Saica Practice Test & Exam Prep | South Africa

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A South African company has taxable income of R8 000 000. It qualifies for the Section 12C manufacturing asset allowance on a machine purchased for R4 000 000 (40% in Year 1). Accounting depreciation is 20% per year (R800 000). Corporate tax rate is 27%. What is the temporary difference and deferred tax liability created in Year 1 under IAS 12 Income Taxes?

Temporary difference R800 000; Deferred tax liability R216 000 Temporary difference R1 600 000; Deferred tax liability R432 000 Temporary difference R400 000; Deferred tax liability R108 000 Temporary difference R0; Deferred tax liability R0

Correct Answer:

Temporary difference R800 000; Deferred tax liability R216 000

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