Page 20 - Capital Allowances Recoupments Part 3 (CTA)
P. 20
EXAMPLE
M Ltd had an outstanding debt of R50 000 on 1 October 2015.
M Ltd used the debt to finance salaries.
Because M Ltd was unable to repay the money the creditor
reduced the debt with the full R50 000.
REQUIRED:
What is the effect of the above on the taxable income of M Ltd?
SOLUTION:
Salaries – s 11(a) (R50 000)
Recoupment – Debt reduction s 19(5) & s 8(4)(a) + R50 000
