Module 5 Flashcards
(22 cards)
True or false: for most capital allowances, the taxpayer should be the owner of the asset.
True.
The capital allowance claimable by taxpayer is compared to which item in the income statement?
Depreciation expense
What are the allowances for immovable assets?
. Manufacturing buildings
. Commercial buildings
. Residential buildings
. Sale of low-cost residential units
. Buildings in Urban Development zones
What are the allowances for movable assets?
. Small Business Corporations
. Manufacturing assets
. Wear and tear
True or false: claiming a capital allowance could result in a future recoupment.
True. SARS wants dat cash back.
Remember: actual VAT input claimed must be removed from market value and cost price.
actual VAT input claimed must be removed from market value and cost price.
True or false: Section 12e capital allowance for SBC’s is only claimable on movable assets.
True. Claim normal allowances on immovable assets.
What is the capital allowance rate for SBC’s on manufacturing assets?
100% if:
. Would have qualified under 12c
. Used in process of manufacturing process
. New or second-hand
What is the capital allowance rate for SBC’s on non-manufacturing assets?
50/30/20 over 3 years.
In terms of Section 11(e) for capital allowances, if the cost price of an asset is less then R7,000, what happens?
Full cost claimed. No apportionment
The allowance for manufacturing assets working is:
Claimed on lower of:
. Cost price; or
. Market value
What is the cost price of a manufacturing asset?
Acquisition cost
+ direct costs of installation
+ cost of foundation and moving costs
EXCLUDING interest
What is the capital allowance for manufacturing assets (Non SBC)?
New and unused assets:
40/20/20/20
Second-hand assets:
20% x 5 yrs
True or false: Section 11(e) wear and tear allowance can be apportioned.
True. Based on nr of months of use
What percentage of allowance is allowed on manufacturing assets?
5%, generally.
What are the requirements for admin/commercial building capital allowance?
. Only claimable by owner
. Building must be new and unused
. Building must be built on or before 1 April 2007
True or false: improvements to an asset are considered to be a new and unused asset.
True, it is separate.
If the basic recoupment formula results in a loss, a scrapping loss allowance can be claimed UNLESS the following requirements are true:
. Tax useful life of asset is more than 10 years
. Asset is sold to a connected person
. Asset is unused
If any of the above is true, no scrapping loss allowance can be claimed.
When disposals are to a connected person, which element gets changed?
Selling price gets changed to market value.
Which intangible assets apply for a capital allowance?
Patents
Inventions
Designs
Copyrights
NOT trademarks
On purchase of intangible assets, if the cost price is LESS than R5,000, how much is claimable for a capital allowance?
Full amount excluding VAT.
On purchase of intangible assets, if the cost price is MORE than R5,000, how much is claimable for a capital allowance?
5%
10% for design
