Deductions

Question 1

S11(a)

Answer 1

Expenditure or losses actually incurred in the production of income that is not capital in nature

Question 2

S7 B

Answer 2

Variable remuneration: overtime, bonuses

100% deductible

Question 3

S11 (c)

Answer 3

Legal fees

100% deductible

Question 4

S11 (cA)

Answer 4

Restraint of trade

Lower of 1/3 or 1/years restricted

Question 5

S11(d)

Answer 5

Repairs: Fully deductible
Improvements: not deductible

Question 6

S11 (i)

Answer 6

Bad debts

100% deductible

Question 7

S11(j)

Answer 7

Allowance for doubtful debts
25% every year

Add prior year
Subtract current year

Question 8

S11(l)

Answer 8

Contributions: medical aid, pension

100% deductible

Question 9

S11 A

Answer 9

Pre trade expenditure

100% deductible only if it would be deductible if they were carrying on a trade.

Question 10

S11(gB)

Answer 10

Renewal of patent

100% deductible

Question 11

S11(gC)

Answer 11

Acquisition of:

Patent/copyright - 5%
If less than R5000 (100% deductible)

Design - 10%

Question 12

S11(lA)

Answer 12

Broad based employee scheme

Deduction = MV - consideration

Limited to R10000 per employee.

Question 13

S11(m)

Answer 13

Remuneration of retired employees

100% deductible

Question 14

S11 D

Answer 14

Research and Development

100% deductible

If funding an R+D = 150% deduction

Capital (50:30:20)
Building (5%)

Question 15

S12H

Answer 15

Learnership agreement

???

Question 16

S18 A

Answer 16

Donation to PBO

Deductible in full limited to 10% of taxable income

Question 17

S20

Answer 17

Set off of assessed losses

100% deductible

Question 18

S24

Answer 18

Credit agreements and debtors allowances

25% or more receivable after 12 months
Deduct amount x Gross profit%

Add prior year
Subtract current year

Question 19

S24 C

Answer 19

Allowance for future expenditure on contracts

(Contract cost/contract price x income received) - actual expenditure

Add prior year
Subtract current year

Question 20

S22

Answer 20

Trading stock

Opening: deduct amount added back last year

Closing: add back lower of cost or MV

Purchases: 100% deductible

Donations : deduct MV

Recoupment: deduct MV

Question 21

S23 F

Answer 21

Any stock not held loses its deduction

Question 22

S24 I

Answer 22

Gains/losses in foreign exchange transactions

???

Question 23

S25 D

Answer 23

Determination of taxable income in foreign currency

All amounts must be converted to the currency of the republic