Dividends tax, trading stock Flashcards
What is the tax rate of a normal company or a CC
28%
What is a Small Business Corporation SBC
- CC/Private
- natural persons as shareholders
- GI < 20mil
- shareholders don’t have interest in other companies
- < 20% of rev + capital gains = from investment income/personal services
- not personal service provider
What is the tax rate of a SBC if its TI = 79000
Tax rate = 0%
What is the tax rate of SBC if it has a TI = 79000 - 365000
Tax rate = 7%
What is the tax rate of a SBC if it has a TI = 365001 - 550000
Tax rate = 20 020 +21%
What is the tax rate of a SBC if it has a TI = 550001 and +
Tax rate = 58 870 + 28%
Trading stock definition:
Anything that is - produced - manufactured - purchase to be - used in manufacturing -exchanged/ sold Proceeds = included in GI Revenue in nature
Trading stock purchases can not be deducted ito S11(a)
NO- deduction = allowed for trading stock purchased
What happens to the closing stock?
The closing stock gets added back to the TI-
What happens to the opening stock?
The opening stock gets deducted form the TI
Volkswagen SA (Pty) Ltd
- trading stock included unsold vehicles
- trading stock was carried at NRV
- accounted for at NRV but this was < cost
- Court = not agree = forward looking
What happens to spare parts if they are used, sold and on hand
- used = deductable
- if sold = recouped
- on hand = added back
What happens to trading stock that are classified as work in progress?
- valued
- included in closing stock
Ernst Bester Trust
- sold sand from farm
- wanted to deduct sand as part of opening stock
- sand in ground = capital in nature
sand taken out & sold = trading stock
What happens if we acquire trading stock for no consideration?
- no S11(a) deduction
- cost = MV
- if not sold = include in closing stock
- deduction = allowed from closing stock
Eveready Pty (Ltd)
- bought business which included trading stock
- stated that trading stock = acquired for no consideration
- wanted deduction
- just because cost price of trading stock is not stipulated = not mean it has no value
What happens to trading stock that is taken for private/domestic use?
- recouped at COST value
- if written down previously- at WD value
- cost not determinable = at MV
When will trading stock be recouped at Market value?
- distributed as dividend
- disposed for consideration < MV
- changed into capital asset
- used in trade of business
- donation w/o S18A certificate
When will donations be recouped at cost?
When posses S18A certificate
Can the company that issues a dividend claim a deduction?
No, it is not
- expenditure
- actually incurred
- in the production of income
What is impact on the shareholder that receives a dividend?
-Local dividend are included in GI and exempted
-Foreign dividends included and portion is exempted (if holds 10% >)
portion exempt:
- company= 8/28
- person = 25/45
Definition of a dividend?
- any amount
- transferred/applied
- by company (resident)
- for the benefit/on behalf of
- any person
- by way of a distribution made
- as consideration for the acquisition of any share in that company
What is compulsory for it to be a dividend?
- A SHARE
Is the issue of capitalisation shares a dividend?
NOOOOO
