Page 22 - F6 - Capital Gains Tax - Debt Reduction

Solution

Year ending 30 April 2015

The amount of the reduction in the debt of R1 000

000 will first be applied against the base cost of the

asset which will be reduced to Rnil; the base cost

being R1 000 000 less the allowances claimed of

R400 000 (1000 000 x 40%), thus a base cost

reduction of R600 000. The remaining debt

reduction of R400 000 (R1 000 000 – R600 000

(reduction applied against base cost of asset) will be

recouped in income (s 19(6)). Recoupment under s

19(6) read with s 8(4)(a) R400 000