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2018 June Special Exam Eb

This document outlines a 2 hour, 70 mark tax law examination consisting of 3 questions. Question 1 asks critically discuss the definition of "received by or accrued to" in the Income Tax Act with reference to case law. Question 2 advises a South African company on the tax implications of R9 million in gross income from customers and dividends, as well as expenses and legal fees incurred. Question 3 advises a former Zambian resident, now South African citizen, on the tax implications of selling shares in a South African property company that he purchased in 2010.

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32 views2 pages

2018 June Special Exam Eb

This document outlines a 2 hour, 70 mark tax law examination consisting of 3 questions. Question 1 asks critically discuss the definition of "received by or accrued to" in the Income Tax Act with reference to case law. Question 2 advises a South African company on the tax implications of R9 million in gross income from customers and dividends, as well as expenses and legal fees incurred. Question 3 advises a former Zambian resident, now South African citizen, on the tax implications of selling shares in a South African property company that he purchased in 2010.

Uploaded by

sacey20.hb
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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TAX LAW BRE0011/TLW41A0

PROGRAM : LLB

MODULE : TAX LAW

CODE : BRE0011

DATE : 2018 SPECIAL EXAMINATION

DURATION : 2 HOURS

TOTAL MARKS : 70

EXAMINER : PROF T LEGWAILA

MODERATOR : PROF SF DU TOIT

EXTERNAL EXAMINER: : DR C FRITZ (UNIVERSITY OF PRETORIA)

NUMBER OF PAGES : 2 PAGES

INSTRUCTIONS:

1. Write legibly.
2. Answer in the answer sheet provided.
3. All examination rules of the University of Johannesburg are applicable.
4. Your answers should express a clear point of view in relation to each question.

2../
TAX LAW BRE0011/TLW41A0

Question 1

The definition of “gross income” in the Income Tax Act 58 of 1962 requires that for an amount
to be included in gross income, such amount should be received by or accrued to a resident or
to person that is not a resident from a source within the Republic. With reference to case law,
discuss critically discuss the requirement of “received by or accrued to”.

[20]
Question 2

SaCo is a company incorporated in South Africa with its place of effective management also in
South Africa. SaCo started trading in South Africa in 2017. SaCo’s gross income for 2017 was
R9 million comprising of the following amounts:

• a total amount of R4 million from its customers for goods and services provided by
SaCo; and
• an amount of R5 million as a dividend from its subsidiary, Subco which is also
incorporated in South Africa with its place of effective management in South Africa.
In the same year, 2017, SaCo incurred liability and paid cash for the following amounts:

• expenses amounting to R4 million in acquiring its trading stock as well as salaries for
its employees, rent of the premises from which it carries on business, telephone costs
and similar costs; and
• legal fees (costs) amounting to R3 million defending an action against a demand for
higher wages by SaCo’s employees, which legal action SaCo lost.
Advise SaCo on the tax implications of the above facts as well as its tax liabilities based on the
above facts for 2017.

[30]
QUESTION 3

Adru is a Zambian tax resident. Unable to buy property in South African company, he bought
shares in a property company (PropCo) in 2010. The assets of PropCo consists 90% of blocks
of flats which are rented out to university students. Adru acquired 30% of the shares in PropCo
for R10 million. In 2015 when the value of the shares was R14 million, he moved to South
Africa, took up employment in a South African bank, married a South African lady and took up
South African citizenship. In 2017 he sold all of his shares for R 20 million.

He approaches you for advice on the tax implications of the above facts. Advise Adru. [15]

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