Chapter 13

Solutions to questions received

Example 13.11
The cost will be included in the base cost, as it is part of the cost of selling the asset.

Example 13.13
No, the capital gain must first be added to the other capital gains and losses to
calculate the aggregate capital gain or loss. The aggregate capital gain of loss for
the year must then be reduced by the annual exclusion. This amount must then be
multiplied with the inclusion rate to determine the taxable capital gain. This
taxable capital gain is then added to other income to calculate taxable income.

Examination preparation

Comprehensive solution
Answer 13.2
Calculation of the capital gain or loss on the disposal of each asset:
Yacht
R
Deemed proceeds (market value) 1 250 000
Less: Base cost (Note 1) (842 000)
Capital gain 408 000

Collective investment scheme in securities

Proceeds (selling price – 120 units at R500 each) 60 000
Less: Base cost (Note 2) (22 350)
Capital gain 37 650

continued

1
A Student’s Approach to Income Tax/Natural Persons

Calculation of the taxable capital gain or loss: R

Total capital gain (R408 000 + R37 650) 445 650
Less: Total capital loss (Rnil) nil
Less: Annual exclusion (40 000)
Aggregate capital gain 405 650
Less: Assessed capital loss brought forward from previous year of
assessment (100 000)
Net capital gain 305 650
Multiplied by: Inclusion rate 40%
Taxable capital gain 122 260

Notes
1. Base cost of the yacht
Acquisition costs 750 000
Add a portion of the donations tax
Y = (M – A)/M × D
Y = (R1 250 000 – R750 000)/R1 250 000 × R230 000 92 000
842 000
2. Base cost of the collective investment scheme in securities
Cost per unit = R74 500/400 units = R186,25
Base cost of 120 units = 120 × R186,25 22 350