QUESTION 2 (30 MARKS)

2.1 XYZ Ltd bought an office building on 1 October 1996 at a cost of R800 000. In 2005 improvements of R1 500 000 were made to the building. The building was sold for R5 000 000 on 1 December 2022. Calculate the taxable gain on the building for year ended 31 December 2022. (5 Marks)

2.2 AB LTD purchased a machinery for R500 000 on 1 October 1999 and sold it on the 30 September 2012 for R600000. At the date of sale capital allowances of R500 000 had been claimed on the machinery. Calculate the capital gain on the sale using the time apportionment base cost? (ROUND OFF TO THE NEAREST RAND) (10 Marks)

2.3 John, 58 years old, a resident of South Africa, disposed of a few items in 2022. He was unsure on how to calculate the capital gains on the disposal and requested some assistance on the calculations.

- He bought a home for R3 000 000 in 2022.He spent R1 200 000 renovating it as this was his permanent residence. He sold it on the 31 December 2022 for R6 000 000 as he was moving to Cape Town.

- On 1 June 2022 John, who was the owner of OMG Ltd decided to sell his business for R2 000 000 as he was going to pursue other interests (market value a time of sale is R4 000 000.

- He acquired shares for R65 000 as long-term investment in 2014 and decided to dispose of the shares for R95 000 in 2022.

- He also sold the following assets:

Winnings of R100 000 at casino

Sale of Mercedes Benz R600 000 Calculate the taxable gain for the year ended 31 December 2022. (15 Marks)