PP purchased an asset on 1 April 2010 for R375,000, incurring legal fees of R12,000. PP is resident in Country X. There was no indexation allowed on the asset. PP sold the asset on 31 March 2013 for R450,000 incurring transaction charges of R15,000. Calculate the capital gains tax due from PP on disposal of the asset. (10)

2.2 BZ received a salary of R34 000 for the year ended 31 March 2013. BZ also received a bonus of R1 700 and benefits in kind valued at R2 150. BZ was entitled to a personal tax allowance of R5 750 for the year. Personal taxation rates that apply to BZ are 20% for the first R20 000 of taxable earnings and 40% on the balance. Required: (a) Explain the meaning of benefits in kind for taxation purposes. (b) Prepare an income tax computation for BZ for the year ended 31 March 2013.

PLEASE NOTE

Unless otherwise specified, only the following rules for taxation of corporate profits will be relevant, other taxes can be ignored: Accounting rules on recognition and measurement are followed for tax purposes. All expenses other than depreciation, amortisation, entertaining, taxes paid to other public bodies and donations to political parties are tax deductible. Tax depreciation is deductible as follows: o 50% of additions to property, plant and equipment in the accounting period in which they are recorded; o 25% per year of the written-down value (i.e. cost minus previous allowances) in subsequent accounting periods except that in which o the asset is disposed of; o No tax depreciation is allowed on land; The corporate tax on profits is at a rate of 28%. No indexation is allowable on the sale of land. Tax losses can be carried forward to offset against future taxable profits from the same business. Value Added Tax Country X has a VAT system which allows entities to reclaim input tax paid. In country X the VAT rates are: o Zero rated 0% o Standard rated 15% o Exempt goods 0%