Page 28 - P6 Slide Taxation - Lecture Day 6 - Dividend Tax

Solution

(A) Normal tax consequences

Cash distribution – no tax consequences

Distribution of trading stock – deduction of

300 000 opening stock and recoupment at

MV of R500 000 ito s22(8)

Distribution of building – Disposal @ MV

Proceeds = MV of 1 500 000, less base cost

of R1 200 000 = Capital gain of R300 000

incl. @ 66.6% in taxable income