LML4804 Assignment 3 (COMPLETE ANSWERS) Semester 2 2026 - DUE 8 September 2026

LML4804 Assignment 3 (COMPLETE ANSWERS) Semester 2 2026 - DUE 8 September 2026; 100% TRUSTED Complete, trusted solutions and explanations. For assistance, Whats-App 0.8.1..2.7.8..3.3.7.2... Jean-Paul is a qualified structural engineer and a South African tax resident. He is married to his childhood sweetheart, Suzette, with whom he has two children. The company he worked for, Continental Engineering (Pty) Ltd (CE), experienced financial difficulties caused by Construction mafias, often labelled ‘business forums’. The Construction mafias employed violence and other illegal means to invade construction sites of CE and thereby demanding money or a stake in development projects. This resulting in CE terminating its projected awarded to it. As a result, CE retrenched several engineers including Jean-Paul. On his retrenchment, Jean-Paul was given a severance package of R3 million for having worked for CE for about ten years. The retrenchment did not sit well with Jean-Paul. His medical state deteriorated, and he was in and out of hospital. One evening on his way from the hospital, he was arrested for a suspicion of driving under the influence of alcohol. The officer who arrested him relied on Jean-Paul’s slurred speech and poor vision. Jean-Paul showed the officer a flu medicine called Bilophys (not a real name) which causes the side effects he was showing. However, the officer took him to the police custody. Jean-Paul was kept in police custody for three days without being taken to the district surgeon for blood tests. The Minister of Police was alerted about the situation and offered Jean-Paul compensation of R1 million, which he accepted. With all the money in his pocket, Jean-Paul embarked on the following transactions: • Sold the house he was staying in with family in Midrand for R2,5 million. He bought for R1,5 million ten years ago; • Before selling the house, he appointed Downtown Real Estate Agency to market and sell the house at a fee of R120 000; • He bought a penthouse worth R2 million in Johannesburg CBD; • He sold his car, a GX Sport for R300 000; • He bought Wild XX SUV for R500 000; and • He bought Kruger Rands worth R200 000 and donated them to Maria as a token of affection. Discuss the capital gains tax consequences of the transactions above. Yaya was a farmer and owned a large piece of land north of Zeerust, Northwest. She was carrying on a business as a grower of wheat. In 2019, she purchased 100% of the shareholding in a company, Themba-Bread (Pty) Ltd (Themba-Bread). When Yaya initially acquired Themba-Bread, it was trading at an assessed loss of R1.5 million. In June 2020, with Themba-Bread now a successful company, Yaya sold all her shares in the company to her close friend Owethu. Upon the submission of its tax returns for the 2021/2022 year of assessment, Themba-Bread’ assessed loss was brought forward and utilised against the company’s taxable income of R 1 million. As a result, the company received a substantial tax benefit. The remaining assessed loss of R 500 000 was carried forward to be utilised in the 2022/2023 year of assessment. The Commissioner of the South African Revenue Service (SARS) is of the view that a tax avoidance arrangement had been created between Yaya and Themba-Bread for the company to receive an impermissible tax benefit. The Commissioner believed that had it not been for the assessed losses, the company would have attracted tax on the income it received. On that basis, the Commissioner issued section 80J notices and letters of assessment in terms of section 80B. Advise Yaya on the meaning of the term ‘impermissible avoidance arrangement’ with specific reference to the requirements that must be met in terms of Section 80A before a transaction/scheme/arrangement is deemed to be an ‘impermissible avoidance arrangement.