Here are the questions and answers as requested:
1.
Question: What is gross income, and how would you determine whether an amount qualifies as
gross income under the South African Income Tax Act?
Answer:
Gross income is defined as the total amount, in cash or otherwise, received by or accrued to a
taxpayer during a year of assessment, excluding receipts of a capital nature. To determine if an
amount qualifies as gross income:
● The amount must be received or accrued.
● It should not be of a capital nature.
● It must be from a source within South Africa (for residents, worldwide income is
included).
2.
Question: Explain the general deduction formula and how it is applied.
Answer:
The general deduction formula (Section 11(a)) allows for deductions of expenditure and losses
that are:
● Actually incurred;
● In the production of income;
● Not of a capital nature;
● In the same year of assessment.
To apply it, you must identify expenses directly related to generating taxable income,
such as business expenses, and ensure they are not capital expenditures like acquiring
assets.
3.
Question: How would you calculate the taxable capital gain for an individual selling a property?
Answer:
To calculate the taxable capital gain:
● Determine the proceeds from the sale of the property.
● Subtract the base cost (original purchase price + improvements).
● Subtract any applicable exclusions (e.g., primary residence exclusion of R2 million).
● Multiply the remaining gain by the inclusion rate (40% for individuals).
The resulting amount is the taxable capital gain.
4.
Question: How is donations tax calculated, and what are the exemptions?
Answer:
Donations tax is levied at 20% on the value of donations exceeding R100,000 per annum (for
individuals). The tax is payable by the donor. Exemptions include:
1.
Question: What is gross income, and how would you determine whether an amount qualifies as
gross income under the South African Income Tax Act?
Answer:
Gross income is defined as the total amount, in cash or otherwise, received by or accrued to a
taxpayer during a year of assessment, excluding receipts of a capital nature. To determine if an
amount qualifies as gross income:
● The amount must be received or accrued.
● It should not be of a capital nature.
● It must be from a source within South Africa (for residents, worldwide income is
included).
2.
Question: Explain the general deduction formula and how it is applied.
Answer:
The general deduction formula (Section 11(a)) allows for deductions of expenditure and losses
that are:
● Actually incurred;
● In the production of income;
● Not of a capital nature;
● In the same year of assessment.
To apply it, you must identify expenses directly related to generating taxable income,
such as business expenses, and ensure they are not capital expenditures like acquiring
assets.
3.
Question: How would you calculate the taxable capital gain for an individual selling a property?
Answer:
To calculate the taxable capital gain:
● Determine the proceeds from the sale of the property.
● Subtract the base cost (original purchase price + improvements).
● Subtract any applicable exclusions (e.g., primary residence exclusion of R2 million).
● Multiply the remaining gain by the inclusion rate (40% for individuals).
The resulting amount is the taxable capital gain.
4.
Question: How is donations tax calculated, and what are the exemptions?
Answer:
Donations tax is levied at 20% on the value of donations exceeding R100,000 per annum (for
individuals). The tax is payable by the donor. Exemptions include:
