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ALLOWANCES & CAPITAL GAINS

Opening stock

• Deduction

• If part of previous year closing stock, then value of closing stock

• If not part of previous year closing stock, the cost price

• For the year ended 31 Dec 2016 the XYZ trading company had

closing stock with a value of R10 000. If this stock is sold for R12

000 during the year ended 31 Dec 2017 what is the effect on tax?

Deduction: Opening stock (R10 000)

(previous year’s closing stock)

Add: Sales – gross income R12 000

Taxable income 2 000

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