Week 9 - Sale of Depreciable Assets

Question 1

how to determine tax value?

Answer 1

initial cost amount less capital allowances to date

Question 2

when and what is recoupment?

Answer 2

• selling price > tax value
• SARS is reclaiming all allowances previously granted

Question 3

when and what is scrapping allowance?

Answer 3

• selling price < tax value
• decreases taxable income

Question 4

steps for when disposing?

Answer 4

1) all cap allowances to date
2) recoupment / scrapping allowance
3) find cap gains tax consequences

Question 5

if asset is disposed of on day 1 of YOA?

Answer 5

no allowance as it has not yet been used for trade

Question 6

calculating recoupment / scrapping allowance?

Answer 6

selling price ltd to initial amount allowance is based on
less tax value

Question 7

tax value definition?

Answer 7

remaining allowances you are still entitled to claim on sale date

Question 8

s11(o) scrapping allowance requirements?

Answer 8

• only if sold assets were subject to s11e or 12C allowances (were moveable)
• UL not exceeding 10 years
• asset not disposed to connected person
• had a cost when acquired, no allowance if rec for free

Question 9

when else can a recoupment be given?

Answer 9

when a bad debtor who got a deduction last year comes back and pays us

Question 10

who is connected to a natural person?

Answer 10

• any relative
• any trust to which they are beneficiary

Question 11

what is a connected non-natural person?

Answer 11

• any company part of the same group of companies
• natural person who, along with other connected persons, owns 20% of the shares in the non-natural person