Page 47 - Nexia Cape Town 2018 TG Digital

Checklist (flowchart) for the application of the
ring-fencing provisions

Did the person carry on a trade in respect of which an
assessed loss was incurred during the year of assessment?
THE
Does the taxable income arrived at after adding back
any current year assessed loss and balance of assessed
loss equal or exceed the amount at which the maximum
marginal rate of tax for individuals becomes payable?
PROVISIONS

Does the trade Is this the third out of
constitute one of the five years of assessment
eight categories of in which an assessed
suspect trades which loss has arisen from OF
are listed? that trade?

Is this the sixth year of assessment in which
an assessed loss has arisen from that trade? SECTION 20A

The assessed loss is ring- Having regard to all the
fenced permanently and facts and circumstances of
may not be set off against this trade, was the person ARE NOT
income derived from able to show that this trade
any other source by that constitutes a business in
person during that year of respect of which there is
assessment� The assessed a reasonable prospect of
loss is carried forward and deriving taxable income
can be set off only against within a reasonable period? APPLICABLE
income derived from that
specific trade�
Key: Yes No
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