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Taxation 200 > Capital allowances > Flashcards

Capital allowances Flashcards

1
Q

What are the 3 main Capital Allowances?

A
  • S11(e) - wear & tear
  • S12C - manufacturing plant/machinery allowances
  • S13 - Building allowances
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2
Q

What are the principles for S11(e)- wear/tear allowances?

A 
- "smaller" assets
(equipment/vehicles)
- used for trade
- are apportioned for period used in the year.
- write-off period differ
- claimed if the TP= owner
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3
Q

What happens to small items that are < R7000

A
  • written off in full
  • must function on their own
  • can’t be part of a set
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4
Q

What are the principles for S12C- Manufacturing plant/equipment allowances?

A
  • “bigger” assets
  • used in process of MANUFACTURE
  • NOT apportioned
  • must be owner
  • new & unused
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5
Q

What is the write off periods for assets that qualify for a S12C allowance

A 
New:
- 4 years
- 40/20/20/20
2d hand/Ships/Planes:
- 5 years
- 20/20/20/20/20
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6
Q

What 3 building allowances can be claimed?

A
  • S13 - Manufacturing/industrial buildings
  • S13quin - Commercial Buildings
  • S13sex - Residential Buildings
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7
Q

What are the principles of S13- manufacturing buildings?

A
  • Only the building
  • Used in the process of manufacturing
  • TP = owner
  • allowances ito date erected
  • NO apportionment
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8
Q

What are the principles relating to used manufacturing buildings?

A
  • entitled to allowance which was received by seller
  • allowance claimable on new cost
  • if purchased after 1/4/2000 - only 5% allowance
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9
Q

What are the principles relating to the Section 13quin allowances for commercial buildings?

A
  • needs to be new and unused
  • producing income in trade
  • 1 April 2007
  • not residential accommodation
  • NO apportionment
  • write off @ 5%
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10
Q

What are the requirements that a Taxpayer needs to meet to qualify for a Section13sex allowance

A
  • New/unused
  • Improvements should be new/unused
  • TP is owner of units
  • Used solely for purpose of trade
  • Unit is in RSA
  • TP needs to own at least 5 residential units
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11
Q

How is the allowance calculated for Section 13sex?

A
  • On cost price
  • 5% on NORMAL unit
  • 10% on LOW COST unit
  • NO apportionment
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12
Q

How is the cost price determined ito S13sex?

A
  • If TP acquires the unit from a developer then we will acquire only:
  • 55% of acquisition price
  • 30% of improvements acquisition price
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13
Q

What is the cost price of a low cost unit?

A

LOW COST UNIT:

  • building = < 300 000
  • apartment = < 350000
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14
Q

What is a Small Business Corporation?

A
  • CC/Private company
  • natural persons as shareholders
  • GI < 20mil
  • members do not have shares/interest in another company
  • <20% total receipts & accruals = investment income and personal services rendered
  • not employment comp
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15
Q

What is the principles and the deduction for plant and machinery for a SBC?
S12E

A
  • TP = owner
  • BIU @ 1/4/2001
  • used in process of manufacture
    deduction = 100% of cost
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16
Q

What are the principles and the deduction for non-manufacturing assets(s12E(1)) ?

A
  • not used in process of manufacture
  • written off over 3 years form BIU
    50/30/20
  • NO apportionment
  • @ 1/4/2005
17
Q

What are the deductions for moving costs and improvements?

A
  • written off over remainder of allowance
  • deduct full costs when asset is written off fully
  • Improvements are treated as a separate asset
18
Q

What is a general recoupment?

S8(4)(a)

A
  • inclusion of any recovery of allowances/deduction previously claimed ito section 11-20
19
Q

What are the important steps needed to be followed when disposing of an asset?

A

1- deduct current year allowances
2- calculate and include/deduct any recoupment/loss on disposal
3- Calculate any CGT

20
Q

How to calculate a recoupment?

A 
recoupment 
= selling price(limited to cost)
- tax value
so,
recoupment if:
sp > tv
21
Q

When can a deduction be claimed ito s11(o)

  • scrapping allowances
A
  • must have qualified for a section 11(e), 12C or 12E allowance
  • expected useful life for tax purposes must not > 10y
  • amount must have been received form
  • alienation
  • loss/ destruction
  • not applicable to buildings
22
Q

What impact does a scrapping allowance have on the taxpayer’s taxable income?

A

It will reduce the taxable income as it will be seen as an allowance.

Taxation 200 (9 decks)

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