Page 106 - SAIT Compendium 2016 Volume2

PN 4/1999 Income Tax acT: PracTIce noTes PN 4/1999 YEAR END 28-02-1998
Ruling exchange rates:
Transaction date (01-01-1998)
Date of translation (28-02-1998) (See calculation 1)
Note:
YEAR END 28-02-1999
Ruling exchange rates:
Previous date of translation (28-02-1998) Date of realisation (30-06-1998)
(See calculation 2)
Exchange difference:
[(0,0650 – 0,2000) x $80 000]
NET TAX RESULT
(+ R5 200 + R10 800)
RECONCILIATION
Rands paid on date of realisation ($80 000 x 6,4000)
Rands received on date of realisation ($80 000 x 6,6000)
Net gain
Calculations:
(1) Intrinsic value [(6,4500 – 6,4000) x $80 000] Time value (Estimated)
Market value of option contract
Ruling exchange rate (R5 200 ÷ $80 000)
Exchange difference:
[(0,0000 – 0,0650) x $80 000]
R5 200 gain
The premium of R4 000 is deductible from income, in this year of assessment, in terms of section 24I(4)(a).
0,0000 0,0650
0,0650 0,2000
R10 800 gain R16 000 gain
R512 000 R528 000
R 16 000
4 000 1 200
R5 200 0,0650
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SAIT CompendIum oF TAx LegISLATIon VoLume 2