Page 8 - P6 Slide Taxation - Lecture Day 5 - Foreign Exchange
P. 8
REMEMBER:
• There are exchange items and underlying items in each transaction.
• Identify each item separately and treat it separately for tax purposes.
EXAMPLE
Co A purchases trading stock from an American supplier @ $100 000.
To protect the company against foreign currency exchange fluctuations,
Co A took out a hedging item (FEC or FCOC).
Items?
Exchange items Underlying item
Debt FEC/FCOC Trading stock
s 11(a)
s 24I s 24I Conversion to Rand? s 25D s 22
