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Hi,
I am a trustee of a family trust, which basically holds assets (not a trading trust). I am trying to understand the tax calculation done by the previous accountants.
There are only a few line items in the income statement. I am putting amounts next to each item to illustrate the tax calc. - Income: Donations received R120 and interest received from the bank R5. Expenses: Accounting fees R20, Life insurance policy of the trustees R52, bank charges R2 and trustee fees paid to an independent trustee R30.
The tax calc is as follow:
Income:
Donations R120
Interest received R5
R125
Less: Non-taxable income
Donations received R120
Gross income R5
Less: Deductions and allowances
Expenses R104
Add: Non-deductible expenses
Life insurance R52
Expenses (*) R47
R99
Taxable income nil
So basically, the expenses added back in (*) is the balance of the expenses after deducting an amount equal to the gross income to make the taxable income nil. Can anybody please help me understand why they did this?
I am a trustee of a family trust, which basically holds assets (not a trading trust). I am trying to understand the tax calculation done by the previous accountants.
There are only a few line items in the income statement. I am putting amounts next to each item to illustrate the tax calc. - Income: Donations received R120 and interest received from the bank R5. Expenses: Accounting fees R20, Life insurance policy of the trustees R52, bank charges R2 and trustee fees paid to an independent trustee R30.
The tax calc is as follow:
Income:
Donations R120
Interest received R5
R125
Less: Non-taxable income
Donations received R120
Gross income R5
Less: Deductions and allowances
Expenses R104
Add: Non-deductible expenses
Life insurance R52
Expenses (*) R47
R99
Taxable income nil
So basically, the expenses added back in (*) is the balance of the expenses after deducting an amount equal to the gross income to make the taxable income nil. Can anybody please help me understand why they did this?
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