An entity acquired an operating license from the local council to operate a night club for ten years in the area. The council charges R150 000 for the license to operating in such an affluent area. The entity decided to use the straight line method of amortization for all its licenses. What is the amount of amortization to be charged against the profits in the third year? Select one: a. R105 000 b. R45 000 c. R0 d. R15 000

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.