Wonderland (Pty) Ltd (“Wonderland) is a listed company. They appointed you as theirtax consultant as they need your advice and assistance regarding the correct taxtreatment of certain transactions. Wonderland has a February financial year end.The following transactions took place during the 2021 year of assessment:

 A delivery vehicle purchased on 1 July 2019 for R260 000 was sold on 30November 2020 for R160 000. Wonderland claimed allowances of R93 750 on thisasset and qualified for a section 11(o) scrapping allowance where applicable.

 An office building was sold on 20 January 2021. The selling price amounted to R2330 000. The office building was purchased on 10 December 2009 forR1 680 000.Costs incurred in connection with the office building for the period from 10December 2009 to 20 January 2021 amounted to R1 396 000 and consisted of the following: R Improvements 300 000Transfer duty and transfer costs paid 316 000Interest paid on mortgage bond 525 000Property tax 255 0001 396 000Property tax and interest paid on mortgage bond were allowed as deductions for income tax purposes. No capital allowances were claimed on this asset.

 A manufacturing building was sold for R1 000 000, the building was bought in July2001 for R190 000. 

The following information is applicable:

 Valuation on 1 October 2001 198 000 Time-apportioned base cost 164 123

 Cost of valuation (carried out on 1 July 2007) 7 589

 Costs incurred on building before 1 October 2001 22 000

 Capital allowances claimed up to date of sale 168 0007 

 Wonderland’s assessed capital loss brought forward from the previous year of assessment amounted to R 175 000.Matter 1A commercial property situated in Cape Town was rented by Wonderland during the year from Hart Properties. The monthly rental amounts to R75 000 and is for a 10-yearperiod. The lease agreement included a lease improvement obligation and the value of the improvements was not to exceed R1 895 000. The improvements were completed at a cost of R1 999 000 on the 1 April 2021, the difference of R104 000 was voluntarily spent on improvements. This property was acquired 10 years ago by Hart Properties, an RSA resident. They purchased the property for R2 890 000. The lease contract expires on 31 May 2025.

Required:

2.1 Calculate the taxable capital gains or loss for Wonderland (Pty) Ltd for the 2021year of assessment. Ignore Matter 1.

2.2 Briefly discuss the capital gain or capital loss (if any) for Wonderland (Pty) Ltdin terms of Property A (Matter 1) for the 2021 year of assessment.

Answer rating: 100% (QA)

2 1 Calcul ate the taxable capital gains or loss for Wonderland P ty Ltd for the 2021 year of assess... View the full answer