question archive During its 2018 year of assessment Peter (Pty) Ltd borrowed R3,5 million from ABC Bank to acquire new plant and machinery used in a process of manufacture
During its 2018 year of assessment Peter (Pty) Ltd borrowed R3,5 million from ABC Bank to acquire new plant and machinery used in a process of manufacture
Subject:AccountingPrice: Bought3
During its 2018 year of assessment Peter (Pty) Ltd borrowed R3,5 million from ABC Bank to acquire new plant and machinery used in a process of manufacture. During the 2019 year of assessment, Peter (Pty) Ltd started experiencing serious financial difficulty and the bank subsequently cancelled R1 million of the debt (none of the capital amount had been repaid by Peter (Pty) Ltd). Explain the CGT consequences of the cancellation of the debt on Peter (Pty) Ltd) and show calculations where necessary. 1.1 Is there a debt benefit? (2) 1.2 Is the debt benefit specifically excluded from the provisions of par 12A? (1) 1.3 What was the purpose of the debt? Explain.
