Page 138 - P6 Slide - Taxation - Lecture Day 1

Example

• Company A acquired second-hand machinery at

a cost of R1 million on loan account from

Company B on 1 March 2013. Company A and

Company B form part of the same group of

companies as defined in s 41(1). Company A is

entitled to an allowance of 20% a year on the

cost price of the machinery under s 12C(1). On 1

March 2014 Company B waived the outstanding

balance on the loan account which at that stage

stood at R500 000, because of Company A’s

adverse economic position. Company A’s year of

assessment ends on 28 February.

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