LML4804 EXAM PACK: CAPITAL GAINS TAX ANALYSIS EXAM |
QUESTIONS AND ANSWERS | VERIFIED ANSWERS (100%
CORRECT) | LATEST EXAM UPDATE
Capital Gains Tax (CGT) - CORRECT ANSWER - Tax on profit from asset
disposal.
Asset - CORRECT ANSWER - Property or right of any nature.
Proceeds - CORRECT ANSWER - Total amount received from asset disposal.
Disposal - CORRECT ANSWER - Event of transferring ownership of an asset.
Base Cost - CORRECT ANSWER - Cost of acquiring or creating an asset.
Qualified Expenditure - CORRECT ANSWER - Costs that can be added to
base cost.
Holding Costs - CORRECT ANSWER - Expenses incurred while maintaining
an asset.
Eighth Schedule - CORRECT ANSWER - Legal framework governing CGT
in South Africa.
Taxable Capital Gain - CORRECT ANSWER - Profit subject to taxation after
asset sale.
Mr Thalitha - CORRECT ANSWER - Tax resident involved in CGT scenario.
,Construction Costs - CORRECT ANSWER - Expenses incurred for building
improvements.
Sale Price - CORRECT ANSWER - Amount received from selling an asset.
Emigration - CORRECT ANSWER - Moving residence to another country.
Lease-with-option-to-buy - CORRECT ANSWER - Rental agreement with
purchase option.
Tax Resident - CORRECT ANSWER - Individual subject to tax laws of a
country.
Tax Year - CORRECT ANSWER - Period for which tax is calculated.
R750,000 - CORRECT ANSWER - Initial purchase price of the Midrand
property.
R3,500,000 - CORRECT ANSWER - Sale price of the Midrand house.
R450,000 - CORRECT ANSWER - Cost of constructing the house.
R100,000 - CORRECT ANSWER - Cost of adding an additional bedroom.
R50,000 - CORRECT ANSWER - Cost of repairing the leaking roof.
Taxable Year - CORRECT ANSWER - 2020/2021 year for CGT assessment.
Jeffreys Bay - CORRECT ANSWER - New location for Mr and Mrs Thalitha.
,Painting - CORRECT ANSWER - Asset given as a birthday gift.
R300,000 - CORRECT ANSWER - Purchase price of the painting.
R600,000 - CORRECT ANSWER - Current value of the painting.
Legal Advice - CORRECT ANSWER - Guidance on legal implications of
actions.
Tax Consequences - CORRECT ANSWER - Financial implications of tax
laws.
Capital Gain - CORRECT ANSWER - Profit from selling an asset above base
cost.
Capital Loss - CORRECT ANSWER - Loss incurred when selling an asset
below base cost.
Aggregate Capital Gain - CORRECT ANSWER - Total capital gain after
exclusions and deductions.
Primary Residence - CORRECT ANSWER - Main home where a person
resides primarily.
Annual Exclusion - CORRECT ANSWER - R40,000 deduction from capital
gains for individuals.
Net Capital Gain - CORRECT ANSWER - Final taxable amount after
exclusions and losses.
, Roll-over Relief - CORRECT ANSWER - Tax relief for asset transfers
between spouses.
Deemed Disposal - CORRECT ANSWER - Tax event triggered by changing
residency.
Market Value - CORRECT ANSWER - Current worth of an asset at a specific
time.
Immovable Property - CORRECT ANSWER - Land and structures
permanently attached to it.
Movable Property - CORRECT ANSWER - Assets that can be moved, like
vehicles or art.
Cessation of Tax Residence - CORRECT ANSWER - End of tax obligations in
a country.
Section 9HB - CORRECT ANSWER - Regulation for asset transfers between
spouses.
Para 20(1)(e) - CORRECT ANSWER - Specific provision in Eighth Schedule
regarding capital gains.
Para 44 - CORRECT ANSWER - Definition of 'residence' for capital gains
purposes.
Para 45(1)(a) - CORRECT ANSWER - Criteria for primary residence capital
gain exclusion.
QUESTIONS AND ANSWERS | VERIFIED ANSWERS (100%
CORRECT) | LATEST EXAM UPDATE
Capital Gains Tax (CGT) - CORRECT ANSWER - Tax on profit from asset
disposal.
Asset - CORRECT ANSWER - Property or right of any nature.
Proceeds - CORRECT ANSWER - Total amount received from asset disposal.
Disposal - CORRECT ANSWER - Event of transferring ownership of an asset.
Base Cost - CORRECT ANSWER - Cost of acquiring or creating an asset.
Qualified Expenditure - CORRECT ANSWER - Costs that can be added to
base cost.
Holding Costs - CORRECT ANSWER - Expenses incurred while maintaining
an asset.
Eighth Schedule - CORRECT ANSWER - Legal framework governing CGT
in South Africa.
Taxable Capital Gain - CORRECT ANSWER - Profit subject to taxation after
asset sale.
Mr Thalitha - CORRECT ANSWER - Tax resident involved in CGT scenario.
,Construction Costs - CORRECT ANSWER - Expenses incurred for building
improvements.
Sale Price - CORRECT ANSWER - Amount received from selling an asset.
Emigration - CORRECT ANSWER - Moving residence to another country.
Lease-with-option-to-buy - CORRECT ANSWER - Rental agreement with
purchase option.
Tax Resident - CORRECT ANSWER - Individual subject to tax laws of a
country.
Tax Year - CORRECT ANSWER - Period for which tax is calculated.
R750,000 - CORRECT ANSWER - Initial purchase price of the Midrand
property.
R3,500,000 - CORRECT ANSWER - Sale price of the Midrand house.
R450,000 - CORRECT ANSWER - Cost of constructing the house.
R100,000 - CORRECT ANSWER - Cost of adding an additional bedroom.
R50,000 - CORRECT ANSWER - Cost of repairing the leaking roof.
Taxable Year - CORRECT ANSWER - 2020/2021 year for CGT assessment.
Jeffreys Bay - CORRECT ANSWER - New location for Mr and Mrs Thalitha.
,Painting - CORRECT ANSWER - Asset given as a birthday gift.
R300,000 - CORRECT ANSWER - Purchase price of the painting.
R600,000 - CORRECT ANSWER - Current value of the painting.
Legal Advice - CORRECT ANSWER - Guidance on legal implications of
actions.
Tax Consequences - CORRECT ANSWER - Financial implications of tax
laws.
Capital Gain - CORRECT ANSWER - Profit from selling an asset above base
cost.
Capital Loss - CORRECT ANSWER - Loss incurred when selling an asset
below base cost.
Aggregate Capital Gain - CORRECT ANSWER - Total capital gain after
exclusions and deductions.
Primary Residence - CORRECT ANSWER - Main home where a person
resides primarily.
Annual Exclusion - CORRECT ANSWER - R40,000 deduction from capital
gains for individuals.
Net Capital Gain - CORRECT ANSWER - Final taxable amount after
exclusions and losses.
, Roll-over Relief - CORRECT ANSWER - Tax relief for asset transfers
between spouses.
Deemed Disposal - CORRECT ANSWER - Tax event triggered by changing
residency.
Market Value - CORRECT ANSWER - Current worth of an asset at a specific
time.
Immovable Property - CORRECT ANSWER - Land and structures
permanently attached to it.
Movable Property - CORRECT ANSWER - Assets that can be moved, like
vehicles or art.
Cessation of Tax Residence - CORRECT ANSWER - End of tax obligations in
a country.
Section 9HB - CORRECT ANSWER - Regulation for asset transfers between
spouses.
Para 20(1)(e) - CORRECT ANSWER - Specific provision in Eighth Schedule
regarding capital gains.
Para 44 - CORRECT ANSWER - Definition of 'residence' for capital gains
purposes.
Para 45(1)(a) - CORRECT ANSWER - Criteria for primary residence capital
gain exclusion.
