TAX2601 SUMMARY
Gross income:
Total amount, in cash or otherwise, received by, accrued to,
or in favor of a person, during the year of assessment,
excluding amounts of a capital nature, e.g. do not include
invested capital, but include the interest income.
Special inclusions:
Lease premiums
Included in lessors income
Leasehold improvements
Included in lessors income, stipulated agreed upon amount
Proceeds from disposal of certain assets
If taxpayer sells an asset that was manufactured, produced,
constructed or assembled by him, then full proceeds
included in gross income
Dividend income
Included in gross income
Key-man insurance policy proceeds
Insurance taken out on certain person in a business entity,
if this person is not available to company any longer, the
policy will pay out, included in gross income
Recoupments
After sale of capital asset, if recoupment, include in
gross income
Exempt income:
Dividends
Government grants
Deductions:
Expenditure and loss, actually incurred, during the year
of assessment, in the production of income, not of a
capital nature
Specific deductions:
Legal expenses
Restraint-of-trade payments
LIMIT: the deduction shall not exceed in any one year the
lesser of: amount incurred/number of years (or part thereof)
during which the restraint trade will apply
OR
one third of the amount incurred
Registration and acquisition of patents, copy rights, designs and trademarks
Less R5000, deducted in full in year brought to use for the first time
More R5000:
, 5% p.a for patent, copyright
10% p.a for design
Research and Development expenditure
New/ unused machinery/plant for R&D purposes
100% deductable and then ALLOWANCE too:
50% first year
30% second year
20% final year
Also applies to improvements to such machinery/plant
NB: R&D costs incurred before date of receipt of application
by the Department of Science and Technology for approval
do not qualify for the additional ALLOWANCE
Bad debts
Fully deductable
Doubtful debts
40% of debt 120 days or more in arrears
20% of debt 60 days or more in arrears
Contributions made by an employer to pension, provident and benefit funds
Fully deductable as long as incurred in production of income
Donations to PBO's
Limited to 10% of taxable income
Therefore this is the LAST LINE in your taxable income calc
Annuities paid to former employees on retirement
Fully deductable
Prepaid expenses
Deductable if the prepaid amount relates to a period within 6 months after
year end
OR
The aggregate prepaid amount is less than R100 000
ONLY PREPAID PORTION IS DEDUCTABLE
Trading stock:
Opening stock deductable
Closing stock added
Capital allowances:
Repairs and improvements
Repairs fully deductable
Improvements not
Movable assets:
Special capital allowance
New or unused plant/ machinery
On/after 1 March 2002
FOUR YEARS: 40%, 20%, 20%, 20%
Used plant/ machinery
FIVE YEARS: 20% p.a
Gross income:
Total amount, in cash or otherwise, received by, accrued to,
or in favor of a person, during the year of assessment,
excluding amounts of a capital nature, e.g. do not include
invested capital, but include the interest income.
Special inclusions:
Lease premiums
Included in lessors income
Leasehold improvements
Included in lessors income, stipulated agreed upon amount
Proceeds from disposal of certain assets
If taxpayer sells an asset that was manufactured, produced,
constructed or assembled by him, then full proceeds
included in gross income
Dividend income
Included in gross income
Key-man insurance policy proceeds
Insurance taken out on certain person in a business entity,
if this person is not available to company any longer, the
policy will pay out, included in gross income
Recoupments
After sale of capital asset, if recoupment, include in
gross income
Exempt income:
Dividends
Government grants
Deductions:
Expenditure and loss, actually incurred, during the year
of assessment, in the production of income, not of a
capital nature
Specific deductions:
Legal expenses
Restraint-of-trade payments
LIMIT: the deduction shall not exceed in any one year the
lesser of: amount incurred/number of years (or part thereof)
during which the restraint trade will apply
OR
one third of the amount incurred
Registration and acquisition of patents, copy rights, designs and trademarks
Less R5000, deducted in full in year brought to use for the first time
More R5000:
, 5% p.a for patent, copyright
10% p.a for design
Research and Development expenditure
New/ unused machinery/plant for R&D purposes
100% deductable and then ALLOWANCE too:
50% first year
30% second year
20% final year
Also applies to improvements to such machinery/plant
NB: R&D costs incurred before date of receipt of application
by the Department of Science and Technology for approval
do not qualify for the additional ALLOWANCE
Bad debts
Fully deductable
Doubtful debts
40% of debt 120 days or more in arrears
20% of debt 60 days or more in arrears
Contributions made by an employer to pension, provident and benefit funds
Fully deductable as long as incurred in production of income
Donations to PBO's
Limited to 10% of taxable income
Therefore this is the LAST LINE in your taxable income calc
Annuities paid to former employees on retirement
Fully deductable
Prepaid expenses
Deductable if the prepaid amount relates to a period within 6 months after
year end
OR
The aggregate prepaid amount is less than R100 000
ONLY PREPAID PORTION IS DEDUCTABLE
Trading stock:
Opening stock deductable
Closing stock added
Capital allowances:
Repairs and improvements
Repairs fully deductable
Improvements not
Movable assets:
Special capital allowance
New or unused plant/ machinery
On/after 1 March 2002
FOUR YEARS: 40%, 20%, 20%, 20%
Used plant/ machinery
FIVE YEARS: 20% p.a
