FOREIGN
EXCHANGE
(CHAPTER 15)
,EXAMPLES
PE in country outside SA
SA resident company (taliza ltd) trades in France and the business in France is considered to be a Permanent
establishment. During th current YOA Taliza ltd received $10 000 from its business in France.
Average exchange rate= $1=R14
Spot rate on date of receipt =$1=R12
Amount to be included in Gross income :
S25D(2) the amount is received from Thus use the average rate 140 000
a PE of the taxpayer, outside SA 10 000 x 14
Interest received from NON PE (company)
Lexi ltd a south African resident (company ) has a fixed deposit in a bank in USA. During the current YOA Lexi ltd received
$50 000 INTEREST from her investment. The date of receipt is also the date of accrual.
Average rate=$1=R11
Spot rate on date of receipt =$1=R10
Amount to be included in Gross income:
S25D(1) $50 000 x 10 R500 000
Lexi Ltd does NOT have a PE in the
USA, thus translate using the spot
rate
Interest received fixed dep for Natural person
Lexi a south African resident has a fixed deposit in a bank in USA. During the current YOA Lexi received $50 000
INTEREST from her investment. The date of receipt is also the date of accrual.
Average rate=$1=R11
Spot rate on date of receipt =$1=R10
Amount to be included in Gross income:
S25D(3) Average rate =$50 000 x 11 Choice
Since lexi is natural person she can =R550 000
choose : OR
➔ Average rate spot rate = R500 000
➔ Spot rate Natural person will probably choose
the spot rate as most beneficial
,
EXCHANGE
(CHAPTER 15)
,EXAMPLES
PE in country outside SA
SA resident company (taliza ltd) trades in France and the business in France is considered to be a Permanent
establishment. During th current YOA Taliza ltd received $10 000 from its business in France.
Average exchange rate= $1=R14
Spot rate on date of receipt =$1=R12
Amount to be included in Gross income :
S25D(2) the amount is received from Thus use the average rate 140 000
a PE of the taxpayer, outside SA 10 000 x 14
Interest received from NON PE (company)
Lexi ltd a south African resident (company ) has a fixed deposit in a bank in USA. During the current YOA Lexi ltd received
$50 000 INTEREST from her investment. The date of receipt is also the date of accrual.
Average rate=$1=R11
Spot rate on date of receipt =$1=R10
Amount to be included in Gross income:
S25D(1) $50 000 x 10 R500 000
Lexi Ltd does NOT have a PE in the
USA, thus translate using the spot
rate
Interest received fixed dep for Natural person
Lexi a south African resident has a fixed deposit in a bank in USA. During the current YOA Lexi received $50 000
INTEREST from her investment. The date of receipt is also the date of accrual.
Average rate=$1=R11
Spot rate on date of receipt =$1=R10
Amount to be included in Gross income:
S25D(3) Average rate =$50 000 x 11 Choice
Since lexi is natural person she can =R550 000
choose : OR
➔ Average rate spot rate = R500 000
➔ Spot rate Natural person will probably choose
the spot rate as most beneficial
,
