Tips

Question 1

amounts in Foreign currency

Answer 1

The dividends were received in foreign currency and should be translated in terms of s25D

Question 2

The improvement amount includes VAT since no input tax could be claimed

Answer 2

Disregarded in terms of s9HB as the shares are left to his spouse

Question 3

Cash in the bank:

Answer 3

Not an asset in terms of the 8th schedule and therefore does not attract any CGT

Question 4

DTA - Local dividends

Answer 4

The dividends and capital gain are both from a Republic source and therefore in terms of SA domestic law, subject to the DTA, SA has taxing rights.

In terms of the DTA the position is as follows:

In terms of Article 10 both countries will have taxing rights in respect of the dividends income

However Nandi will be entitled to a s10(1)(k) exemption as these are local dividends

Question 5

DTA - Capital gains

Answer 5

In terms of Article 13 both countries will have taxing rights in respect of any possible capital gain on the sale of her property situated in Pretoria

The property is a CGT asset of a non-resident. (refer para 2 of the Eighth Schedule)

SA will tax the capital gain and include 40% thereof in Nandi’s taxable income after the annual exclusion of R40 000.