,A Student’s Approach to
Taxation in South Africa
Fourth edition
2024
,
,A Student’s Approach to
Taxation in South Africa
Fourth edition
2024
L BRUWER
MCom (UP) CA(SA)
Senior Lecturer: School of Accountancy, UFS
C CASS
MCom (UP)
Senior Lecturer: Department of Taxation, UNISA
K COETZEE
DCom (UNISA) CA(SA)
Professor: School of Accounting Sciences, NWU
D CUCCIOLILLO
MCom (Tax) (UFS) Professional Accountant (SA)
BDO
KL DE HART (Volume editor)
PhD Accounting Sciences (Unisa)
Senior Lecturer: Department of Taxation, UNISA
AD KOEKEMOER
PhD (Taxation) (UP) CA(SA)
Associate Professor: School of Accountancy, UFS
A OOSTHUIZEN
PhD Accounting Sciences (Unisa) CA(SA)
Senior Lecturer: School of Accountancy, UFS
C STEDALL
MCom (UP) CA(SA)
Senior Lecturer: Department of Taxation, UNISA
,Members of the LexisNexis Group worldwide
South Africa LexisNexis (Pty) Ltd
www.lexisnexis.co.za
JOHANNESBURG Building 8, Country Club Estate Office Park, 21 Woodlands Drive, Woodmead,
2191
CAPE TOWN TBE Waterfront, 3 Dock Road, V & A Waterfront, Cape Town, 8001
DURBAN TBE Umhlanga, Block A, Park Square, Centenary Boulevard, Umhlanga, 4319
Australia LexisNexis, CHATSWOOD, New South Wales
Austria LexisNexis Verlag ARD Orac, VIENNA
Benelux LexisNexis Benelux, AMSTERDAM
Canada LexisNexis Canada, MARKHAM, Ontario
China LexisNexis, BEIJING
France LexisNexis, PARIS
Germany LexisNexis Germany, MÜNSTER
Hong Kong LexisNexis, HONG KONG
India LexisNexis, NEW DELHI
Italy Giuffrè Editore, MILAN
Japan LexisNexis, TOKYO
Korea LexisNexis, SEOUL
Malaysia LexisNexis, KUALA LUMPUR
New Zealand LexisNexis, WELLINGTON
Poland LexisNexis Poland, WARSAW
Singapore LexisNexis, SINGAPORE
United Kingdom LexisNexis, LONDON
United States LexisNexis, DAYTON, Ohio
© 2024
ISBN 978-1-77617-738-7 (softback)
978-1-77617-748-6 (e-book)
First edition 2021
Second edition 2022, reprinted 2022
Third edition 2023
Copyright subsists in this work. No part of this work may be reproduced in any form or by any means with-
out the publisher’s written permission. Any unauthorised reproduction of this work will constitute a copy-
right infringement and render the doer liable under both civil and criminal law.
While every effort has been made to ensure that the information published in this work is accurate, the edit-
ors, publishers and printers take no responsibility for any loss or damage suffered by any person as a result
of the reliance upon the information contained therein.
Editor: Marjorie Guy
Technical Editors: EDS Team
Printed by Pinetown Printers
, Preface
A Student’s Approach to Taxation in South Africa was written for undergraduate stu-
dents with the specific purpose of combining in one volume the provisions of the
Income Tax Act 58 of 1962, as it applies to individuals and businesses for the year of
assessment ending 29 February 2024. Simple language is used and the relevant sec-
tions of the Act are provided and explained in simple terms.
A further characteristic of this book is the steps used to explain certain topics. This is
especially handy for students who are making use of distance education. At the end
of each chapter are exam preparation questions, with solutions, that can be used to
revise the various principles of the chapter.
This work is directed at undergraduate students. It is not written specifically for tax
practitioners but may in fact be used by general accountants for addressing basic tax
problems.
The book contains various examples and practical case studies. All examples and case
studies relate to the year of assessment from 1 March 2023 to 29 February 2024 (the
2024 year of assessment). Unless otherwise indicated, all dates will fall within the
2024 year of assessment. A date of 3 August will thus refer to the August of this year
of assessment, 3 August 2023, and 2 February will refer to 2 February 2024.
A Student’s Approach to Taxation in South Africa integrates some basic technology into
taxation students’ studies. Some examples have so-called e-mails inserted. You can
electronically download the responses to these e-mails either on your computer or on
your smartphone. The e-mail questions are based on errors students traditionally
make in exams or on aspects students are sometimes uncertain about. The responses
to these e-mails do not provide any new content but seek to embed concepts. Stu-
dents who don’t have access to the electronic answers are not disadvantaged, as these
answers do not contain any new information. Each chapter also contains one or more
additional questions that are available electronically.
This work is updated to include all relevant legislative amendments to the end of
November 2023.
We would like to thank all the people who offered us their invaluable advice.
Although extreme care was taken to update, review and edit the content of this book,
some errors or anomalies may still occur. To help us and your fellow students, please
send any errors or anomalies you find to .
AUTHORS
v
,
, Assumptions and
abbreviations
Unless expressly stated to the contrary, the following assumptions must be made
when interpreting the examples and examination preparation questions in this vol-
ume:
• References to ‘the Act’ bear reference to the Income Tax Act 58 of 1962 (as amended).
• The use of the concept ‘South Africa’ or ‘Republic’ refers to the Republic of South
Africa and vice versa.
• All individuals are residents of the Republic.
• No double tax agreements between South Africa and overseas countries are in
force.
• Enterprises are registered as vendors for value-added tax (VAT).
• The cost price of all purchases made by vendors registered for VAT purposes is net
after any input tax credit to which they are entitled.
• All married persons are married out of community of property.
• Taxpayers, their spouses and their children are not persons with a disability as
defined.
• Medical costs fulfil the requirements of section 18 of the Act.
• The ages given are the ages of the persons on the last day of the year of assessment.
• In the case of an individual, the current year of assessment ends on 29 Febru-
ary 2024.
• All calculations are in Rands only.
Abbreviations used in this volume
The Commissioner of the South African Revenue Service ................. The Commissioner
South African Revenue Service ..................................................................................... SARS
First-in, first-out ................................................................................................................ FIFO
Last-in, first-out ................................................................................................................ LIFO
Pay-as-you-earn .............................................................................................................. PAYE
vii
,A Student’s Approach to Taxation in South Africa
Value-added tax ................................................................................................................. VAT
Kilometres............................................................................................................................. km
Close corporation................................................................................................................. CC
Secondary tax on companies ............................................................................................. STC
Capital gains tax ................................................................................................................ CGT
viii
, Contents
Page
Preface ......................................................................................................... v
Assumptions and abbreviations ........................................................................... vii
Chapter 1 Introduction ............................................................................................. 1
Lizelle Bruwer
Chapter 2 Value-added tax (VAT) .......................................................................... 17
Lizelle Bruwer
Chapter 3 Gross income ........................................................................................... 157
Karina Coetzee
Chapter 4 Special inclusions .................................................................................... 205
Annelize Oosthuizen
Chapter 5 The taxation of non-residents ................................................................ 217
Annelize Oosthuizen
Chapter 6 Income exempt from tax ........................................................................ 239
Kerry de Hart
Chapter 7 General deduction formula ................................................................... 265
Annelize Oosthuizen
Chapter 8 Specific deductions and allowances ..................................................... 305
Carien Cass
Chapter 9 Expenditure and allowances relating to capital assets ...................... 361
Carien Cass
Chapter 10 Capital gains tax...................................................................................... 401
Alta Koekemoer
Chapter 11 Taxation of companies and company distributions ........................... 475
Doria Cucciolillo
Chapter 12 Prepaid taxes ........................................................................................... 513
Annelize Oosthuizen
Chapter 13 Individuals ............................................................................................... 551
Kerry de Hart
ix
Taxation in South Africa
Fourth edition
2024
,
,A Student’s Approach to
Taxation in South Africa
Fourth edition
2024
L BRUWER
MCom (UP) CA(SA)
Senior Lecturer: School of Accountancy, UFS
C CASS
MCom (UP)
Senior Lecturer: Department of Taxation, UNISA
K COETZEE
DCom (UNISA) CA(SA)
Professor: School of Accounting Sciences, NWU
D CUCCIOLILLO
MCom (Tax) (UFS) Professional Accountant (SA)
BDO
KL DE HART (Volume editor)
PhD Accounting Sciences (Unisa)
Senior Lecturer: Department of Taxation, UNISA
AD KOEKEMOER
PhD (Taxation) (UP) CA(SA)
Associate Professor: School of Accountancy, UFS
A OOSTHUIZEN
PhD Accounting Sciences (Unisa) CA(SA)
Senior Lecturer: School of Accountancy, UFS
C STEDALL
MCom (UP) CA(SA)
Senior Lecturer: Department of Taxation, UNISA
,Members of the LexisNexis Group worldwide
South Africa LexisNexis (Pty) Ltd
www.lexisnexis.co.za
JOHANNESBURG Building 8, Country Club Estate Office Park, 21 Woodlands Drive, Woodmead,
2191
CAPE TOWN TBE Waterfront, 3 Dock Road, V & A Waterfront, Cape Town, 8001
DURBAN TBE Umhlanga, Block A, Park Square, Centenary Boulevard, Umhlanga, 4319
Australia LexisNexis, CHATSWOOD, New South Wales
Austria LexisNexis Verlag ARD Orac, VIENNA
Benelux LexisNexis Benelux, AMSTERDAM
Canada LexisNexis Canada, MARKHAM, Ontario
China LexisNexis, BEIJING
France LexisNexis, PARIS
Germany LexisNexis Germany, MÜNSTER
Hong Kong LexisNexis, HONG KONG
India LexisNexis, NEW DELHI
Italy Giuffrè Editore, MILAN
Japan LexisNexis, TOKYO
Korea LexisNexis, SEOUL
Malaysia LexisNexis, KUALA LUMPUR
New Zealand LexisNexis, WELLINGTON
Poland LexisNexis Poland, WARSAW
Singapore LexisNexis, SINGAPORE
United Kingdom LexisNexis, LONDON
United States LexisNexis, DAYTON, Ohio
© 2024
ISBN 978-1-77617-738-7 (softback)
978-1-77617-748-6 (e-book)
First edition 2021
Second edition 2022, reprinted 2022
Third edition 2023
Copyright subsists in this work. No part of this work may be reproduced in any form or by any means with-
out the publisher’s written permission. Any unauthorised reproduction of this work will constitute a copy-
right infringement and render the doer liable under both civil and criminal law.
While every effort has been made to ensure that the information published in this work is accurate, the edit-
ors, publishers and printers take no responsibility for any loss or damage suffered by any person as a result
of the reliance upon the information contained therein.
Editor: Marjorie Guy
Technical Editors: EDS Team
Printed by Pinetown Printers
, Preface
A Student’s Approach to Taxation in South Africa was written for undergraduate stu-
dents with the specific purpose of combining in one volume the provisions of the
Income Tax Act 58 of 1962, as it applies to individuals and businesses for the year of
assessment ending 29 February 2024. Simple language is used and the relevant sec-
tions of the Act are provided and explained in simple terms.
A further characteristic of this book is the steps used to explain certain topics. This is
especially handy for students who are making use of distance education. At the end
of each chapter are exam preparation questions, with solutions, that can be used to
revise the various principles of the chapter.
This work is directed at undergraduate students. It is not written specifically for tax
practitioners but may in fact be used by general accountants for addressing basic tax
problems.
The book contains various examples and practical case studies. All examples and case
studies relate to the year of assessment from 1 March 2023 to 29 February 2024 (the
2024 year of assessment). Unless otherwise indicated, all dates will fall within the
2024 year of assessment. A date of 3 August will thus refer to the August of this year
of assessment, 3 August 2023, and 2 February will refer to 2 February 2024.
A Student’s Approach to Taxation in South Africa integrates some basic technology into
taxation students’ studies. Some examples have so-called e-mails inserted. You can
electronically download the responses to these e-mails either on your computer or on
your smartphone. The e-mail questions are based on errors students traditionally
make in exams or on aspects students are sometimes uncertain about. The responses
to these e-mails do not provide any new content but seek to embed concepts. Stu-
dents who don’t have access to the electronic answers are not disadvantaged, as these
answers do not contain any new information. Each chapter also contains one or more
additional questions that are available electronically.
This work is updated to include all relevant legislative amendments to the end of
November 2023.
We would like to thank all the people who offered us their invaluable advice.
Although extreme care was taken to update, review and edit the content of this book,
some errors or anomalies may still occur. To help us and your fellow students, please
send any errors or anomalies you find to .
AUTHORS
v
,
, Assumptions and
abbreviations
Unless expressly stated to the contrary, the following assumptions must be made
when interpreting the examples and examination preparation questions in this vol-
ume:
• References to ‘the Act’ bear reference to the Income Tax Act 58 of 1962 (as amended).
• The use of the concept ‘South Africa’ or ‘Republic’ refers to the Republic of South
Africa and vice versa.
• All individuals are residents of the Republic.
• No double tax agreements between South Africa and overseas countries are in
force.
• Enterprises are registered as vendors for value-added tax (VAT).
• The cost price of all purchases made by vendors registered for VAT purposes is net
after any input tax credit to which they are entitled.
• All married persons are married out of community of property.
• Taxpayers, their spouses and their children are not persons with a disability as
defined.
• Medical costs fulfil the requirements of section 18 of the Act.
• The ages given are the ages of the persons on the last day of the year of assessment.
• In the case of an individual, the current year of assessment ends on 29 Febru-
ary 2024.
• All calculations are in Rands only.
Abbreviations used in this volume
The Commissioner of the South African Revenue Service ................. The Commissioner
South African Revenue Service ..................................................................................... SARS
First-in, first-out ................................................................................................................ FIFO
Last-in, first-out ................................................................................................................ LIFO
Pay-as-you-earn .............................................................................................................. PAYE
vii
,A Student’s Approach to Taxation in South Africa
Value-added tax ................................................................................................................. VAT
Kilometres............................................................................................................................. km
Close corporation................................................................................................................. CC
Secondary tax on companies ............................................................................................. STC
Capital gains tax ................................................................................................................ CGT
viii
, Contents
Page
Preface ......................................................................................................... v
Assumptions and abbreviations ........................................................................... vii
Chapter 1 Introduction ............................................................................................. 1
Lizelle Bruwer
Chapter 2 Value-added tax (VAT) .......................................................................... 17
Lizelle Bruwer
Chapter 3 Gross income ........................................................................................... 157
Karina Coetzee
Chapter 4 Special inclusions .................................................................................... 205
Annelize Oosthuizen
Chapter 5 The taxation of non-residents ................................................................ 217
Annelize Oosthuizen
Chapter 6 Income exempt from tax ........................................................................ 239
Kerry de Hart
Chapter 7 General deduction formula ................................................................... 265
Annelize Oosthuizen
Chapter 8 Specific deductions and allowances ..................................................... 305
Carien Cass
Chapter 9 Expenditure and allowances relating to capital assets ...................... 361
Carien Cass
Chapter 10 Capital gains tax...................................................................................... 401
Alta Koekemoer
Chapter 11 Taxation of companies and company distributions ........................... 475
Doria Cucciolillo
Chapter 12 Prepaid taxes ........................................................................................... 513
Annelize Oosthuizen
Chapter 13 Individuals ............................................................................................... 551
Kerry de Hart
ix
