Page 14 - PowerPoint Presentation

ALLOWANCES & CAPITAL GAINS

Costs of trading stock

• Cost price of trading stock? (s11(a) deduction)

• Cost incurred to acquire, plus

• Further costs incurred to get into current condition or

location

• Trading stock acquired for no consideration = current

market value

• Trading stock with a market value of R50 000 is acquired

by way of inheritance. If the trading stock is still on hand

at the end of the year the effect on taxable income will

be as follows:

• Closing stock R50 000

• Deduction allowed in practice (R50 000)

• Nil 14