Dictionary list_revised.docx - Tax Computation for Companies – Explanations and tax adjustments Receipts Compensation termination of sales contract

Dictionary list_revised.docx - Tax Computation for...

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Tax Computation for Companies – Explanations and tax adjustments Receipts Explanation Tax Adj Compensation - - termination of sales contract Received in the ordinary course of business. Normal incident to a business operation. Taxable Nil - disruptions of company’s productions schedule Relates to “day to day” business operations, represents a replacement of lost of profits Taxable Nil - Sale of company know how, secret processes with restrictive covenant Capital receipt as sale of capital asset for a purchase price Not taxable Less Insurance compensation for trading stock To fill up the profit lost, part and parcel of common trading profits Taxable Nil Compensation for restrictive covenant Securing an unfair advantage, an enduring benefits assets was disposed Not taxable Less Gains on disposal of shares Capital gain on long term investment Not taxable Less Recovery off specific trade debtors Trading receipts as provision is given deductions. S 30(4) Taxable Nil Recovery of specific non trade debtors Not an income receipts as provision / written off is not given any deductions Not taxable Less Foreign exchange differences Foreign exchange gain - trade debtors/creditors (realized payment) - import of trading stocks (payment to trade creditors) - receipts from trade debtors Part and parcel of trading income, received in the ordinary course of business. Taxable Nil Unrealized gain – purchase of raw materials - translation Not realized, not income yet, income had not been crystallized Not taxable Less Exchange gain relating to the purchase of machine Capital gains as it relates to asset used in the production of business profits Not taxable Less Interest income on trade debtors Part of business income S4 (a). Received in the ordinary course of business Taxable Nil Investment income – Separately assessed, distinct from Not taxable Less
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dividend, interest, rental business source Deduction of expenses + Loss on disposal of plant / machinery Lost of an enduring benefits assets Not allowed Add Withdrawal of trading stock for long term investments – current asset to fixed asset Deemed disposal of trading stock at market value S 24(2) Not allowed Market value will be Gross income Trading stocks give away Deemed disposal off trading stock at market value Not allowed Market value will be gross income Investment expense Not trading expense, deducted against individual investment source Not allowed Add -Withholding tax not complied with. If the penalty and
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