Page 136 - SAIT Compendium 2016 Volume2

PN 4/1999
YEAR END 31-08-1997 Debt (paid)
Ruling exchange rates:
Transaction date (01-07-1997) Date of realisation (01-07-1997)
Exchange difference:
[(4,6500 – 4,6500) x $200 000]
Debt (outstanding capital) Ruling exchange rates:
Transaction date (01-07-1997) Date of translation (31-08-1997)
Exchange difference:
[(4,7000 – 4,7000) x $100 000]
Income Tax acT: PracTIce noTes
PN 4/1999
R nil
R nil
R nil
Debt (interest incurred until 31-8-1997)
Ruling exchange rates:
Transaction date (31-08-1997) Date of translation (31-08-1997)
Exchange difference:
[(4,7000 – 4,7000) × ($100 000 × 12% × 2 ÷ 12 months)]
Note:
4,6500 4,6500
4,7000 4,7000
4,7000 4,7000
Although interest accrues from 1-07-1997, the transaction date is assumed to be 31-08-1997.
Forward exchange contract
Ruling exchange rates: Transaction date (1-07-1997)
Date of translation (31-08-1997)
Exchange difference:
[(4,7000 – 4,7000) x $106 000]
Note:
4,7000 4,7000
As the forward rate of the forward exchange contract was used to record the debt and interest incurred and the forward exchange contract quali es as an affected contract in respect of the interest not yet incurred at the end of the year of assessment, the forward rate in terms of the forward exchange contract may be used as the ruling exchange rate on translation of the forward exchange contract, in terms of paragraph (b)(ii) of the de nition of ‘ruling exchange rate’.
YEAR END 31-08-1998
Debt (balance outstanding as at 31-08-1997, paid on 31-12-1997)
Ruling exchange rates:
Date of previous translation (31-08-1997) Date of realisation (31-12-1997)
4,7000 4,7500
R nil
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SAIT CompendIum oF TAx LegISLATIon VoLume 2