Misc Things Flashcards
When income is earned by a minor, in whose hands does it get taxed?
Section 7(3)
- any income that has been earned by the child because of a donation by the parent, will be included in the taxable income of the parent
How do subsistence allowances get taxed?
section idk
- they have a limit on them
what is the allowance given for credit losses? and for bad debts?
Credit Allowance
Section idk
- 25% of debtors of a certain age?
- 40% of debt over another certain age?
- if deducted in the current year of assessment, must be added back in the following year of assessment
Bad debts allowance
section idk
- all of bad debts
what are the tax implications when you issue debentures?
- Deductible interest?
- deductible payments?
What are the tax implications of a barter transaction?
section idk of the ITA or case idk
- the consideration you receive will then not be in money be known as “otherwise”
- the value of the otherwise will be deemed to be the market value of that consideration
- that item you receive then will either be capital in nature or revenue, revenue will be included in gross income
When are you allowed to deduct output tax from your taxable income?
section idk of idk
- When no cash was received to pay over to SARS
What happens when you issue shares in order to pay someone?
Labat Case
- the deduction in terms of s11a gets denied for the value of the shares because it was argued that no expenditure was actually incurred
How does one determine whether to include something in gross income or not? When it’s unsure whether it is capital in nature or not.
- ask yourself if it is capital in nature of not
- determine what the original intention at the acqusition of the item - Stott case
- check if there was a change in intention during the year - Stott case
- was there a profit making scheme present during the sale - Pick n Pay
- the mere intention to sell is not a change in intention - John Bell
- Sub division could merely be to realise to best advantage - Stott case and didn’t cross the Rubicon - natal Estates
- but if the company is only selling the land because the shareholders changed to property speculators, then it is likely that the court will pierce the veil
- they’ll pierce the veil to see who is controlling the company and judge their intention - Elandsheuwel
- therefore proceeds will probably be revenue in nature and included in gross income
How do you argue if an amount is deductible or not?
- Speak about section 11a and 23g and if it meets it
- Section 11a
~ actually been incurred
~ during the year of assessment
~ in the production of income
~ expenditure
~ not capital in nature - Section 23g and f
~ for the purposes of trade
~ not for exempt incomes or capital in nature income - then we need to prove each point
- Actually incurred
~ an amount has been incurred when an “unconditional liability” exists - Edgars stores
~ no amounts can be deducted for a provision - National Pers
~ an unconditional obligation to payment only exists if some work has been done by year end and
~ when they can put a number to it - In the production of income
~ an amount is considered in the production of income if it is sufficiently closely connected to an inevitable concomitant of the actions of that produce income - PE electric tramways
~ a required audit for JSE is certainly incurred in the production of income
~ if part of the income is exemept or capital in nature and part isn’t, then a reasonable allocation basis must be determined, like time or amount of revenue - mobile telephone network holdings - remember that local dividends is exempt
- if the amount was incurred for capital income, you can likely add it to the base cost
What is the definition of a connected person?
Section 1 of the ITA
- in relation to a company means
* any person other than a company who together with someone else or alone holds at least 20% of the equity shares or voting rights
* Any other company who holds at least 50% equity shares or voting rights
