Blue Horizon pty Ltd, a resident company that was formed in 2009, has a 31 March financial year-end. The company distributed the following amounts/assets to its sole shareholder, Mr. Asmal, on 1 December 2022: - A cash distribution of R1 100 000; - An in specie distribution of trading stock with a market value of R600 000 (trading stock was acquired on 1 April 2022 at a cost price of R400 000); and - An in specie distribution of a building with a market value of R1 600 000 (the building was acquired on 15 June 2015 for R1 200 000 - the building did not qualify for any capital allowances) - The applicable company tax rate and dividend tax rate is 28% and 20% respectively. REQUIRED: 1 Calculate the normal tax consequences arising from the above distributions for Blue Horizon pty Ltd’s 2023 year of assessment. 2 Calculate the amount of dividends tax that Blue Horizon Ltd. is liable for.
Blue Horizon pty Ltd, a resident company that was formed in 2009, has a 31 March financial year-end.
The company distributed the following amounts/assets to its sole shareholder, Mr. Asmal, on 1 December 2022:
- A cash distribution of R1 100 000;
- An in specie distribution of trading stock with a market value of R600 000 (trading stock was acquired on 1 April 2022 at a cost price of R400 000); and
- An in specie distribution of a building with a market value of R1 600 000 (the building was acquired on 15 June 2015 for R1 200 000
- the building did not qualify for any capital allowances)
- The applicable company tax
REQUIRED:
1 Calculate the normal tax consequences arising from the above distributions for Blue Horizon pty Ltd’s 2023 year of assessment.
2 Calculate the amount of dividends tax that Blue Horizon Ltd. is liable for.
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