LML4804
Assignment 3 Semester 2 2025
Unique Number: 733857
Due Date: 3 September 2025
QUESTION 1
CAPITAL GAINS TAX CONSEQUENCES OF PETER’S TRANSACTIONS
1. Severance Package (R3 million)
The severance package Peter received upon retrenchment is classified as employment
income under the Income Tax Act, not as a capital gain. It is subject to normal income tax
under gross income and may qualify for exemptions under the retrenchment rules, but it
does not fall within CGT .
2. Compensation from Minister of Police (R1 million)
The R1 million paid as compensation is not connected to the disposal of an asset, but rather
a delictual claim settlement. Since CGT only applies to disposals of assets, this amount is
not subject to CGT .
Terms of use
By making use of this document you agree to:
Use this document as a guide for learning, comparison and reference purpose,
Terms of use
Not to duplicate, reproduce and/or misrepresent the contents of this document as your own work,
By making use of this document you agree to:
Use this document
Fully accept the consequences
solely as a guide forshould you plagiarise
learning, reference,or and
misuse this document.
comparison purposes,
Ensure originality of your own work, and fully accept the consequences should you plagiarise or misuse this document.
Comply with all relevant standards, guidelines, regulations, and legislation governing academic and written work.
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is" without any express or
implied representations or warranties. The author accepts no responsibility or liability for any actions taken based on the
information contained within this document. This document is intended solely for comparison, research, and reference purposes.
Reproduction, resale, or transmission of any part of this document, in any form or by any means, is strictly prohibited.
Assignment 3 Semester 2 2025
Unique Number: 733857
Due Date: 3 September 2025
QUESTION 1
CAPITAL GAINS TAX CONSEQUENCES OF PETER’S TRANSACTIONS
1. Severance Package (R3 million)
The severance package Peter received upon retrenchment is classified as employment
income under the Income Tax Act, not as a capital gain. It is subject to normal income tax
under gross income and may qualify for exemptions under the retrenchment rules, but it
does not fall within CGT .
2. Compensation from Minister of Police (R1 million)
The R1 million paid as compensation is not connected to the disposal of an asset, but rather
a delictual claim settlement. Since CGT only applies to disposals of assets, this amount is
not subject to CGT .
Terms of use
By making use of this document you agree to:
Use this document as a guide for learning, comparison and reference purpose,
Terms of use
Not to duplicate, reproduce and/or misrepresent the contents of this document as your own work,
By making use of this document you agree to:
Use this document
Fully accept the consequences
solely as a guide forshould you plagiarise
learning, reference,or and
misuse this document.
comparison purposes,
Ensure originality of your own work, and fully accept the consequences should you plagiarise or misuse this document.
Comply with all relevant standards, guidelines, regulations, and legislation governing academic and written work.
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is" without any express or
implied representations or warranties. The author accepts no responsibility or liability for any actions taken based on the
information contained within this document. This document is intended solely for comparison, research, and reference purposes.
Reproduction, resale, or transmission of any part of this document, in any form or by any means, is strictly prohibited.
