One of the directors of SendIT Limited, Dillon Ceasar, is considering emigrating from South Africa to Namibia. He currently lives in Stellenbosch with his wife, to whom he is married in community of property. Although they also own a house in Namibia, they always regarded their Stellenbosch house as their primary residence.
The house was acquired through a donation from Dillon’s grandfather on 1 October 2009 and formed part of the couple’s joint estate. Donations tax amounted to R361 087 and was paid by Dillon’s grandfather. The market values of the house amounted to R2 150 000 on 1 October 2009 and R6 500 000 on 1 February 2022. Dillon’s wife, Nicole, operates a small business, selling second-hand books, from their house. A room of 35m² is used exclusively in her trading operations. The house covers an area of 480m² in total. Nicole has been utilizing the space in her trade since Dillon acquired the house.
SendIT Limited considers purchasing the house from Dillon. The house will then be provided to an employee of SendIT Limited as residential accommodation.

REQUIRED:

With reference to the House sale, discuss the normal tax implications for Dillon Ceasar regarding the proposed disposal of the house in Stellenbosch. You may assume that the house was sold to SendIT Limited for R6 500 000 on 1 February 2022 and that this was the only disposal by Dillon Ceasar during the 2022 year of assessment.

Answer rating: 100% (QA)

Answer The gain on the sale of the property will be calculated as follows if the house was sold to SendIT Limited for R6 500 000 on 1 February 2022 R6 500 000 R2 150 000 R4 350 000 Dillon Ceasars tax ... View the full answer