Page 98 - P6 Slide - Taxation - Lecture Day 1

Example – Roll-overs

A (Pty) Ltd acquired a new machine for R100 000 from a local supplier (not a

connected person) on 1 October 2014. The machine was brought into use

immediately and qualified for the s 12C allowance.

Due to the rapid expansion of the operations of A (Pty) Ltd, it was decided

to replace this machine with a technologically more advanced machine. On

1 November 2015 the old machine was sold for R150 000 and a new and

unused machine was purchased at a cost of R450 000. The new machine

was brought into use on 15 November 2015 and also qualifies for the s 12C

allowance. The company’s year-end is the last day of December each year.

Calculate the normal tax implications for A (Pty) Ltd arising from the

above transactions, assuming that the company elects to apply the

provisions of par 66. (Assume that the company has no other capital gains

or losses for the relevant tax years.)