Page 52 - P6 Slide - Taxation - Lecture Day 1
P. 52
Solution – loss-limitation rule 3
This is a historic loss situation. The market value was
determined by the taxpayer.
The valuation date value will be the lower of
• market value (R150), or
• time-apportionment base cost (R75).
The capital gain will therefore be determined as follows:
Proceeds R50
Less: Base cost (R75)
Capital loss (R25)
Par 27(3)(b) mostly favours the fiscus. The large artificial loss
of R100, using market value (R50 – R150), is replaced with a
smaller loss of R25 (using TAB).
