Page 29 - Chapter 22 - Foreign Exchange (Cont.)

Solution cont.

29

Exchange difference

 Since the machine is brought into use only on 1 April 2015, the

exchange loss of R14 000 [FC100 000 × (6,74 – 6,60)] is not

deductible in the 2015 year of assessment. The deduction is

therefore deferred to the year during which the machine is

brought into use, namely, the 2016 year of assessment.

Year of assessment ended 28 February 2016

S 12C allowance (20% × R715 000) (R143 000)

Exchange difference

Deductible exchange difference in respect of 2014 tax year

 [FC100 000 × (7,00 – 6,74)] (R26 000)

 Deductible exchange difference in respect of 2013 tax year

(deferred in terms of s 24I(7)(a))

 [FC100 000 × (6,74 – 6,60)] (R14 000)

(183 000)