Page 23 - F6 - Capital Allowances - Leases
P. 23
Example
Mr Pitt hired imported computer equipment for his
business from Clive Ltd for three years at an annual
rental of R30 000, which was fully deductible. He was
given the option to acquire the equipment at a price of
R10 000 at the end of the lease. He exercised this
option at the end of the lease when the fair market
value of the equipment had increased to R160 000 due
to currency fluctuations.
What amount must be included in Mr Pitt’s
income on the exercise of the option?
