Page 50 - P6 Slide - Taxation - Lecture Day 1
P. 50
Solution – loss-limitation rule 2
This is a historic loss situation. The market value was determined by the taxpayer.
The expenditure incurred before valuation date of R250 exceeds both the proceeds
of (R150) and the market value (R200). Therefore par 27(3)(a) or loss-limitation rule 2
will apply.
The valuation date value will be the higher of
• market value (R200), or
• proceeds less the expenditure incurred on the asset after valuation date (R150 –
R25).
The capital gain will therefore be determined as follows:
Proceeds R150
Less : Base cost
Valuation date value (par 27(3)(a)) R200
Add: Expenditure after valuation date 25
(225)
Capital loss (R75)
