Page 18 - F6 - Capital Gains Tax - Debt Reduction
P. 18
Example
During its 2014 year of assessment B (Pty) Ltd
borrowed R3,5 million from ABC Bank to acquire new
plant and machinery used in a process of
manufacturing. During the 2015 year of assessment B
(Pty) Ltd started experiencing serious financial
difficulty and the bank subsequently cancelled R1
million of the debt (none of the capital amount had
been repaid by B (Pty) Ltd). Explain the CGT
consequences of the cancellation of the debt on B
(Pty) Ltd).
