TAX3701 JMP INSTITUTE OF ACCOUNTANCY.

Table of Contents ................................................................................................................................................................2 STUDY UNIT 1........................................................................................................................................2 VALUE ADDED TAX (VAT).................................................................................................................2 Registration as a vendor after deregistration as micro business ........................................................7 Zero-rated supplies..............................................................................................................................9 EXEMPT SUPPLIES .........................................................................................................................12 Deemed supplies...............................................................................................................................14 VALUE OF THE SUPPLY .................................................................................................................19 INPUT VAT........................................................................................................................................20 DEEMED INPUT VAT ON SECOND-HAND GOODS ......................................................................23 SUPPLIES OF GOING CONCERNS ................................................................................................27 SUMMARY ........................................................................................................................................29 STUDY UNIT 2 (TURNOVER TAX)......................................................................................................32 STUDY UNIT 3 INCOME OF BUSINESS.............................................................................................34 GROSS INCOME (SECTION 1 OF INCOME TAX ACT 58 OF 1962)..............................................34 GROSS INCOME – SPECIAL INCLUSIONS....................................................................................37 EXEMPT INCOME – SECTION 10 ...................................................................................................38 STUDY UNIT 4 (GENERAL DEDUCTION FORMULA)........................................................................40 GENERAL DEDUCTION FORMULA – the expenses incurred by the taxpayer which qualify as a deduction (subtracted from income in the framework and results in taxable income) ......................40 STUDY UNIT 5 (SPECIFIC DEDUCTIONS).........................................................................................45 Calculating the taxable income of companies ...................................................................................46 TRADING STOCK.............................................................................................................................47 ASSESSED LOSSES........................................................................................................................60 STUDY UNIT 6......................................................................................................................................63 EXPENDITURE AND ALLOWANCES RELATING TO CAPITAL ASSETS......................................64 REPAIRS AND IMPROVEMENTS....................................................................................................65 WEAR-AND-TEAR ALLOWANCES..................................................................................................67 STUDY UNIT 7 CAPITAL GAINS TAX (CGT) ......................................................................................76 FRAMEWORK FOR CALCULATION OF TAXABLE CAPITAL GAINS : ..........................................76 SELECTING VALUATION DATE VALUE .........................................................................................83 EXCLUSIONS ...................................................................................................................................85 STUDY UNIT 8 (TAXATION ON COMPANIES AND CCs ...................................................................90 DIVIDENDS TAX...............................................................................................................................91 STUDY UNIT 9 (EMPLOYEES, PROVISIONAL AND DONATIONS TAX ...........................................92 EMPLOYEES TAX ............................................................................................................................92 Calculation of employees’ tax............................................................................................................93 Duties of an employer........................................................................................................................95 PROVISIONAL TAX ..........................................................................................................................96 LIABILITY TO PAY PROVISIONAL TAX ..........................................................................................96 Calculation of provisional tax payments ............................................................................................97 The calculation of the second provisional tax payment is shown in the guidance below. ................98 INTEREST.......................................................................................................................................100 Penalties ..........................................................................................................................................100 2 JMP INSTITUTE OF ACCOUNTANCY TAX3701 Page 2 THE TAXATION OF BUSINESS INCOME