The scenarios below are all separate and unrelated. You can ignore all VAT implications for these transactions.

1. Office building

Building (Pty) Ltd purchased an office building on 10 September 2006 for R2 900 000. The building did not qualify for section 13 quin since it was not erected after 1 April 2007. The office building was sold on 30 January 2023 for R4 000 000. During the time when Building (Pty) Ltd owned the office building, costs on improvements of R690 000 and transfer costs of R55 000 were incurred.

Building (Pty) Ltd also paid interest of R596 000 on a mortgage bond relating to the office building and property tax of R260 000. Both the interest and property tax paid was deducted for normal tax purposes.

Building (Pty) Ltds year of assessment ended on 30 June 2023.

1. Aircraft

On 1 March 2022, Shane Verstappen purchased an aircraft, with an empty mass of 490 kg, for R12 000 000. He used it to travel between his:

Primary residence in Ballito Bay, and

Holiday home in the Karoo.

Shane Verstappen did not use the aircraft for trade purposes. On 28 February 2023, he sold the aircraft for R11 900 000.

1. Shares in Pink Limited

Rainbow (Pty) Limited, who is not a share-dealer, purchased 1 200 shares in Pink Limited on 1 January 2022 for R120 per share. A total dividend of R40 000 for the 1 200 shares held in Pink Limited, accrued to Rainbow (Pty) Ltd on 1 July 2022. The total dividend of R40 000 was exempt from normal tax under section 10(1)(k)(i) and dividends tax under section 64(1)(a) of the Income Tax Act. Rainbow (Pty) Limited sold the 1 200 shares in Pink Limited for R120 000 on 1 February 2023.

1. Shares in Blue Limited

Ben Naidoo purchased 54 000 shares at R25 each in Blue Limited on 1 December 2000 as a long-term investment. The market value of an Blue Limited share was R33 on 1 October 2001. This was confirmed in the Gazette notice issued by the Commissioner (under paragraph 29(1)(a)(i) of the Eighth Schedule to the Income Tax Act). On 30 November 2022 Ben Naidoo sold her 54 000 shares in Blue Limited at R55 per share. Assume that the time-apportionment base cost at the date of sale was correctly calculated as R1 480 245.

Required:

1.1 With reference to the sale of the office building, calculate the capital gain or loss for the 2023 year of assessment as a result of this transaction. Clearly show which costs are included in the base cost or not. (8 marks)

1.2 With reference to the sale of the shares in Blue Limited:

1.2.1 Calculate the capital gain or loss implications for the 2023 year of assessment under all the valuation date value options available. (14 marks)

1.2.2 Based on your answer in 1.2.1, advise Ben Naidoo which option she should choose. (2 marks)

1.3 With reference to the sale of the aircraft, discuss the capital gain or capital loss consequences that result from Shane Verstappens purchase and sale of his aircraft. Support your answer with references to the Eighth Schedule and calculations. (10 marks)

1.4 With reference to the sale of the shares in Pink Limited, discuss the capital gain or loss consequences that result from the purchase and sale of Rainbow (Pty) Ltds 1 200 shares in Pink Limited. Support your answer with references to the Eighth Schedule and calculations.