Page 110 - SAIT Compendium 2016 Volume2

PN 4/1999 Income Tax acT: PracTIce noTes PN 4/1999
5.2 The transaction was recorded on the transaction date at the forward rate, for accounting purposes. At the end of the nancial year (date of translation) the debt was translated at the forward rate, for accounting purposes.
Accounting recording of the transaction Dr Purchases (Stock)
Cr Creditor
($100 000 x 6,4900)
The forward exchange contract was not recorded separately.
The premium on the forward exchange contract is included in the cost price of the stock which is taken into account as a deduction for tax purposes in terms of sections 11 (a) and 22.
R649 000
R649 000
YEAR END 28-02-1998 Debt
Ruling exchange rates:
Transaction date (01-12-1997) Date of translation (28-02-1998)
Exchange difference:
[(6,4900 – 6,4900) x $100 000]
Forward exchange contract
Ruling exchange rates:
Transaction date (01-12-1997) Date of translation (28-02-1998)
Exchange difference:
[(6,4900 – 6,4900) x $100 000]
YEAR END 28-02-1999 Debt
Ruling exchange rates:
Date of previous translation (28-02-98) Date of realisation (31-05-1998)
Exchange difference:
[(6,4900 – 6,5600) x $100 000]
Forward exchange contract
Ruling exchange rates:
Date of previous translation (28-02-98)
Date of realisation (31-05-1998)
Exchange difference:
[(6,4900 – 6,5600) x $100 000]
NET TAX RESULT
(R0 + R0 – R7 000 + R7 000)
6,4900 6,4900
6,4900 6,4900
6,4900 6,5600
6,4900 6,5600
R nil
R nil
R7 000 loss
R7 000 gain R nil
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SAIT CompendIum oF TAx LegISLATIon VoLume 2