, TAX2601 Assignment 1 Semester 1 2026 - DUE 8 April 2026
QUESTION 1 (13 marks)
General deduction formula – s11(a) read with s23
For a deduction, the amount must:
1. Be actually incurred
2. Be in the production of income
3. Not be of a capital nature
4. Not be prohibited by s23
Application to Dzindu Properties (Pty) Ltd:
1. Actually incurred (3 marks)
The company suffered a loss of R2 700 000 when completed houses
were destroyed by flooding.
The houses had already been developed and were ready for sale;
therefore, the expenditure had been incurred.
The destruction resulted in a definite financial loss during the 2026 year
of assessment. ✔️
2. In the production of income (3 marks)
Dzindu Properties builds houses for resale; thus, the houses constitute
trading stock.
The loss arose directly from the company’s normal trading activities.
The flooding, although unforeseen, is a risk incidental to carrying on the
business. ✔️
QUESTION 1 (13 marks)
General deduction formula – s11(a) read with s23
For a deduction, the amount must:
1. Be actually incurred
2. Be in the production of income
3. Not be of a capital nature
4. Not be prohibited by s23
Application to Dzindu Properties (Pty) Ltd:
1. Actually incurred (3 marks)
The company suffered a loss of R2 700 000 when completed houses
were destroyed by flooding.
The houses had already been developed and were ready for sale;
therefore, the expenditure had been incurred.
The destruction resulted in a definite financial loss during the 2026 year
of assessment. ✔️
2. In the production of income (3 marks)
Dzindu Properties builds houses for resale; thus, the houses constitute
trading stock.
The loss arose directly from the company’s normal trading activities.
The flooding, although unforeseen, is a risk incidental to carrying on the
business. ✔️
