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Taxable income calculation - Coggle Diagram
Taxable income calculation
Gross Income
Exemptions
Local dividend
dividend paid as annuity = include in GI
Foreign dividend
exemption = dividend X 8/28
at least 10% equity
Special inclusions
para cA - restraint of trade
para(g) - Lease premium
para (gA) - Know how pmts
para (h) Leasehold improvvements
para(jA) - Sale of assets with similar nature
para(k) - Dividend
Gross dividend (incl WHT)
para(n) - other provisions in the ACT (recoupments)
Definition
total amount
in cash or othewrise
in yOA
excl. receipts of capital nature
received or accrued to
Deductions
general deduction forumla
Trade test
Positive test
expenditure or losses
Joffee & Co
expenditure involuntary nature
actually incurred
Naisonale pers bp
Expenditure deducted in year incurred
during YOA
In production of income
not of a capital nature
for purposes of trade
Negative test
deductions not allowed
provisions & reserves
government grants
provider
expenditure to produce exempt income
non-trade expenditure
interest penalties, taxes
Special deductions
restraint of trade
Pre-Paid expenditure s23H
Qualifying expenditure
s11(a),
s11c (legal)
,s11e(repairs),
s11w(maintenance)
s11A pre-trade
expenditure irt g/s not yet received/supplied in current YOA
Deduct in full
supply/render 6 month after YOA
laibilty imposed by law
remaining pmts below 100k
Limitation on amount deducted
section 23C
TP is lessor
lease
exclude INPUT
credit sale
TP lessee
capital allowances
Intellectual property s11g
Registration of IP
Acquisition of IP
machinery s12C
Used process of manufacture
new & unused = accelerated 40/20
default = 20/20
Recoupments
general recoupment s8(4)(a)
tax value = Cost less ALL allowances
recoupement = SP(ltd cost) Less tax value
Deferred recoupments s8(4)(e)
s8(4)(eA) election of para 65 & 66 of 8th schedule
para 66 - voluntary
-s11(e),12C and 12E
proceeds exceed BC
replacement asset
conclude 12mths
bring use 3yrs
para 65 - involuntary (all assets)
All assets(excl. buildings)
damage, theft,destruction
compensation recieved
replacement asset
conclude 12 months
bring use 3yrs
PROCEEDS EXCEED BC
s8(4)(eB) - Deferral of recoupments depreciable assets
depreciable assets
Assets wear & tear
para 65 or 66
non-depreciable assets
only para 65
s8(4)(eC) - Disposal of Replacement asset
-
s8(4)(eD) - Ceasing use of Replacement asset
s8(4)(eE) - Failure to conclude contract for replacement asset within prescribed period (par 65/66)
s13(3) - Industrial building recoupment
s11(o) scrapping allowance
excludes connected persons (ITA)
connected persons def:
group of companies
any person other than company
Company no majority SH
Company controlled or managed by connected person
s8(4)(k) applied if s11(o) not met
s8(4)(k) - Donations, dividends & connected persons
S12B renweable energy
generate renewable electricty
default = 50/30/20
100% = photovoltiic
s12E SBC's deduction
GI of 20 mil
SH natural persons
100% in first year
50/30/20
moving costs - installments or full
Building Allowances
s13 - Process of manufacture
5% allowance
s13quin - Commercial accom.
Full building - 5%
Partial or part
55% Building
30% Improvements
s13sex - residential accom
Low-cost
apartment 350k
building - 300k
Part of unit
apartment 55%
improvement 30%
MUST BE OWNED - NOT LEASED
at least 5 units
s12H Learnership allowances
Annual allowance
Completion
annual allowance X total no. of 12 mths
VAT link with Income Tax s23C
Installment credit agreement
Lessee claim VAT in full commencement date
Lessor charge output in full at commencement date
Rental agreement
Lessee claim VAT monthly
Lessor charge output monthly
Amounts included in GI excl. VAT
Allowances & deductions - cost excl. VAT
s26A - Capital Gains
WHO is liable for CGT
Residents
Non-residents
What is CGT
Tax on disposal of assets
Assets
excl. currency
Disposals
Actual
Deemed (MV)
Exclusions (no transfer of ownership)
Timing of disposals
transfer of ownership
receive compensation
Legal requirements met
date of distribution
How is CGT calculated?
Proceeds - Base cost = Capital gain/loss
proceeds (case law)
Lategan - ascertainable monetary value
Geldenhuys - own behalf & benefit
Mooi - unconditional entitlement
specific inclusions & reduction in proceeds
base cost
para 20 specific inclusions
acquistion
valuation
expenditure directly acquisition
defending legal title
improvements
loan acquisition of shares
para 20(2) specific exclusions
borrowing costs
repairs & maintenance, insurance
reduction of base cost
allowance allowed under asset
Determine Capital gain/loss
Exclusions/Rollovers
Net capital gain/loss @ inclusion rate