Page 23 - F6 - Capital Gains Tax - Debt Reduction
P. 23
Example
On 1 October 2013, XYZ (Pty) Ltd owes debt of R500 000.
XYZ (Pty) Ltd purchased trading stock of R200 000, new
machinery of R200 000 (which qualifies for s 12C
allowance) and a piece of land of R100 000 (no allowance
available) during the 2014 year of assessment.
On 30 April 2014 XYZ (Pty) Ltd sold the piece of land for
R50 000.
On 30 April 2015 XYZ (Pty) Ltd’s creditors discharge the
R500 000 of debt due to XYZ (Pty) (Ltd)’s inability to
pay. R150 000 of the trading stock purchased was still on
hand at the date of the debt reduction.
Calculate the tax implications for XYZ (Pty) Ltd of
the debt reduction for the 2015 year of
assessment ending on 30 April 2015.
