains Tax Overview: Capital Gains Tax (CGT) is a tax on the profit realized from the sale
of an asset. The tax is calculated based on the difference between the sale price of the asset and
its base cost. The base cost of an asset typically includes the purchase price, any capital
improvements made to the asset, and any selling costs incurred.
2. Base Cost Calculation:
o Primary Residence: For a primary residence, the base cost is calculated as the original
purchase price plus the cost of any improvements made to enhance the value of the
property. Improvements must be capital in nature, such as adding a new room or replacing
old fixtures with high-end materials. Routine maintenance or repairs, such as fixing a leaking
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. Capital Gains Tax Overview: Capital Gains Tax (CGT) is a tax on the profit realized from the sale
of an asset. The tax is calculated based on the difference between the sale price of the asset and
its base cost. The base cost of an asset typically includes the purchase price, any capital
improvements made to the asset, and any selling costs incurred.
2. Base Cost Calculation:
o Primary Residence: For a primary residence, the base cost is calculated as the original
purchase price plus the cost of any improvements made to enhance the value of the
property. Improvements must be capital in nature, such as adding a new room or replacing
old fixtures with high-end materials. Routine maintenance or repairs, such as fixing a leaking
