Copyright © 2024. Juta & Company, Limited. All rights reserved.

Parsons, S. (2024). Advanced questions on sa tax. Juta & Company, Limited.

Created from unisa1-ebooks on 2025-01-16 22:38:53.
 ADVANCED QUESTIONS ON
SA TAX
2024
9th Edition
GENERAL EDITOR
Shaun Parsons
M.Phil. (Applied Theology) Pretoria, PGDip (Tax Law), M.Com. (Taxation), PhD
(Taxation) Cape Town, CA (SA)

CONTRIBUTING AUTHORS
Annette Becker
B.Com. (Accounting) UP, B.Compt. (Honours) SA, M.Com. (Taxation) Pretoria, CA
(SA)
Lizelle Bruwer
B.Compt UFS, M.Com. (Taxation) UP, CA (SA)
Riley Carpenter
B.BusSc. (Finance with Accounting), M.Com. (Taxation) Cape Town, CA (SA)
Muneer Hassan
B.Compt. (Honours), M.Com. (Taxation) UJ, CA(SA), CTA
Riyaan Mabutha
B.Com. (Accounting), HDip (Accounting) Wits, M.Com. (Taxation) Wits, CA (SA)
Copyright © 2024. Juta & Company, Limited. All rights reserved.

Depika Singh
B.Acc. UDW, HDip (Accounting) UND, M.Com. (Taxation) Wits, CA (SA)
Lee-Ann Steenkamp
B.Acc. (Honours) Stellenbosch, M.Com. (Taxation) Cape Town, PhD (Public Law)
Cape Town, MTP (SA)

ECT CREATORS
R E SP
Making illegal copies of this publication, distributing them
ILLEGAL
O unlawfully or sharing them on social media without the written
T

CO

permission of the publisher may lead to civil claims or criminal

SAY NO

PYING

complaints.

Protect the communities who are sustained by creativity.

Parsons, S. (2024). Advanced questions on sa tax. Juta & Company, Limited.

Created from unisa1-ebooks on 2025-01-16 22:39:08.
 Advanced Questions on SA Tax

First published 2016

Second edition 2017
Third edition 2018
Fourth edition 2019
Fifth edition 2020
Sixth edition 2021
Seventh edition 2022
Eighth edition 2023
Ninth edition 2024

Juta and Company (Pty) Ltd

First Floor, Sunclare Building, 21 Dreyer Street, Claremont 7708
PO Box 14373, Lansdowne 7779, Cape Town, South Africa
www.juta.co.za

© 2024 Juta and Company (Pty) Ltd

ISBN (print): 978 1 99896 349 2

ISBN (webPDF): 978 1 99896 350 8

Production Specialist: Mmakasa Ramoshaba

Proofreader: Lee-Ann Ashcroft
Typesetter: Wouter Reinders
Cover designer: Genevieve Simpson

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form
or by any means – electronic, mechanical, photocopying, recording or otherwise – without written
permission from the publisher, except in accordance with the provisions of the Copyright Act 98 of 1978.

Please contact DALRO for information regarding copyright clearance for this publication. Any
unauthorised copying could lead to civil liability and/or criminal sanctions.

Tel: +27 (0)10 822 7469

Fax: +27 (0)86 649 1136

Postal address: PostNet Suite #018, Private Bag X9951, Sandton 2146
Email: dalro@dalro.co.za
http://www.dalro.co.za

Please email permissions@juta.co.za for permission to use text excerpts from a Juta and Company
Copyright © 2024. Juta & Company, Limited. All rights reserved.

publication.

The author and the publisher believe on the strength of due diligence exercised that this work does not
contain any material that is the subject of copyright held by another person. In the alternative, they believe
that any protected pre-existing material that may be comprised in it has been used with appropriate authority
or has been used in circumstances that make such use permissible under the law.*Unless otherwise indicated,
questions and solutions† are generally based on examination questions and solutions from the University
of Cape Town. The examination questions and solutions in their original examination form are the sole
copyright of the University of Cape Town. Adapted questions and solutions are the sole copyright of the
authors and the publisher.

Where questions have been initially included and where such questions appear in their original examination
form, they are reproduced with permission from the University of Cape Town in terms of a royalty-free
licence.
†This refers to selected questions and solutions under licence from UCT.

Parsons, S. (2024). Advanced questions on sa tax. Juta & Company, Limited.

Created from unisa1-ebooks on 2025-01-16 22:39:16.
 CONTENTS
Page
Preface v
Acknowledgements vi
About the Editorial Team vii
General Assumptions viii

General and trading

Chapter 1: Capital Allowances and Recoupments 1
Chapter 2: Assessed Losses and Debt Benefits 18
Chapter 3: Financial Instruments 32
Chapter 4: Dividends, Foreign Dividends and Dividends Tax 51

Individuals
Chapter 5: Fringe Benefits, Allowances and Share Gains 63
Chapter 6: Employees’ Tax and Provisional Tax 78
Chapter 7: Retirement Benefits and Planning 90

Passive income and controlled foreign companies

Chapter 8: Investment Income – Residents and Non-Residents 106

Capital gains tax

Chapter 9: Capital Gains Tax 114

Wealth taxes
Copyright © 2024. Juta & Company, Limited. All rights reserved.

Chapter 10: Donations Tax and Estate Duty 124

Chapter 11: Taxation Of Trusts and Estates 132
Chapter 12: Estate Planning 146

Value-added tax
Chapter 13: Value-Added Tax 160

Administration
Chapter 14: Tax Avoidance, Administration, Objection and Appeal 178
Chapter 15: Integrated Questions 185
Chapter 16: Foundations 216

Advanced Questions on SA Tax iii

Parsons, S. (2024). Advanced questions on sa tax. Juta & Company, Limited.
Created from unisa1-ebooks on 2025-01-16 22:39:23.
 Appendices
Appendix A: Rates and Monetary Limits 255
Appendix B: Life Expectancy Table (Table A) 260
Appendix C: Annuity Table (Table B) 262
Note: Solutions to all questions are provided to prescribing universities.
Copyright © 2024. Juta & Company, Limited. All rights reserved.

iv Advanced Questions on SA Tax

Parsons, S. (2024). Advanced questions on sa tax. Juta & Company, Limited.
Created from unisa1-ebooks on 2025-01-16 22:39:23.
 PREFACE
Advanced Questions on SA Tax is a publication for students and incorporates the
legislation up to and including the Rates and Monetary Amounts and Amendment
of Revenue Laws Bill of 2023; the Taxation Laws Amendment Bill of 2023 (where
applicable to the year of assessment); and the Tax Administration Laws Amendment
Bill of 2023 (where applicable to the year of assessment). Most scenarios have been
based on the 2024 year of assessment.

This tutorial book includes questions on South African income tax, estate duty and
value-added tax. Up-to-date questions are graded, allowing students to develop their
abilities from an introductory level to an advanced level.

Questions are graded with the following legend:

– Easy *
– Medium **
– Difficult ***

Each chapter has a contents page referring to the sections being tested in each question.
Solutions to all questions are provided to prescribing universities. Mark plans are
allocated to every solution. Integrated questions are also provided to assist students
preparing for their final examinations.

The Editorial Team

January 2024
Copyright © 2024. Juta & Company, Limited. All rights reserved.

Selected solutions are available on Juta Passmasters, which is free to both lecturers and students
using Juta Academic textbooks as prescribed course materials. To access these resources please visit
www.jutapassmastersco.za

Advanced Questions on SA Tax v

Parsons, S. (2024). Advanced questions on sa tax. Juta & Company, Limited.
Created from unisa1-ebooks on 2025-01-16 22:39:31.
 ACKNOWLEDGEMENTS
We gratefully acknowledge the following individuals and organisations for their
contributions of questions to this work:

Jennifer Roeleveld, David Warner, Craig West, Peter Cramer, Keith Huxham and
Grant Bayne, together with past academic trainees of the UCT College of Accounting.
Copyright © 2024. Juta & Company, Limited. All rights reserved.

vi Advanced Questions on SA Tax

Parsons, S. (2024). Advanced questions on sa tax. Juta & Company, Limited.
Created from unisa1-ebooks on 2025-01-16 22:39:39.
 ABOUT THE EDITORIAL TEAM
Shaun Parsons is an associate professor in the College of Accounting at the University
of Cape Town. He holds a PhD in Taxation and is a Chartered Accountant (SA) and
a registered tax practitioner.

Annette Becker is a senior lecturer in the College of Accounting Sciences at the

University of South Africa. She holds a Master’s degree in Taxation and is a Chartered
Accountant (SA). She has published in academic journals and presented peer-reviewed
conference proceedings.

Lizelle Bruwer is a senior lecturer in the School of Accountancy at the University of

the Free State. She holds a Master’s degree in Taxation and is a Chartered Accountant
(SA) and a registered tax practitioner.

Riley Carpenter is an associate professor in the College of Accounting at the University

of Cape Town, where he convenes the Postgraduate Diploma in Accounting programme.
He holds a Master’s degree in Taxation and is a Chartered Accountant (SA). He is
also a registered tax practitioner and provides tax consulting to firms in the South
African structured finance arena. He has presented numerous peer-reviewed national
and international conference proceedings in Taxation and is also a contributing author
of other tax and accounting publications.

Muneer Hassan is a senior lecturer at the University of Johannesburg (UJ). Muneer

is a chartered accountant and chartered tax advisor. He is a member on the Senate at
UJ. He is also member of the SAICA National Tax Committee and a member of the
SAIT External Integrated Summative Assessment Committee (EISA). Muneer will be
receiving his PhD in Taxation in March 2024.

Riyaan Mabutha is a senior lecturer in Taxation at Milpark Education. Prior to that, he

lectured at the University of Cape Town and the University of the Witwatersrand. He
Copyright © 2024. Juta & Company, Limited. All rights reserved.

holds a Master’s degree in Taxation and is a Chartered Accountant (SA).

Depika Singh is the Head of Business Advisory at Advicecube (Pty) Ltd. Prior to that,
she was the head of Taxation in the School of Accountancy at the University of the
Witwatersrand. She holds a Master’s degree in Taxation and is a Chartered Accountant
(SA) and a registered tax practitioner.

Lee-Ann Steenkamp is an associate professor at Stellenbosch University’s Business

School where she teaches taxation and managerial accounting. She is also an
extraordinary professor in the Department of Taxation at UNISA. She has previously
taught undergraduate and postgraduate taxation modules at the universities of Cape
Town, Stellenbosch and the Western Cape. Lee-Ann holds a PhD in Law and is a
registered Master Tax Practitioner (SA). She is a National Research Foundation (NRF)
rated researcher and has published numerous papers in peer-reviewed international
journals. She advises on carbon tax policy matters and chairs the South African
Institute of Chartered Accountants (SAICA) Carbon Tax subcommittee.

Advanced Questions on SA Tax vii

Parsons, S. (2024). Advanced questions on sa tax. Juta & Company, Limited.
Created from unisa1-ebooks on 2025-01-16 22:39:46.
 GENERAL ASSUMPTIONS
Applicable legislation
Advanced Questions on SA Tax incorporates all legislation at the time of going to print,
up to and including the Rates and Monetary Amounts and Amendment to Revenue
Laws Bill, the Taxation Laws Amendments Bill and the Tax Administration Laws
Amendments Bill of 2023.

Most questions focus on years of assessment commencing 1 March 2023 for individuals,
and no later than 1 January 2024 for companies. Where relevant, solutions to questions
assume that the existing legislation (including the above amendments) continues to be
applicable into the future.

Market value
We are aware that there is some difference of opinion as to whether market value (as
referred to in the Income Tax Act) includes or excludes VAT and whether this amount
should be further reduced by a VAT component in every circumstance. To the best of
our knowledge, there is no authoritative position on this issue.
In order to reduce uncertainty, in our solutions to this edition we have attempted to be
explicit as to whether the market value amount given includes or excludes VAT in each
particular circumstance.

Where an amount is referred to as being the ‘open-market value’, that amount includes
VAT by virtue of the definition of ‘open-market value’ in the VAT Act.

Where an amount of proceeds is deemed to be equal to market value (for example, in

terms of paragraph 38 of the 8th Schedule to the Income Tax Act), we have taken what
seems to be the majority view, that if a VAT-inclusive value has been provided, it should
be reduced by the actual VAT output that arises on the transaction. This prevents
instances of double taxation and is consistent with the treatment of expenditure
Copyright © 2024. Juta & Company, Limited. All rights reserved.

required by s23C.

Where no VAT arises (for instance when a capital asset becomes trading stock), where
the taxpayer in question is not a VAT vendor or where VAT has been excluded from
the scope of the question, we have simply provided a market value without reference
to VAT.

We acknowledge that a valid approach in the case of income amounts may also be to
make an adjustment equal to the market value multiplied by the tax fraction.

viii Advanced Questions on SA Tax

Parsons, S. (2024). Advanced questions on sa tax. Juta & Company, Limited.
Created from unisa1-ebooks on 2025-01-16 22:39:54.