The following statements refer to income. You are required to indicate whether the statements are True or False. If a statement is False, give supporting reasons for your answer.
- All dividends received from South African companies are exempt in terms of Section 10(1)(k)(i).
- Able, an Australian resident, receives an annual royalty income of R600 000 from a SA company which uses the patent (invented by Able in Australia) in South Africa. The royalty is exempt from tax.
- A SA resident receives a dividend from a foreign company in which he holds 30% of the equity shares and voting rights. The foreign dividend is exempt.
- If a taxpayer who sells groceries exchanges them with a second taxpayer who sells clothes, he/she doesn’t need to recognize any amount in gross income.
- A taxpayer sells an asset to a company in exchange for shares in that company. The shares have a market value of R10 000, but the parties agree that the purchase price will be R250, being the nominal value of the shares. The taxpayer need include only R250 in gross income.
- Soft drinks (in bottles) are sold to a customer for R10. If the customer returns the bottle he receives a refund of R1. The seller need include only R9 in gross income.
- A credit seller concludes a sale of R100, subject to an early settlement discount of 10%. The last date for early settlement falls in the following year of assessment. At year end the seller must include R100 in gross income.
- A new lounge suite is sold to a customer on credit. The sale is subject to the customer being allowed to return the lounge suite within 30 days and receive a refund. The amount must be included in gross income on the date of sale.
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