IIE Learn Module Outline
TAXA6212
Taxation 2A
TAXA6212
MODULE OUTLINE 2021
(First Edition: 2018)
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© The Independent Institute of Education (Pty) Ltd 2021
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IIE Learn Module Outline
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Table of Contents
Introduction.................................................................................................................................. 3
Using this Module Outline ........................................................................................................... 4
This Module on Learn................................................................................................................... 5
Icons Used in this Document and on Learn ................................................................................. 6
Module Resources........................................................................................................................ 7
Module Purpose ........................................................................................................................... 8
Module Outcomes........................................................................................................................ 8
Assessments ................................................................................................................................. 9
Module Pacer ............................................................................................................................. 12
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IIE Learn Module Outline
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Introduction
Welcome to Taxation 2A. The purpose of this module is to provide you with a basic introduction
to the South African tax system as it relates to corporate entities. You will be introduced to new
and exciting principles that will benefit you greatly in your future career.
Understanding and applying the taxation principles contained in this module opens up many
doors in your career. Whether you choose to specialise in tax or not, this subject is fundamental
to being a well-rounded professional working in the corporate world. This is also a very practical
subject and can aid you in your personal life as well.
Students generally find this module difficult as they are introduced to several new concepts. The
content of this module is large, and students find great difficulty in studying towards the exam
as all topics are examinable and a lot of content needs to be covered in order to be adequately
prepared for the exam. Tests and ICE tasks will be given during the course of the semester in
order to assist you with keeping up to date with the syllabus, and to ensure that you are studying
the content on a regular basis, which will also assist with the end of semester exam preparation,
and will ease the volume that needs to be studied. Completing work at home and tackling
homework is essential for passing this module.
Taxation 2A will make you aware of various taxes, however, you will only be focusing on two,
namely Income Tax (as it relates to a corporate entity) and Value-Added Tax (VAT). It is essential
to understand that VAT and Income tax are two separate taxes governed under two separate
Acts, but they can be easily integrated and it is imperative that you understand how this is done.
Other taxes such as Dividends tax, Donations Tax and Estate Duty will be learnt as you progress
through your studies.
The concepts and principles included in this module are difficult, but with enough practice, they
can be mastered. What you learn this year serves as a fundamental basis to what you will learn
in future and Taxation 2A is quite a substantial portion of what you will learn in Taxation 3A.
Obtaining a solid understanding now will only make it easier as you progress.
© The Independent Institute of Education (Pty) Ltd 2021
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IIE Learn Module Outline
TAXA6212
Using this Module Outline
This module outline has been developed to support your learning. Please note that the
content of this module is on Learn as well as in the prescribed material. You will not succeed
in this module if you focus on this document alone.
•
•
This document does not reflect all the content on Learn, the links to different resources,
nor the specific instructions for the group and individual activities.
Your lecturer will decide when activities are available/open for submission and when these
submissions or contributions are due. Ensure that you take note of announcements made
during lectures and/or posted within Learn in this regard.
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This Module on Learn
Learn is an online space, designed to support and maximise your learning in an active manner.
Its main purpose is to guide and pace you through the module. In addition to the information
provided in this document, you will find the following when you access Learn:
•
A list of prescribed material;
•
A variety of additional online resources (articles, videos, audio, interactive graphics, etc.)
in each learning unit that will further help to explain theoretical concepts;
•
Critical questions to guide you through the module’s objectives;
•
Collaborative and individual activities (all of which are gradable) with time-on-task
estimates to assist you in managing your time around these;
•
Revision questions, or references to revision questions, after each learning unit.
Kindly note:
•
Unless you are completing this as a distance module, Learn does not replace your
contact time with your lecturers and/or tutors.
•
TAXA6212 is a Learn module, and as such, you are required to engage extensively
with the content on the Learn platform. Effective use of this tool will provide you
with opportunities to discuss, debate, and consolidate your understanding of the
content presented in this module.
•
You are expected to work through the learning units on Learn in your own time –
especially before class. Any contact sessions will therefore be used to raise and
address any questions or interesting points with your lecturer, and not to cover every
aspect of this module.
•
Your lecturer will communicate submission dates for specific activities in class and/or
on Learn.
© The Independent Institute of Education (Pty) Ltd 2021
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TAXA6212
Icons Used in this Document and on Learn
The following icons are used in all your modules on Learn:
Icon
Description
A list of what you should be able to do after working through the learning unit.
Specific references to sections in the prescribed work.
Questions to help you recognise or think about theoretical concepts to be
covered.
Sections where you get to grapple with the content/theory. This is mainly
presented in the form of questions which focus your attention and are aimed at
helping you to understand the content better. You will be presented with online
resources to work through (in addition to the textbook or manual references) and
find some of the answers to the questions posed.
Opportunities to make connections between different chunks of theory in the
module or to real life.
Real life or world of work information or examples of application of theory, using
online resources for self-exploration.
REMEMBER:
You need to log onto Learn to:
● Access online resources such as articles, interactive graphics, explanations, video clips, etc. which
will assist you in mastering the content; and
● View instructions and submit or post your contributions to individual or group activities which are
managed and tracked on Learn.
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Module Resources
Prescribed Material (PM) for
this Module
Recommended Readings,
Digital, and Web Resources
Module Overview
Assessments
Bruwer, L. 2021. A Student’s Approach to Income Tax:
Business Activities. Durban: Lexis Nexis (PM1).
ISBN: 9780639009391
Please note that a number of additional resources and links
to resources are provided throughout this module on the
Learn platform. You are encouraged to engage with these as
they will assist you in mastering the various objectives of
this module. They may also be useful resources for
completing any assignments. You will not, however, be
assessed under examination conditions on any additional or
recommended reading material.
You will find an overview of this module on Learn under the
Module Information link in the Course Menu.
Find more information on this module’s assessments in this
document and on the Student Portal.
© The Independent Institute of Education (Pty) Ltd 2021
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IIE Learn Module Outline
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Module Purpose
The purpose of this module is to introduce students to the basic principles of the South
African tax system in order for them to be able to calculate taxable income in a corporate
environment.
Module Outcomes
MO1
MO2
MO3
MO4
Demonstrate a basic understanding of VAT and be able to calculate the VAT
implications in a specific scenario.
Understand the different types of entities and the tax implications for each of
them.
Apply basic principles to calculate normal income tax (including capital gains tax)
for a corporate entity.
Calculate the tax payable or refundable by the taxpayer for the year of
assessment.
© The Independent Institute of Education (Pty) Ltd 2021
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Assessments
Integrated Curriculum Engagement (ICE)
Minimum number of ICE activities to complete
Weighting towards the final module mark
Formatives
Weighting
Duration
Learning Units covered
Resources required
Test 1
20%
1 hour
LU 1 – 3
None
Summative
Weighting
Duration
Total marks
Open/Closed book
Resources required
Learning Units covered
Examination
50%
3 hours
180
Closed book
None
All
© The Independent Institute of Education (Pty) Ltd 2021
4
10%
Test 2
20%
1 hour
LU 1 – 5
None
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TAXA6212
Assessment Preparation Guidelines
Format of the Assessment
Test 1
The test for this module will
assess your understanding
of Learning Units 1 – 3 of
this module, and will
include a series of short and
medium-length questions,
as well as one longer
question. You will be
expected to apply, as well as
recall information as per
your objectives for these
learning units.
Test 2
The test for this module will
assess your understanding
of Learning Units 1 to 5 of
this module, and will
include a series of short and
medium-length questions,
as well as one longer
question. You will be
expected to apply, as well as
recall information as per
your objectives for these
learning units.
Preparation Hints
•
•
•
•
•
•
•
•
Examination
The examination will assess •
all learning units in this
module, and will include
both theory and applicationtype questions.
•
You will be expected to
respond to short, theory-
Ensure that you work through all the relevant activities,
exercises and revision questions on Learn and in your
textbook.
Brainstorm possible questions based on the learning
outcomes and objectives provided. Then complete
these as practice-tests.
During both your preparation for the test and during
the test itself, pay attention to the instruction words
(like list, apply, describe etc.) and to the mark
allocations of each question to ensure that you are able
to provide the correct depth and detail in your answers.
Make sure that you have mastered the objectives in
Learning Units 1 – 3.
Ensure that you work through all the relevant activities,
exercises and revision questions on Learn and in your
textbook.
Brainstorm possible questions based on the learning
outcomes and objectives provided. Then complete
these as practise-tests.
During both your preparation for the test and during
the test itself, pay attention to the instruction words
(like list, apply, describe etc.) and to the mark
allocations of each question to ensure that you are able
to provide the correct depth and detail in your answers.
Make sure that you have mastered the objectives in
Learning Units 1 – 5.
Consult your examination brief for this module, which
will be made available prior to your examination. Make
sure that you practise answering the sample questions
in the brief so that you become familiar with the kinds
of questions likely to appear in the examination itself.
Ensure that you work through all the activities,
exercises and revision questions on Learn and in your
textbook. You must have completed close readings of
© The Independent Institute of Education (Pty) Ltd 2021
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TAXA6212
based, but mainly to
calculation based questions.
•
•
•
your prescribed material to ensure that you have
prepared adequately for your examination for this
module.
Pay close attention to the instruction words (like list,
apply, describe, analyse etc.) and to the mark
allocations of each question to ensure that you provide
the correct depth and detail in your answers.
Make sure that you are comfortable in responding to all
the objectives for all learning units.
Brainstorm possible questions based on the learning
outcomes and objectives provided.
© The Independent Institute of Education (Pty) Ltd 2021
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IIE Learn Module Outline
Module Pacer
Code
TAXA6212
Learning Unit 1
TAXA6212
Programme
BAC312
Introduction to taxation
Contact Sessions
44
Credits
12
Overview:
This learning unit introduces you to the South African tax system, the different types of taxes
as well as the different tax bases. You will also learn about how legislation is interpreted and
the impact of interpretation notes and practice notes where the legislation is not clearly
worded.
If you are a contact student, you will likely spend four sessions on this learning unit.
Please work through Themes 1 and 2 on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please also ensure that you complete the activities on Learn.
This is fairly basic learning unit and generally easy to understand. Students do not usually
struggle with this learning unit.
© The Independent Institute of Education (Pty) Ltd 2021
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IIE Learn Module Outline
Learning Unit 1: Theme Breakdown
Sessions:
Theme 1: Introduction to Taxation
1-4
LO1: Describe the South African tax
Academic Week:
system;
1
LO2: Describe the budget process;
Related
LO3: Describe the role of SARS;
Outcomes:
LO4: Explain how Income Tax law is
MO1
interpreted;
LO5: Identify the impact of Regulations,
Practice Notes and Interpretation
notes.
Theme 2: Classification of taxes
LO6: Explain the implications for resident
and non-resident taxpayers (basis of
taxation);
LO7: Distinguish between direct and
indirect taxes;
LO8: Distinguish between progressive,
regressive and proportional tax.
© The Independent Institute of Education (Pty) Ltd 2021
TAXA6212
Prescribed Material (PM)
No prescribed text
No prescribed text
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IIE Learn Module Outline
Learning Unit 2
TAXA6212
Value-Added tax (VAT)
Overview:
In Learning Unit 1, you established the different taxes that are levied in South Africa. VAT (an
indirect tax) was one of them. In this learning unit, we will now be looking at VAT in more
detail. The work that will be covered in this learning unit is merely an introduction to VAT
and does not encompass all the rules and/or exceptions.
You will learn how to calculate output and input tax as well as the amount that is owed to/by
SARS at the end of the VAT period. The payment made to SARS requires an understanding of
the administrative process, so you will need to know when a person should register for VAT,
the different payment categories that are available, when the return must be submitted and
paid, and whether or not an invoice is valid in order for input vat to be claimed. Accounting
for the input and output tax is vital to your understanding of how it is treated in the real
world and thus you must be able to provide the necessary journal entries for any
transaction.
You will also learn how to determine the VAT treatment of a particular transaction i.e. when
is output tax levied and when can input tax be claimed. This includes learning the special
rules such as the exempt and zero rated supplies for output tax and the type of goods that
will lead to input vat being denied.
If you are a contact student, you will likely spend eight sessions on this learning unit.
Please work through Themes 1 to 4 on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please complete the activities on Learn.
Students generally struggle with this topic not only because of the volume, but also because
of the level of detail you are expected to know. There are many rules and exceptions to the
rules and this may become very confusing. It is imperative that you are able to distinguish
between output and input tax as well as understanding the difference between a zero rated
(taxable) and an exempt supply. Marks will not be awarded if these are incorrectly identified.
© The Independent Institute of Education (Pty) Ltd 2021
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IIE Learn Module Outline
Learning Unit 2: Theme Breakdown
Sessions:
Theme 1: The calculation of VAT
3-10
Academic Week: LO1: Calculate output or input tax on an
–1-3
amount that is inclusive of VAT;
LO2: Calculate output or input tax on an
amount that is exclusive of VAT;
LO3: Calculate the net VAT payable to or
refundable by SARS at the end of a
particular VAT period;
LO4: Supply the journal entries to
record transactions and the VAT
effect of such transactions.
Related
Theme 2: The accounting basis and
Outcomes:
administration
MO1
LO5: Explain how the VAT system works;
LO6: State when a taxpayer needs to
register as a vendor;
LO7: Describe the different categories
of vendors
o Describe their various tax
periods;
LO8: Identify the accounting basis to be
applied to the vendor;
LO9: Determine when returns are to be
submitted
o Determine when payments
must be made.
Theme 3: The basics of output tax
LO10: Determine when output vat must
be levied;
LO11: Determine when a supply is a zero
rated supply;
LO12: Determine when a supply is an
exempt supply;
LO13: Apply the value and timing rules of
a supply.
Theme 4: The basics of input tax
LO14: List the requirements of a valid
VAT invoice that enable input tax
to be claimed;
© The Independent Institute of Education (Pty) Ltd 2021
TAXA6212
Prescribed Material (PM)
PM: Chapter 2
PM: Chapter 2
PM: Chapter 2
PM: Chapter 2
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IIE Learn Module Outline
TAXA6212
LO15: Based on the value and timing
rules addressed under output tax,
determine the input tax that can
be claimed on a transaction;
LO16: Identify transactions where input
tax will be denied;
LO17: Determine when notional input tax
can be claimed on second-hand
goods.
© The Independent Institute of Education (Pty) Ltd 2021
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IIE Learn Module Outline
Learning Unit 3
TAXA6212
Income tax
Overview:
In Learning Unit 1, you established the different taxes that are levied in South Africa. Income
Tax (a direct tax) was one of them. We will now be looking at Income Tax in more detail.
Income Tax is a separate tax and is levied in accordance with its own rules as per the Income
Tax Act No. 58 of 1962.
In this learning unit, you will learn how to describe the income tax process from registration
all the way to resolving a dispute with SARS. There are many rules and processes when it
comes to disputes and you will need to know how to discuss and apply the rules for
objections, appeals and dispute resolution. You will need to identify a specific type of
taxpayer and from that determine at what rate that taxpayer should be taxed. Taxpayers
such as “small business corporations” and “microbusinesses” have to meet certain
requirements before they can register as such taxpayers. You will need to know what these
requirements are and apply them in a practical scenario.
You will also need to know how to calculate taxable income and the tax liability for that
taxpayer per the framework. A microbusiness is taxed using the turnover tax method, which
requires you to know how to calculate “qualifying turnover” and “taxable turnover”.
This learning unit merely provides a foundation. The detail of how taxable income is
calculated (based on the framework and the relevant legislation) will be covered in separate
learning units.
If you are a contact student, you will likely spend two sessions on this learning unit.
Please work through Themes 1 to 3 on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please complete the activities on Learn.
While this module is not very difficult, students tend to struggle with the new concepts,
elements of the income tax framework and the tax liability framework are often confused,
which leads to many errors in their calculations. Students also confuse the rates applicable to
a particular taxpayer. It is recommended that you familiarise yourself with the terminology in
this study unit and thoroughly understand the frameworks as these will form the basis of
what you will cover over the rest of the semester.
© The Independent Institute of Education (Pty) Ltd 2021
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IIE Learn Module Outline
Learning Unit 3: Theme Breakdown
Sessions:
Theme 1: The taxation process
11 – 12
Academic Week: LO1: Explain the various elements of the
3
taxation process and the related
requirements as per the Tax
Administration Act;
LO2: Discuss the rules for objections,
appeals and dispute resolution;
LO3: Apply the rules for objections,
appeals and dispute resolution.
Related
Theme 2: Different taxpayers
Outcomes:
LO4: Identify different taxpayers;
MO3
LO4: Determine the manner each
MO4
respective taxpayer should be
taxed;
LO6: Apply the requirements for a
taxpayer to register as a
“microbusiness”;
LO7: Apply the requirements for a
taxpayer to register as a “small
business corporation”;
LO8: Calculate a taxpayer’s taxable
income per the framework;
LO9: Calculate a taxpayer’s tax liability
or refund per the framework;
LO10: Calculate the following of a
microbusiness:
• “qualifying turnover”;
• “taxable turnover”; and
• the tax liability or refund.
Theme 3: Interaction between Income Tax
and VAT
LO12: Determine the impact of VAT on
transactions included in the
income tax calculation.
© The Independent Institute of Education (Pty) Ltd 2021
TAXA6212
Prescribed Material (PM)
PM: Chapter 12
PM: Chapter 1, 8 and 9
PM: Chapter 2
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IIE Learn Module Outline
Learning Unit 4
TAXA6212
Income
Overview:
In learning unit 3, you learnt the framework of how to calculate taxable income. Learning
units 4 to 7 will breakdown that framework into its individual components and deal with
each one separately.
The first component is “Income”. The Income tax Act defines income as “gross income” less
exempt income (i.e. income items which are not taxed).
“Gross income” is specifically defined in section 1 of the Act and most exemptions available
to taxpayers are contained is section 10 of the Act. In this learning unit we will be looking at
what makes up gross income per definition and you will learn to apply the various
components of that definition (with related case law) to determine if an amount is gross
income. We will also look at certain scenarios when the definition is overridden and the
amount is included because it is a special inclusion.
We will then move on to exempt income and you will learn to identify when an entire entity
or just a stream of income is exempt from tax.
Please note that for both of these, we will only be looking at what pertains to a business
entity and thus this learning unit does not contain all the specific inclusions and exemptions
included in the Act. These will be covered later in your studies.
If you are a contact student, you will likely spend three sessions on this learning unit.
Please work through Themes 1 to 3 on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please complete the activities on Learn:
This topic is usually tested in a theory or discussion type question and students generally
struggle with this. The principles of the “gross income” definition and the relevant case law
are easy to understand, but sometimes difficult to apply and discuss, especially those relating
to “capital in nature”. The only way to combat this is to practice questions.
It is important to note that because you will now be delving into a framework, each learning
unit builds on the one before and you must keep up to date. Missing lectures or falling
behind will inevitably lead to unnecessary confusion.
© The Independent Institute of Education (Pty) Ltd 2021
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IIE Learn Module Outline
Learning Unit 4: Theme Breakdown
Sessions:
Theme 1: The “Gross income” definition
13 – 15
Academic Week: LO1: State the criteria contained in the
4
definition of gross income (together
with the applicable case law);
LO2: Apply the principles of relevant case
law to illustrate the meaning of the
terms used in the gross income
definition.
Related
Theme 2: Gross income – Special
Outcomes:
inclusions
MO2
LO3: Identify the special inclusions of
MO3
gross income specifically for a
MO4
business entity, namely:
(c) Services rendered or voluntary
awards;
(g) Lease premiums;
(gA) “Know-how” payments;
(h) Lease Improvements;
(jA) Sale of assets similar to trading
stock;
(k) Dividends;
(lC) Government grant;
(m) Key-man insurance policies;
(n) Recoupments and other
inclusions.
LO4: Calculate the amount that should be
included in gross income for various
recipients based on information
provided.
Theme 3: Exemptions
LO5: Identify entities which are exempt
from tax;
LO6: Identify income that is exempt from
tax for a business entity, namely:
• S10(1)(k) Local dividends;
• S10B Foreign dividends; and
• S12P Government grants.
© The Independent Institute of Education (Pty) Ltd 2021
TAXA6212
Prescribed Material (PM)
PM: Chapter 3
PM: Chapter 3
PM: Chapter 3
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IIE Learn Module Outline
Learning Unit 5
TAXA6212
Deductions
Overview:
You are now moving on to the next part of the taxable income framework: Deductions. These
are all the costs that can be deducted from “income”. As a recap, the term “income” means
“Gross income” less exempt income and it is imperative that you understand that meaning
for this module. Not all costs incurred by a business can be claimed as a deduction for tax.
This learning unit guides you through how to assess which costs are deductible and which
are not by applying the definition of section 11(a) (general deduction formula) and the
related case law. You will also learn how to calculate certain specific deductions in
accordance with rules prescribed in the Income Tax Act. Lastly, you will learn how to identify
costs or expenses which are not allowed as a deduction (prohibited by section 23).
If you are a contact student, you will likely spend eight sessions on this learning unit.
Please work through Themes 1 to 3 on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please complete the activities on Learn:
Similarly to the previous learning unit, students tend to struggle with the discussion and
theory type questions. Applying the criteria of the general deduction formula (section 11(a))
as well as the relevant court cases prove to be quite challenging. Students also find it difficult
to remember the rules for each specific deduction. There are a lot of new sections which are
introduced in this learning unit and each one comes with its own rules. Students tend to
confuse these rule. However, if you practice consistently, you will find that applying these
rules become much easier.
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Learning Unit 5: Theme Breakdown
Sessions:
Theme 1: General deduction formula
Prescribed Material (PM)
16 – 23
(Positive test S11(a) and negative test
S23(g))
Academic Week: LO1: State the criteria contained in S11(a) PM: Chapter 3
6–8
(together with the applicable case
law);
LO2: Apply the principles of relevant case
law to illustrate the meaning of the
terms used in the general deduction
formula (S11(a)).
Related
Theme 2: Specific deductions
PM: Chapter 4
Outcomes:
LO3: Calculate the various specific
MO2
deductions (including trading stock)
MO3
that are available to the taxpayer in
MO4
accordance with the Income Tax
Act. These include:
• S11(c) – Legal fees;
• S11(cA) – Restraint of trade;
• S11(d) – Repairs;
• S11(gB) – Renewal of patents,
designs, copyrights and
trademarks;
• S11(gC) – Acquisition of
patents, designs and copyrights;
• S11(i) – Bad debts;
• S11(j) – Allowance for doubtful
debts;
• S11(l) – Contributions to
pension funds, provident funds
and medical aids;
• S11(m) – Annuities paid to
employees and dependants;
• S11D – Research and
development;
• S18A – Donations to Public
Benefit Organisations;
• S23H – Prepayments;
• S22 – Trading stock (including
recoupments).
© The Independent Institute of Education (Pty) Ltd 2021
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Theme 3: Prohibited deductions
PM: Chapter 3
LO4: Identify costs which are prohibited
from being deducted. These include:
• S23(c) – insured losses;
• S23(d) – Tax, penalties, interest
and levies;
• S23(e) – Provisions;
• S23(f) – Expenses incurred to
produce exempt income;
• S23(g) – Non-trade
expenditure;
• S23(l) – Expenditure relating to
restraint of trade payments;
• S23(o) – Fines and corrupt
activities;
• S23(q) – expenses relating to
foreign dividends.
© The Independent Institute of Education (Pty) Ltd 2021
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IIE Learn Module Outline
Learning Unit 6
TAXA6212
Capital allowances
Overview:
In Learning Unit 5, you learnt the criteria to deduct a cost incurred under section 11(a). One
of the requirements for deductibility was that the amount should not be capital in nature.
This, however, does not mean that SARS does not allow a taxpayer to deduct capital
expenditure. This learning unit covers the capital allowances that can be claimed on certain
assets and you will learn how to calculate these allowances in accordance with the specific
sections of the Act for moveable and immoveable assets. We will also look at calculating the
tax effect of disposing of an asset.
If you are a contact student, you will likely spend eight sessions on this learning unit.
Please work through Themes 1 to 4 on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please complete the activities on Learn.
Every section has its own rules and provisos. This learning unit is done directly after
deductions where there was quite a few new sections to learn and in this learning unit, the
volume increases. You will start to feel overwhelmed at this stage with the various sections
and rules. It is confusing and daunting trying to remember all of this information, but
remember an easy way to combat this is to make sure you keep up to date and practice lots
of questions.
© The Independent Institute of Education (Pty) Ltd 2021
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IIE Learn Module Outline
Learning Unit 6: Theme Breakdown
Sessions:
Theme 1: Terminology
24 – 30
Academic Week: LO1: Define the different terms used;
6–7
• Discuss how such items are
treated in the income tax
calculation.
LO2: Distinguish between a repair and
improvement and determine the
difference in tax treatment of each
one.
Related
Theme 2: Capital allowances for moveable
Outcomes:
assets
MO2
LO3: Calculate the capital allowances that
MO3
are available to the taxpayer in
MO4
respect of moveable assets in
accordance with the Income Tax
Act. Allowances covered include:
• S12C – Allowances on moveable
assets used by manufacturers;
• S12E – Deductions in respect of
a Small Business Corporation;
• S11(e) – Wear and tear
allowance on other assets (nonmanufacturing assets).
Theme 3: Capital allowances for
immoveable assets
LO4: Calculate the capital allowances that
are available to the taxpayer in
respect of immoveable in
accordance with the Income Tax
Act. Allowances covered include:
• S13 – Deductions in respect of
buildings used in the process of
manufacture;
• S13quat – Deductions in
respect of erection or
improvements of buildings in an
urban development zone;
© The Independent Institute of Education (Pty) Ltd 2021
TAXA6212
Prescribed Material (PM)
PM: Chapter 5
PM: Chapter 5
PM: Chapter 5
Page 25 of 30
IIE Learn Module Outline
TAXA6212
•
S13quin – Deductions in respect
of commercial buildings;
• S13sex – Deductions in respect
of certain residential units.
Theme 4: Disposal of assets
PM: Chapter 5
LO5: Calculate the effects that the
disposal of an asset has on taxable
income, namely:
• Recoupments (S8(4)(a),
S8(4)(k));
• Deductible scrapping
losses/allowances (S11(o)).
• Determine when a recoupment
can be deferred in terms of
section 13(3).
© The Independent Institute of Education (Pty) Ltd 2021
Page 26 of 30
IIE Learn Module Outline
Learning Unit 7
TAXA6212
Capital gains tax (CGT)
Overview:
When a capital asset is disposed of, the implications are twofold. There is an income tax
implication and there is also a capital gains tax (CGT) implication. You learnt the income tax
implication (recoupment and scrapping allowance) in Learning Unit 6.
You will now be looking at the CGT implications. You will learn how to determine who needs
to pay CGT and when it needs to be paid. You will learn how to calculate proceeds and base
cost as well as the resulting capital gain or loss.
Although the CGT calculation is quite complex, it is merely an additional step that is added on
the calculations you learnt in Learning Unit 6.
If you are a contact student, you will likely spend eight sessions on this learning unit.
Please work through Themes 1 and 2 on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please complete the activities on Learn.
The calculation of CGT is done in terms of its own unique framework and it is only the end
result that is included in the taxable income calculation. It also has its own definitions. While
there is a lot of volume, students tend to master this topic quite easily if they put in the initial
work in Learning unit 6 as this topic built on the previous topic. Students, however, still tend
to struggle with the rules of a pre-valuation date asset and the rules for calculating the
valuation date value of an asset using paragraph 26 and 27 of the Eighth Schedule.
© The Independent Institute of Education (Pty) Ltd 2021
Page 27 of 30
IIE Learn Module Outline
TAXA6212
Learning Unit 7: Theme Breakdown
Sessions:
Theme 1: Framework for calculating CGT
Prescribed Material (PM)
31 – 38
Academic Week: LO1: Determine the difference between
PM: Chapter 6
12 – 14
how residents and non-residents are
subject to CGT;
LO2: Determine when CGT is applicable.
Related
Theme 2: Calculating the taxable capital
PM: Chapter 6
Outcomes:
gain or assessed capital loss
MO2
LO3: Calculate proceeds;
MO3
LO4: Calculate base cost of a preMO4
valuation date asset;
LO5: Calculate base cost of a postvaluation date asset;
LO6: Calculate the aggregate and net
capital gain;
LO7: Determine the inclusion rate
applicable for a particular taxpayer.
© The Independent Institute of Education (Pty) Ltd 2021
Page 28 of 30
IIE Learn Module Outline
Learning Unit 8
TAXA6212
Provisional tax
Overview:
In learning unit 3, you were introduced to the taxation process. You also learned how to
calculate the tax payable or refundable, which is the tax calculated per the specified rate of
that particular taxpayer less any prepaid taxes. There are two methods of prepaying over
taxes to SARS, namely provisional tax and employees’ tax.
Any taxpayer will need to prepay their taxes before the end of the year of assessment. The
true taxable income for that taxpayer has not yet been calculated for the year and thus will
need to be estimated. In this learning unit, we will be looking exclusively at provisional tax,
who is required to pay it, when is it paid over and how the calculations for the first, second
and third provisional payment is performed..
If you are a contact student, you will likely spend three sessions on this learning unit.
Please work through Themes 1 and 2 on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please complete the activities on Learn.
This is a relatively easy learning unit, however, students tend to confuse payment dates. The
second provisional payments proves to be the most challenging because of the choices that
need to be made to determine what to base the payment on. Once this is understood, the
calculations are simple and students master this topic quite easily.
© The Independent Institute of Education (Pty) Ltd 2021
Page 29 of 30
IIE Learn Module Outline
Learning Unit 8: Theme Breakdown
Sessions:
Theme 1: Provisional taxpayers
39 – 41
Academic Week: LO1: List the type of taxpayers who are
15
required to pay provisional tax.
Related
Theme 2: Calculation of provisional tax
Outcomes:
payments
MO4
LO2: Calculate the first, second and third
provisional payments in accordance
with the Fourth Schedule of the
Income Tax Act.
© The Independent Institute of Education (Pty) Ltd 2021
TAXA6212
Prescribed Material (PM)
PM: Chapter 8
PM: Chapter 8
Page 30 of 30