SCHOOL OF ACCOUNTANCY

Department of Taxation
Question Bank

TAXATON IIIA
(CITA 031)

COMPILED BY: MULWELI ELIA RAKHADANI CA(SA)

© 2010 University of Limpopo, Private Bag X1106, Sovenga, 0727, South Africa
Printed and published by the University of Limpopo.
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1
Question Description & Topics Marks Time
CITA031 Test 1 2022
1 Topics: Gross Income, Gross Income Special Inclusions, 80 2 hours
Exempt Income, General Deduction, and Special Deduction.
CITA031 Test 2 2022
2 Topics: VAT, General Deduction, Capital Allowances, 100 2.5 hours
Recoupments, CGT, Trading Stock, and CGT.
CITA031 Exam 2022
3 Topics: Gross Income, Deductions, Allowances, VAT, CGT, 100 2.5 hours
Exempt Income, and Recoupments
4 CITA031 Sup Exam 2022
Topics: Gross Income, Deductions, Allowances, VAT, CGT, 100 2.5 hours
and Recoupments
5 CITA031 Test 1 2021
Topics: Gross Income, Types of Taxes, Year of Assessment, 80 2 hours
Exempt Income and Deductions.
CITA031 Exam 2021
6 Topics: Gross Income, VAT, Trading Stock, Deductions, 100 2.5 hours
Capital Allowances, CGT, Recoupments, and Provisional Tax.
7 CTAA031 Exam 2017
Topics: Gross Income, Gross Income Special Inclusions,
General Deduction, Special Deductions, VAT, Exempt 120 3 hours
Income, Trading Stock, CGT, Recoupments, and Capital
Allowances
8 CTAA031 Supp Exam 2017
Topics: VAT, Gross Income, Exempt income, Deductions, 120 3 hours
Capital Allowances, CGT, and Recoupments.
CTAA031 Test 1 2017
9 Topics: Gross Income, Gross Income Special Inclusions, 80 2 hours
Exempt Income, General Deductions, Special Deductions,
CGT, Allowances, and Recoupments.
10 CITA031 Test 2 2021 80 2.25 hours
Topics: VAT

2
QUESTION 1 (80 MARKS)

Question 1.1 (30 MARKS)

Quality Masks (Pty) Ltd (hereafter QM) is a South African company operating at Paledi Mall in Mankweng
which manufactures and sells face masks. Since the COVID-19 pandemic started, the company has been
expanding rapidly developing a reputation for excellent quality and customer service. The company has a
28 February year end.

You have been recently appointed as a Tax Specialist at QM and your Tax Manager requested you to
assist with the following tax matters relating to the 2024 year of assessment:

1. Total sales made by QM amounted to R5 000 000 during 2024 the year of assessment with R1
000 000 of it made on 21 February 2024. Payment for the sales made on 21 February 2024 was
received on 01 March 2024 as these sales were subject to quality inspections, any face mask that
fails the quality inspection is returned to QM. All the masks passed the quality inspections on 01
March 2024.
2. Total raw materials purchased during 2024 year of assessment amounted to R1 500 000 of which
R500 000 relates to materials to be supplied on 30 September 2024.
3. Total rent paid relating to the factory leased by QM amounted to R120 000 during 2024 year of
assessment.
4. Total labour cost and other operating costs (water and electricity) amounted to R480 000 during 2024
year of assessment.
5. QM has a number of investments around the world and the following amounts were earned during
2024 year of assessment:
a. Local dividends of R200 000 and local interest of R100 000.
b. Dividends of R90 000 from a company in Italy, QM holds 5% voting and participating rights
in this company.
c. Dividends of R100 500 from a US company, QM holds 12, 5% of voting and participating
rights in this company.
6. Total debts amounting to R120 000 was written off during 2023 year of assessment made up of
R100 000 masks sold on credit and the balance relates to a loan which was granted to an
employee on 01 December 2021.
7. Total impairment loss allowance of R20 000 during 2024 year of assessment determined in terms of
IFRS 9. It consisted of R7 000 measured at an amount equal to the lifetime expected credit loss and
R13 000 measured at an amount equal to the 12-month expected credit loss. SARS allowed R4 500 in
the 2023 year of assessment as doubtful debts deduction.
8. The company (QM) erected a billboard on the R71 road next to Paledi Mall to advertise its face
masks at a cost of R150 000.
9. Donated R250 000 to an approved public benefit organisation (PBO) during the 2024 year of
assessment and received section 18A certificate from the PBO.

You are required to:

Calculate taxable income for Quality Masks (Pty) Ltd for the 2024 year of assessment. Provide reasons where
applicable. Show all your workings as marks will be awarded. (29)
Presentation and layout (1)

3
QUESTION 1 (80 MARKS)

Question 1.2 (50 MARKS)

You are employed at a Tax Consulting firm in Lebowakgomo and have been allocated work on the
clients below. The clients are unrelated, and all persons are South African Tax residents.

Client 1
Polokwane Properties (Pty) Ltd (hereafter PP) owns land and buildings in Polokwane which it
leases out to companies and individuals, the company let one of its properties to the Rakoma
couple for the whole year. The lease contract was concluded on 1 August 2023 and specified the
following:
1. The couple paid a deposit of R7 500 on conclusion of the lease agreement, PP put the
deposit in separate banking account from the business's bank account and this deposit is
payable to the tenant on termination of the lease subject to damage inspections
performed on the property. If there are damages to the property the deposit will be used
to fix the damages with balance, if any, payable to the tenant.
2. The couple must pay a monthly rent of R7 000 from 1 August 2023. They only paid the
January 2024 rental on 15 February 2024 together with the February 2024 rent. The
monthly rent escalates by 10% in January each year.
3. The couple is obligated to effect improvements to the house to the value of R10 000. The
couple completed the improvements during November 2023 at cost of R15 000.

Other information:
PP has a year end of January and is not a registered VAT vendor.

Client 2
Mankweng Waters (Pty) Ltd (hereafter MW) manufactures and sells bottled water in Mankweng
and supplies retailers operating in Mankweng complex and Paledi Mall. The company has a 28
February year end.

The company requested for tax advice on the following transaction relating to the 2024 year of
assessment:
1. The company paid an employee who resigned and left the employment of MW on 30 November
2023 an amount of R1 200 000 restraining them from starting a water bottling company in
Mankweng for a period of 4 years.
2. The company has learnership agreements with five employees on 1 March 2023 for a
period of 3 years. Two of the employees are doing NQF level 3 qualification, another two of
the employees are doing NQF level 8 qualification, and the fifth employee who is disabled
is doing NQF level 5 qualification.
4
Client 3

Maleka Clothing (Pty) Ltd (hereafter MC) is a clothing company that produces and sells casual and
corporate clothes. The company employs fashion designers to design and produce its products
and has a January year end.

The company has a taxable income of R3 500 000 before taking into account the following
transaction for its 2024 year of assessment:
1. Compensation for injury and damages amounting to R100 000. One of the designers'
hand got stuck in one of the sewing machines and sustained injuries from this
incident. The designer claimed compensation for injuries and damages at work. MC
only paid the damages after court ordered it to pay the employee. It incurred legal
costs amounting to R15 000 in the dispute process of the claim.
2. Total dividends of R200 000 from a company formed and operating in Brazil. MC has 5%
voting and participating rights in the company. MC also has 8% interest in preference
shares in this company. Invest (Pty) Ltd, a company forming part of the same group of
companies with MC has 7% voting and participating rights in the Brazilian company.
3. Proceeds from disposal of two sewing machines amounting to R130 000. The company
uses its sewing machines for 4 years and sells them at the end of year four when the
machines are no longer efficient in the production processes and costs the company a lot
to maintain.
No. You are required to: Marks
1. Relating to client 1
1.1 Discuss, with reference to case law, whether the deposit of R7 500 will be
included in gross income of Polokwane Properties (Pty) Ltd for its 2024 5
year of assessment.
1.2 Calculate, with reasons, the income tax implications for Polokwane
Properties (Pty) Ltd relating to the monthly rental for its 2024 year of 7
assessment.
1.3 Calculate, with reasons, the income tax implications for Polokwane Properties 3
(Pty) Ltd relating to the improvements to the house for its 2024 year of
assessment.

Layout and communication 1

2. Relating to client 2
Calculate the income tax implications for transaction 1 and 2 for Mankweng
Waters (Pty) Ltd for its 2024 year of assessment.
9

Presentation and layout 1

5
3. Relating to client 3
3.1 Discuss, with reference to case law, whether Maleka Clothing (Pty) Ltd will
be allowed a deduction for the compensation of R100 000 for its 2024 year of 5 -
·
assessment.
4
3.2 Discuss whether Maleka Clothing (Pty) Ltd will be allowed a deduction for
the legal fees of R15 000 for its 2024 year of assessment.
5
3.3 Discuss, with reference to case law, whether the proceeds from disposal of
two sewing machines amounting to R130 000 will be included in gross income
of Maleka Clothing (Pty) Ltd for its 2024 year of assessment. 9
3.4 Calculate the taxable income of Maleka Clothing (Pty) Ltd for its 2024 year
of assessment.
1

Layout and communication

6
QUESTION 2 (100 MARKS)

Question 2.1 (25 MARKS)

Lucky-Printing (Pty) Ltd “LP’ is a printing company operating in Brooklyn, Pretoria, the company offers printing
(of clothing) services to local and international clients. LP is a category A Valued Added Tax (VAT) vendor and
has a year of assessment ending on 31 March of each year.

The company’s supplies for the period 1 April 2022 to 31 March 2023 amounted to R2 000 00 with R600
000 being supplies made to international clients.

The following outstanding transactions took place in the company during the tax period ending 31 March
2024, all amounts include VAT UNLESS not applicable or stated otherwise:
1. Printing services to local customers amounted to R2 415 000 and to customers in foreign countries
amounted to R900 000.
2. Purchased ten (10) multi-functional commercial printers from a manufactures of printers in Johannesburg
at a cost of R517 500.
3. Total salaries and wages for the period ending 31 March 2024 amounted to R458 000.
4. During January 2024 two machines were stolen at the company’s premises. A claim was made with the
insurance company and R178 250 was paid out by the insurance company on 1 February 2024 made up
of R92 000 cash for one machine and the balance being a machine to replace the other machine.
5. On the 22 January 2024 the company purchased a coffee machine which is used in the kitchen by all the
employees for R3 780.
6. The company paid for the following sundry expenses during the 12-month period:
• Stationery R16 800
• Fuel R45 000
• Bank charges R6 720
• Interest on overdraft R12 000

No You are required to Marks

7
 1. Calculate the input VAT ratio for Lucky-Printing (Pty) Ltd. 3

2. Discuss the VAT implications for Lucky-Printing (Pty) Ltd relating to transaction 4 for 6
its 2024 year of assessment. Include time and value of supply in your discussion.

3. Calculate the VAT payable to SARS or refundable to Lucky-Printing (Pty) Ltd relating 14
to all the outstanding transactions for Lucky-Printing (Pty) Ltd for its 2024 year of
assessment.

Presentation and communication 1

QUESTION 2 (100 MARKS)

Question 2.2 (15 MARKS)

Part A
Mike Trading Pty (Ltd) (hereafter MT) is a small business corporation as defined and has a year of
assessment which ends on the last day of February each year. MT is not a registered VAT vendor.

MT has the following matters relating to manufacturing machines acquisitions relating to its 2024 year of
assessment which requires your attention as a Tax consultant:
1. Purchased a new and unused manufacturing machine (machine A) on 15 September 2023 for R50 000,
which was immediately brought into use for trade purposes.
2. Purchased a secondhand manufacturing machine (machine B) on 1 February 2024 for R6 500, which
was immediately brought into use for trade purposes.

Part B
Limpopo Constructions (Pty) Ltd is a construction company operating in Polokwane, Limpopo. The company
was established on 1 December 2023 and has a 31 January year end. The company wishes to know if it can
register for VAT and if so, when.

The company has provided you with the following information with regards to contracts secured to
construct roads with clients in Limpopo:

Contract 1: University of Limpopo

The company has signed a contract on 15 January 2024 to provide routine road maintenance of roads within
the University. The contract is for R1 200 000 and will run for a six-month period beginning on 1 February 2024
with R200 000 accruing monthly. This is the only contract of the company and has not generated any taxable
supplies apart from this contract.

8
 No You are required to Marks

1. Relating to Part A, discuss the income tax implications for transaction 1 and 2 for Mike 9
Trading Pty (Ltd) for its 2024 year of assessment.

2. Relating to Part B, discuss if and when should Limpopo Constructions (Pty) Ltd 5
register as a VAT vendor

Presentation and communication 1

QUESTION 2 (100 MARKS)

Question 2.3 (60 MARKS)

Mokgadi Beers (Pty) Ltd (hereafter BM) is a South African company operating in Mafefe, 200 km south east of
Polokwane. The company’s main operations is the production and sale of traditional beer, however it also sells
food. The company is a registered VAT vendor and has a March year end.

BM had a taxable income (accurately determined) of R1 350 000 before the following transactions (exclusive of
VAT) were considered for its 2024 year of assessment:
1. The company sold an old manufacturing machine on 1 May 2023 for R375 000, the machine was
purchased new and unused for R300 000 on 30 June 2021. MB purchased a new machine to replace the
old machine on 1 July 2023 for R400 000 and immediately brought it into use.
2. The company sold a piece of land on 30 September 2023 for R500 000, the land was bought on 30
September 1998 at a cost R100 000.
3. On 15 January 2023, the company completed the construction of a building used for accommodation by
the employees of the company at a total cost of R600 000. The building has six units and each unit
costed the company the same amount to construct. The employees are paying the company a monthly
rental of R1 500 and the rent escalates by 10% at the beginning of January each year, the employees
started occupying the units on 1 February 2024.
4. The company had the following information with regards to raw materials that was not accounted for as
yet in the 2024 year of assessment:
 Held raw materials amounting to R100 000 on 1 April 2023
 Raw materials purchased for the year of assessment amounted to R250 000 and
 Raw materials held on 31 March 2024 amounted to R80 000

Provisional taxes: 2024 year of assessment

The company has furnished you with the following relating to its provisional tax payments for its 2024 year of
assessment:

9
 Tax year Taxable income Date of assessment
2021 R1 200 000 4 September 2022
2022 R1 350 000 Assessment not issued due to a dispute between the company
and SARS
2023 R1 500 000 20 September 2023
2024 R1 700 000 (estimated – not yet assessed)

Additional information:
Please note that the company will make elections available in the Income Tax Act that may result in a
favourable tax position in the current year of assessment.

No You are required to Marks

1. Discuss the income tax implications for transaction 1 for Mokgadi Beers (Pty) Ltd for 15
its 2024 year of assessment.

2. Discuss the income tax implications for transaction 3 for Mokgadi Beers (Pty) Ltd for 5
its 2024 year of assessment.

2. Calculate, with brief reasons were applicable, the taxable income for Mokgadi Beers 29
(Pty) Ltd for its 2024 year of assessment. Please start with taxable income of R1 350
000 as provided.
3. Calculate with brief reasons were applicable, the first and second provisional payments 10
for Mokgadi Beers (Pty) Ltd for its 2024 year of assessment.

Presentation and communication 1

10
QUESTION 3 (100 MARKS)

Question 3.1 (50 MARKS)

Tzaneen Mugs (Pty) Ltd (hereafter TM) is a company manufacturing and selling mugs
operating in Tzaneen, a large tropical garden town situated in the Mopani District
Municipality of the Limpopo province in South Africa. The company’s financial year ends on
the last day of February each year and it is a registered VAT vendor.

TM had the following transactions for its 2024 year of assessment, the transactions are
exclusive of VAT:

1. Total amount received from sale of mugs amounting to R3 500 000.

2. Total dividends from South African companies amounting to R120 000 received in
monthly annuities of R10 000.
3. Total interest amount of R200 000 received from South African Banks.
4. Purchase of new and unused manufacturing machines for R3 500 000 on 1
December 2023. The new machines were more efficient and were used to replace
old machines purchased second hand for R2 000 000 on 30 June 2022. The old
machines were sold on 10 January 2024 for R1 500 000.
5. Total raw material purchase for the year of assessment amounting to R500 000.
6. Total labour cost of R1 000 000 and other operating cost of R400 000 were paid by
TM for the current year of assessment.
7. TM moved to a new factory building on 15 February 2024, the factory building was
constructed by TM at total cost amounting to R1 750 000. The factory building was
completed on the same date that TM moved into it. The old factory building was
purchased from a developer for R700 000 on 1 March 2007 and was sold on 15
February 2024 for R1 000 000.
8. TM incurred a total cost of R150 000 to move manufacturing machines from the old
factory building to the new one, R65 000 related to new machines (refer to number 4
above) and the balance related to old machines which were bought new and unused
on 1 October 2021.
9. The following information relates to TM’s administration building and costs incurred
for the 2024 year of assessment:
 The administration building was purchased from a developer for R800 000 on
1 March 2012.
 Wages and salaries paid to administration personnel amounted to R150 000.
 There are computers in this building bought on 1 October 2018 for R300 000.
SARS allows for a write off period of five years on a straight line basis for
these computers.

No You are required to: Marks

11
1. Calculate the normal tax liability of Tzaneen Mugs (Pty) Ltd for its 2024 49
year of assessment. Show all your workings and provide reasons where
applicable.

Presentation and communication 1

12
QUESTION 3 (100 MARKS)

Question 3.2 (45 MARKS)

Mike Tax Consulting (Pty) Ltd (hereafter MTC) is a company operating in Polokwane,
Limpopo. The company specializes in Tax consulting services and serves companies and
individuals in and around Polokwane.

The following queries from MTC clients require your attention, all the parties are not related
and are South African tax residents:

Client 1

Ngwanabo Guest House is a bed-and-breakfast (B&B) establishment situated in

Lebowakgomo. Total value of supplies for its 2024 year of assessment amounted to
R550 000, with R350 000 representing receipts from guests who do not stay longer than five
nights at a time and the balance represents receipts from guests staying for a 30 to 35 days
unbroken period at a time. The company is comfortable with input tax treatment and
therefore did not require MTC’s services in this regard.

Client 2

ZB Bricks (Pty) Ltd is a company that specializes in manufacturing bricks. ZB bricks is

situated in Zebediela in the Capricorn District Municipality of Limpopo Province, south-east
of Polokwane next to Lebowakgomo. The company is a registered VAT vendor and its
financial year ends on the last day of March each year.

ZB Bricks has the following queries which require your attention:

1. ZB Bricks acquired a machine to be used in the production of bricks from JK Machines

(Pty) Ltd. The machine has a cash selling price of R250 000. ZB Bricks will pay R20 000
per month for 24 months (first payment on 1 February 2024) to JK Machines. The
contract is a finance lease, an instalment credit agreement as defined and the machine
was delivered on 15 January 2024 and ZB Bricks received an invoice on 25 January
2024.
2. ZB Bricks purchased a bigger warehouse to store raw materials from LB Developers
(Pty) Ltd (a vendor and South African resident) for a consideration equal to the open
market value of R575 000. The registration of the property in the name of ZB Bricks
occurred on 15 November 2023. ZB Bricks paid the full R575 000 on 20 October 2023,
the invoice was received from LB Developers on 19 October 2023.
3. One of ZB Bricks’ machines broke down on 1 March 2024 and the insurance of the ZB
Bricks paid R460 000 in cash for the loss suffered on 15 March 2024.
4. Another machine which was producing 1 000 bricks a day was not efficient anymore, the
machine started producing 600 bricks only a day. ZB Bricks paid R175 000 on 25 March
2024 to fix the machine and the machine was now efficient again as it now producing
1 500 bricks a day.
5. On 30 March 2024 a brick fell on the arm of one of the employees who is involved in the
manufacturing process of the bricks. ZB Bricks paid the employee R120 000 as
compensation for injuries sustained.

13
6. ZB Bricks accepted bricks amounting to R20 000 (exclusive of VAT) from a customer on
29 March 2024. The customer bought the bricks on 25 March 2024 but noticed that they
bought an incorrect bricks size. The customer had bought the bricks on credit and their
debt was written off on the date of return.

No You are required to: Marks

1. Relating to client 1,

1.1 Discuss whether Ngwanabo Guest House can register as a VAT 5

vendor.
1.2 Assuming that Ngwanabo Guest House is a registered VAT vendor, 3
discuss without any calculations the VAT implications for its supplies
made in 2024 year of assessment.
1.3 Assuming that Ngwanabo Guest House is a registered VAT vendor,
6
calculate the VAT implications for its supplies made in 2024 year of
assessment.

Presentation and clear communication 1

2. Relating to client 2,

2.1 Discuss the time of supply for transaction 1 to transaction 3 for ZB 14

Bricks (Pty) Ltd for its 2024 year of assessment.

2.2 Discuss with reference to case law, whether the cost incurred to fix
the machine (transaction 4) can be deductible by ZB Bricks (Pty) Ltd. 5
Please ignore VAT.

2.3 Discuss with reference to case law, whether the compensation paid
(transaction 5) is deductible by ZB Bricks (Pty) Ltd. Please ignore 5
VAT.

2.4 Discuss the income tax implication for transaction 6 for ZB Bricks
5
(Pty) Ltd for its 2024 year of assessment. Please ignore VAT.
1
Communication

14
QUESTION 3 (100 MARKS)

Question 3.3 (5 MARKS)

Smart Toys (Pty) Ltd (hereafter ST) is a company that manufactures educational children’s toys. The
company has a financial year ending on 31 January each year.

The following information relating to one outstanding matter requires your attention:

Matter 1: Inventories

During the current year of assessment ST acquired spare parts for the manufacturing machines at a
cost of R100 000. At the end of the year of assessment, all the machines were still operating
satisfactorily and therefore none of the spare parts were used. The market value of the spare parts
on 31 January 2024 is R95 000.

No You are required to: Marks

1 Discuss the income tax implication for Smart Toys (Pty) Ltd for its 2024 year of 5
assessment.

15
QUESTION 4 (100 MARKS)

Question 4.1 (50 MARKS)

This question consists of two independent parts.

Part A

Mike Games (Pty) Ltd is a company resident in South Africa which designs and
manufactures board games for children and sells them to retailers nationwide. Its financial
year ends on the last day of February each year.

The Statement of Profit or Loss and other Comprehensive Income of Mike Games (Pty) Ltd
for the year ended 28 February 2024 is set out below:

Item Note R

Sales 26 850 000

Less: Cost of sales (13 250 000)

Gross Profit 13 600 000

Profit on sale of Machine A 7 432 500

14 032 500

Less: Expenditure (5 691 250)

Bad debt 1 (25 000)

Impairment loss (IFRS 9 loss) adjustment for doubtful 2 (95 000)

debt (movement in allowance)

Rent expense 3 (300 000)

Depreciation on computer 4 (50 000)

Depreciation on Machine A 5 (1 250 000)

Depreciation on factory building 6 (130 000)

Depreciation on Machine B 7 (22 500)

Depreciation on other machinery and depreciable assets (22 500)

– all fully written off for tax purposes

Restraint of trade 8 (800 000)

16
Insurance premium 9 (280 000)

Salaries 10 (2 500 000)

Provision for leave pay 11 (99 500)

Other tax-deductible administrative and marketing (117 000)

expenses

Profit before tax 8 341 250

Notes

1. Bad debt written off of R25 000 consist of normal trade debtors.

2. During the previous year of assessment SARS allowed Mike Games (Pty) Ltd to

claim R50 000 as a doubtful debt allowance. As of 28 February 2024, the

outstanding normal trade debtors of Mike Games (Pty) Ltd amounted to R3 800 000.

During the 2024 year of assessment a total impairment loss allowance (IFRS 9 loss

allowance) of R95 000 was determined, it consisted of R25 000 measured at an

amount equal to the lifetime expected credit loss and R70 000 measured at an

amount equal to the 12-month expected credit loss.

3. Since 1 June 2021, Mike Games (Pty) Ltd leased a delivery truck (with a cost price of

R780 000) from Naidoo Ltd, a non-connected company, for R25 000 per month in

terms of a three-year lease agreement.

4. On 18 January 2024 computer equipment was purchased for R255 000.

Interpretation Note No. 47 allows for a three-year write-off period on this computer

equipment. The computer equipment was brought into use on 1 February 2024.

5. Mike Games (Pty) Ltd ordered a manufacturing machine (Machine A) from a supplier

in France for R4 425 000 (converted to South African Rand correctly) on 1 November

2023 to use in the manufacturing process. Machine A was shipped free on board

(FOB) on 15 November 2023 and was delivered at Mike Games (Pty) Ltd’s premises

17
 on 25 November 2023. The payment for the machine was made to the supplier on 15

November 2023. The import duties of R45 000 were paid on importation. The

company had to erect a supporting structure at a total cost of R27 500 to support the

machine before it was brought into use on 1 December 2023.

6. The current factory building was erected by Mike Games (Pty) Ltd at a cost of R6 500

000 and brought into use on 1 June 2022.

7. On 1 January 2024, a part of the factory was flooded during a heavy rainstorm and

machine A (see note 5 above) was irreparably damaged in the process. On 15

January 2024, an amount of R3 568 000 was received from the insurance company.

8. Mike Games (Pty) Ltd paid R800 000 to Thabang Moroka, a former employee who

left the employment of Mike Games (Pty) Ltd, on 1 January 2024 as a restraint of

trade on the condition that he will not exercise a trade, profession or occupation in

the manufacturing of board games for the next five years.

9. Insurance premiums of R175 000 were incurred during the 2024 year of assessment.

On 15 February 2024 Mike Games (Pty) Ltd paid insurance premiums of R105 000

covering the period 1 March 2024 to 31 October 2024 , since this early payment

would secure cheaper insurance.

10. Salaries of R2 500 000 include directors’ salaries and fees.

11. The leave pay provision was increased by R99 500 for the 2024 financial year. As at
28 February 2024 the balance on the leave pay provision amounted to R150 500.

Other information:

Mike Games (Pty) Ltd has neither an assessed loss nor an assessed capital loss to carry
forward from its 2023 year of assessment.

Part B

Smart Toys (Pty) Ltd is a company that manufactures educational children toys. Its financial
year ends on 31 January each year.

The following information is available:

The notice of assessment for the 2023 year of assessment was issued on 25 July 2023, it
reflected a taxable income of R954 285, and this amount does not include any taxable

18
capital gains. The notice of assessment for the 2022 year of assessment was issued on 15
June 2023, it reflected a taxable income of R758 963, and this amount does not include any
taxable capital gains.

The estimated taxable income for the 2024 year of assessment is R965 000 and the actual
taxable income for the 2024 year of assessment is not yet available.

No You are required to: MARKS

1. Relating to Part A, calculate with brief reasons the normal tax liability of
Mike Games (Pty) Ltd for its 2024 year of assessment. Please ignore
VAT and start your answer with the profit before tax of R8 341 250. 45

2. Relating Part B, discuss and determine the basic amount for Smart
Toys (Pty) Ltd for its 2023 year of assessment. Please do not calculate
the provisional payments. 4

Presentation and communication 1

19
QUESTION 4 (100 MARKS)

Question 4.2 (30 MARKS)

Glen Wools (Pty) Ltd (hereafter GW) is a South African tax resident company that
manufactures and sells wools to local and international clients. The company is a Category
A registered VAT vendor and has a financial year of end of March each year.

Set out below are outstanding GW's transactions that took place during the months of
February and March 2024, all amounts include VAT where applicable unless stated
otherwise:

1) Total sales amounted to R2 195 000 with R700 000 being sales made to export
countries. Twenty percent (20%) of the local sales were made on 29 March 2024 and
invoiced on 1 April 2024 and the payment was received on 8 April 2024.
2) Wages and salaries paid for the period amounted to R200 000.
3) On 1 March 2024, the company purchased a coffee machine costing R5 000 to be
used by its employees during tea break and lunch time.
4) The company purchased a new manufacturing equipment on 14 February 2024, the
value of the machine was R50 000 (excluding VAT).
5) Raw materials were purchased for consideration of R460 000 during February and
March 2024.
6) Received dividends amounting to R57 500 on 18 March 2024 from South African
companies listed on the Johannesburg Stock Exchange (JSE).
7) Paid R45 000 for rent and electricity for the months February and March 2024.
8) Paid R115 000 insurance premiums for the two months period.
9) The company paid R23 000 for cleaning services for February and March 2024
months on 15 January 2024.

No You are required to: Marks

1. Calculate VAT payable by or refundable to Glen Wools (Pty) Ltd for the 29
February and March 2024 VAT period.

Presentation and layout 1

20
QUESTION 4 (100 MARKS)

Question 4.3 (20 MARKS)

Matter 1

Small (Pty) Ltd (hereafter Small) is a small business corporation as defined and has a
financial year ending 31 March. The company is not a registered VAT vendor. Small has the
following transactions relating to purchases of machines that requires your attention:

1. Small purchased new and unused manufacturing machine (machine A) on 1

February 2024 for R10 000 and brought the machine into use on the same day.
2. Small bought a secondhand manufacturing machine (machine B) from a registered
VAT vendor for R6 900 on 31 January 2024. The machine was brought into use on 1
March 2024.

Matter 2

Meshach Masemola is a lecturer at the University of Limpopo who has started a company
called Turf Apartments (Pty) Ltd (hereafter Turf) on 1 March 2024. The company provides off
campus accommodation to University students and has 28 February year end.

The company built Apartments consisting of eight units, the construction of the Apartments
began on 1 March 2023 and was completed on 31 August 2023. Five units of the eight units
are standard single room apartments while three are bachelor apartments. Below is the
details of the costs of the units and the rent charged by Turf:

For the five units (standard single rooms apartments), each unit costed Turf R100 000 to
construct and the tenants pay R1 250 rent per month. For the three units (bachelor
apartments), each unit costed Turf R300 000 to construct and the tenants pay R2 500 rent
per month. The lease agreements provides for 10% escalation of the monthly rental on the
1st of March each year for all the units (single room and bachelor apartments).

21
No You are required to Marks

1. Relating to Matter 1, discuss the income tax implications for the 9

transaction

1 and 2 for Small (Pty) Ltd for its 2024 year of assessment.

2. Relating Matter 2, discuss the allowances available for the apartments 10

and rentals for Turf Apartments (Pty) Ltd for its 2024 year of
assessment. Please do not calculate the allowances.

Presentation and communication 1

22
QUESTION 5 (80 MARKS)

Question 5.1 (20 MARKS)

As a registered student of CITA031 (after you have passed CTAA021) at the University of
Limpopo, School of Accounting and to become a prospective Tax Practitioner. You have
been given the opportunity to compete with different students from other Universities in
South Africa. Topic for the debate/challenge is to argue both for and against, the following
methods of taxation:

1. Value-added tax. (4 marks)

2. Estate duty. (4 marks)
3. Capital gains tax. (4 marks)
4. Donations tax. (4 marks)
5. Normal tax. (4 marks)
You are required to: Explain and discuss each method of taxation and setting/indicate out
its advantages and disadvantages. (20)

Question 5.2 (08 Marks)

An extract from the opening words of the definition of 'gross income' in section 1(1) of the
Income Act follows: ‘Gross income, in relation to any year or period of assessment, means...
You are required to:

1. Discuss what is meant by the term ‘period of assessment’ (02)

2. Indicate when a ‘period of assessment’ will be less or more than a year. (06)

Question 5.3 (20 Marks)

Query A

AmaKhalo (Pty) Limited is a hops (a climbing plant whose dried flowers are used in brewing
to give beer a bitter flavour) farmer. Its financial year ends on the last day of February. In
January 2024 it sold and delivered hops to an ' African beer' manufacturer for R25 000. An
amount of R15 000 was paid to it on delivery (on 31 January 2024) and the R10 000 balance
was paid to it six months later (on 31 July 2024).

You are required to: Determine and discuss, the amount to be included in AmaKhalo (Pty)
Limited's 2024 gross income. (5)

23
Query B

Ms. N Mose inherited money in 2017 and opened Small Medium and Micro Enterprises
called “Namose (Pty) Ltd”. Namose bought two residential duplex units in Tshamahansi,
Mokopane for R375 500 each. These units were sold at R582 490 each to the tenants during
2024 year of assessment.

You are required to: Discuss with reference to case law, in the above query, what amount
will be included in gross income of the respective taxpayer. (14)

Presentation mark for clarity of explanation, logical argument and language usage. (01)

Question 5.4 (20 Marks)

1. The term actually term “actually incurred" in relation to on amount that is deductible in
the determination of taxable income means an amount actually paid or an amount for
which there is a commitment to pay in the future.
2. When an act is performed in the production of the income, expenditure attendant upon
that act qualifies for deduction in the determination of taxable income under section
11(a).
3. Only expenses incurred in South Africa are deductible in the determination of a
taxpayer's taxable income.
4. No tax, duty, levy or interest on the late payment of tax or penalties may be deducted in
the determination of taxable income.
5. The terms "business income" and "trade income" do not necessarily have the same
meaning.
6. Whether it is necessary to incur an expense will determine if it is deductible in
determination of taxable income under the general deduction formula.
7. Expenses must be incurred in the production of the "gross income" in order for them to
be deductible in the determination of taxable income.
8. Certain provisions for future expenditure or losses qualify for a deduction in the
determination of taxable income under section 11(a).
9. One of the tests established by the courts to distinguish capital expenditure from non-
capital expenditure is whether the expenditure fills a "hole" in the taxpayer's capital
structure.
10. In the determination of a taxpayer’s taxable income, "home study" expenses are
deductible by a taxpayer who conducts his business from his home or who earns a
commission.

24
You are required to: In each of the following question indicate whether the statement is
TRUE OR FALSE, and provide brief reason for your answer. Answer the question in the
following format.

NO TRUE/FALSE Reasons

Question 5.5 (12 Marks)

Hlasemo (Pty) Ltd (hereafter Hlasemo) is a South African, Micro Business company
producing sanitizers. In the ensuing years the company expanded rapidly developing a
reputation for innovation, quality and customer service. Hlasemo’s operation is a process of
manufacture. Hlasemo has 28 February year end. Hlasemo is not a Value Added Tax
vendor.

The tax manager is on leave and you, “a recently qualified Professional Accountant”, have
been requested to assist with the following tax matters relating to 2024 year of assessment:

1. Hlasemo made total sales of R4 557 200 during 2024 the year of assessment.
2. Total raw materials purchased during 2024 year of assessment was R1 322 100.
3. Hlasemo has several investments around the globe and the following incomes were
earned during 2024 the year of assessment:
a. Gross foreign dividends of R128 500 from US company. Hlasemo holds
12,5% of voting shares in the US Company.
b. Gross foreign dividends of R119 000 from a company in Madagascar;
Hlasemo holds no shares in the Madagascar company.
c. Net local dividends of R232 300 and local interest of R121 000.
4. Hlasemo spent a total of R254 000 on uniforms and protective clothes used by
manufacturing and general sales staff. The uniform is clearly distinguishable.
5. Hlasemo incurred a penalty of R13 250 for late submission of provisional tax payment.
You are required to:

Calculate tax payable of Hlasemo (Pty) Ltd for 2024 year of assessment. State the applicable sections
and reasons where applicable. Show all your workings as marks will be awarded. (12)

25
Small Business Corporations (SBC)

Financial years ending on any date between 1 April 2023 and 31 March 2024:

Taxable income (R) Rate of tax (R)

Not exceeding R 91 250 0% of taxable income

Exceeding R 91 250 but not exceeding R 365 000 7% of taxable income above R 91 250

Exceeding R 365 000 but not exceeding R 550 R 19 163 + 21% of taxable income above R 365
000 000

Exceeding R 550 000 R58 013 + 28% of taxable income above R 550 000

Financial years ending on or after 31 March 2023:

Taxable income (R) Rate of tax (R)

Not exceeding R 91 250 0% of taxable income

Exceeding R 91 250 but not exceeding R 365 000 7% of taxable income above R 91 250

Exceeding R 365 000 but not exceeding R 550 R 19 163 + 21% of taxable income above R 365
000 000

Exceeding R 550 000 R58 013 + 27% of taxable income above R 550 000

TURNOVER TAX FOR MICRO BUSINESSES

2024 (1 March 2023- 28 February 2024)

Taxable turnover (R) Rate of tax (R)

Not exceeding R 335 000 0% of taxable turnover

Exceeding R 335 000 1% of taxable turnover above R 335 000

Exceeding R 500 000 but not exceeding R 750 R 1 650 + 2% of taxable turnover above R 500 000
000

26
Exceeding R 750 000 R 6 650 + 3% of taxable turnover above R 750
000

QUESTION 6 (100 MARKS)

Question 6.1 (25 MARKS)

Query 1

Decuplets (Pty) Ltd (which makes 85% taxable supplies) buys a motor car for R264 500
including VAT. It gives the use of the vehicle to one of its employees. The company spends
R5 355 on repairs and R6 453 on insurance for the vehicle. The company submits a two-
monthly VAT return. The employee does not bear any costs of repairs or maintenance costs.

You are required to:

Calculate and discuss the VAT implications of Decuplets (Pty) Ltd for the two-month VAT
period. (10)

Query 2

Nonuplets (Pty) Ltd (hereafter Nonu) is a resident of the Republic of South Africa. It has April
as year-end. Nonu owns a land, which it acquired as a fixed asset on the 01 May 2018. The
land has a base cost of R2 150 000. In March 2024, Nonu changed its intention vis-à-vis the
land and decided to develop it and deal with it as trading stock. At the time the market value
was R7 650 000. Nonu then developed the land at a cost of R5 400 000, subdivided it into
separate residential plots and sold half plots for R6 550 000 in total, during the 2024 year
of assessment (all amounts are net of VAT). The rest of plots were sold on 31 March 2024
for R7 650 000.

You are required to:

Calculate the effect this transaction will have on the taxable income of Nonuplets (Pty) Ltd
on the 30 April 2024. State the applicable sections and reasons where applicable. Show all
your workings as marks will be awarded.
(15)

27
Question 6.2 (10 MARKS)

Septuplets (Pty) Ltd (hereafter “Septuplets”) is a manufacturing company. During the current
year of assessment acquired a spare part at a cost of R70 000. The spare part is a gearbox
of one of the machines. Septuplets was worried that the existing gearbox might fail and
cause serious downfall in the production process. At the end of the year of assessment, the
old gearbox was still operating satisfactorily and it had not been necessary to replace it.

You are required to:

Explain whether a deduction for the current year of assessment may be claimed under s11
(a) in Septuplets (Pty) Ltd. If s11 (a) deduction cannot be claimed explain whether a
deduction could be claimed under any s11 deduction provisions. State the applicable court
cases and reasons where applicable.
(10)

Question 6.3 (50 MARKS)

Octopus Ltd (Hereafter Octopus) is a company based in Polokwane. It manufactures

assorted chemicals and is a registered VAT vendor. All amounts exclude VAT, unless
otherwise stated. During the 2024 year of assessment, it expanded its operations due to
increase in demand of chemicals. The expansion included the building of a new factory and
the acquisition of new machinery. The old factory and certain machinery were sold. The
year-end of Octopus Ltd is the last day of February. Octopus has net income before tax per
the statement of comprehensive income of R5 680 000. The information below was not
taken into account.

Old factory

The old factory building was erected in October 2000 at a cost of R2 000 000. It was
brought into use on 1 July 2004. After the building was completed, certain improvements
were undertaken. This cost the company an amount of R200 000 on 1 August 2005. The
building was therefore valued on 1 October 2002 at R2 000 000. It was sold for R15 000

28
000 in November 2023. The accountant has not accounted for the sale of the building in the
accounting records yet. Time-Apportionment Based Cost was determined to be R2 608 571.

New factory

A 30-year lease agreement was signed on 1 November 2023 for the lease of vacant land. In
terms of the lease agreement, Octopus was to pay a lease premium of R500 000 on the day
the lease was signed, and also obliged to build a factory on the land. The cost of the
building was stipulated in the agreement to be R50 000 000. The building of the factory
commenced on 1 November 2023 and was completed at a cost of R55 000 000 on
1 December 2023 and immediately brought into use.

Old and new manufacturing machinery

The old manufacturing machine, which had cost the company R1 000 000 in April 2021, was
sold for R2 000 000 on 30 October 2023. This machine was bought new and unused. New
manufacturing machinery was acquired on 1 December 2023 for R8 050 000 (including VAT)
in cash in an arm’s length transaction. The machine was purchased to replace the old
manufacturing machine. The machine was brought into use on the same day in a process of
manufacture. Octopus has elected paragraph 66 of the Eighth Schedule and s8(4)(e) to
defer its tax liability on the old machine.

Depreciation

The accountant of Octopus provided depreciation on the following assets only:

1. A delivery truck, which distributes the chemicals to all parts of the Limpopo Province,
was purchased on 1 July 2023 at a cost of R280 000. It was brought into use on the
same day. Interpretation Note 47 allows a write-off period of 5 years on motor
vehicles.
2. Chemical making is a specialised business. The company requires computers in
mixing the chemicals in order to arrive at the correct standard. A high-powered
computer was purchased on 1 October 2023 for R48 000 and brought into use the
same day. Interpretation Note 47 allows a write-off period of 3 years on computers.

You are required to:

Calculate the tax payable of Octopus Ltd for its year of assessment ended 28 February
2024. Start your calculation with the net income before tax per the statement of
comprehensive income of R5 680 000. State the applicable sections and reasons where

29
applicable. Show all your workings as marks will be awarded.
(50)

Question 6.4 (15 MARKS)

Quintuplets CC (hereafter Quintuplets) whose year of assessment ends on 28 February

2024 estimates on 31 August 2023 that it will generate a taxable income of R1 000 000 for
the year. According to company records, last assessment was done in 2021 and the taxable
income was R900 000. In May 2024 the taxable income of the company for the year of
assessment ending 28 February 2024 was calculated to be R1 200 000.

You are required to:

a) State the date on which the provisional tax payment is due and calculate the
provisional tax for each period with regard to the year of assessment 28 February
2024. (i.e. first, second and third provisional tax payments)
(10)
b) Calculate additional tax, if any (05)

30
QUESTION 7 (120 MARKS)

Question 7.1 (60 MARKS)

You are a Trainee Accountant of BubuCobly a small audit firm situated in North of Pretoria.
You are currently busy with the Audit of Afrisum Ltd a company that’s manufacture cement
called Sepheku at the cement plant in North West and Mpumalanga province. Afrisum Ltd is
listed on JSE, has a 30 April year of assessment and is a registered vat vendor. Afrisum it’s
a manufacturing company as defined

The strategy of AfriSum Ltd is to stabilize and optimize its production capacity and to offer
high quality products, exceptional services, first class technical support to customers and
lastly to ensure sustainable growth in profitability to shareholders. Afrisum targets Gauteng,
surrounding North West, Limpopo and Mpumalanga Provinces as well as Botswana.

The Audit Manager of BubuCobly Mr. Hein Steenkamp, requested that you re-do the
calculation of the tax payable of Afrisum and agree with what it is disclosed in the annual
financial statements. The following Information were taken into consideration in calculating
the tax payable by Afrisum Ltd.

All amounts includes vat unless stated otherwise

1. Afrisum Ltd sold Sephaku cements as follows during the year of assessment:
Local sales………………………………………R 3 876 000

Export Sales…………………………………… R2 394 000

2. The value of inventory as at year end was derived as follows

The Value of inventory

31
 Market
No Description Date Cost Value

Opening
1 stock 01 May 2023 729 600 616 740

01 September 1 014
2 Purchase 2023 000 1 014 600

3 Closing Stock 30-Apr-2024 405 840 340 860

3. The company invested in various portfolios and the following income were received
a) Local net dividends……………………………………………..R 108 000
b) Foreign dividends from unlisted foreign company……………R 54 900
c) Interest income received from Bantu Bank…………………...R 20 800
4. The following payments and benefits were received by the employees of Afrisum Ltd:
a) Salaries and wages………………………………….R732 000
b) Contribution to pension fund …………………….R326 000
The company’s executive retired on 01 November 2023 and as a result thereof the
company paid him R350 000 to restrain him from accepting employment with the
competitor of the company for a period of two years.
Afrisum Ltd was fined R300 000 by competition commission for price fixing and
Afrisum paid a legal fees amounting to R100 000 disputing all this allegation.
5. Trade mark B was purchased and taken into use on 01 May 2020 at a cost of R96 900,
the trademark should be renewed every three years. AfriSum Ltd had renewed the
registration of the trade mark on 01 May 2023 at a cost of R14 250.
6. Movable Assets
a) The company purchased a new manufacturing machine A on the 01 May 2023 at a
cost of R250 800 for use directly in the process of manufacture and it was brought
into use on 01 July 2023.
b) The company acquired a second hand machine B on 1 August 2023 at a cost of
R171 000 and directly brought into use, directly in the process of manufacture.
c) Afrisum purchased loose tools on the 1st of December 2023 (12 spades and 10
forks) at a cost of R456 and R1368)respectively to be used during production and
bought an equipment that will be used to count the cement produced at a cost of R8
208
7. Buildings

32
 a) Administrative building was purchased from Property R us a commercial property
agent selling on behalf of previous owners on 01 October 2022 at a cost of
R5 130 000.
b) Five of its employees were in desperate need of accommodation closer to Afrisum
Ltd in North West and the company decided to invest in residential property that it will
rent out to the employees. Afrisum Ltd Constructed a block of flat consisting of 25
units. The cost of the first twenty units was R340 000 per unit, and the rent charged
is R3200 per month. The cost of the remaining five units were R750 000 each the
apartment is fully furnished with two bedrooms at a monthly rental of R5 300 per
month, The flats were rented out as from 01 February 2024.
c) Afrisum Ltd purchased a factory building at an amount of R1 710 000 and the factory
was brought into use since 30 April 2021.
8. Afrisum Ltd purchased a factory building on 1 October 1998 for R798 000. The factory’s
tax value on 1 June 2023 was R0 when it sold it for R2 166 000. The market value of the
building on 1 October 2002 was R1 400 000.
9. Afrisum Ltd sold machine DD used in the process of manufacturing for R1 254 000 on
1st February 2024. The machine DD was acquired New at the total cost of R969 000
(including moving costs of R57 000) on the 1 June 2021.
10. Afrisum Ltd invested in various shares portfolio and during 01 May 2019 its purchased 5
000 shares at R120 each from MTN Zakhele shares and in December 2020 Afrisum Ltd
bought additional 3 000 shares for R205.In terms of the contract the share can only be
sold after five years and cannot be sold to the public but to existing shareholders.
Afrisum Ltd decided to sell 6 000 shares for R450 each on the 30 April 2024
11. The company bought VW Golf 5 to Mr. Radical Change to be used for business
purpose.The Golf 5 was purchased for R741 000 on 01 September 2021. On 01 January
2024 Mr. Radical Change resigned and the company sold the VW Golf 5 for R389 880
on same date.
12. The company sold 20 meter yacht (boat) at the end of the year for R950 000(excluding
vat) and the base cost on the date of sale was correctly calculated as R1 200 000.

13. Afrisum Ltd purchased a second hand machinery on 01 September 2022 for R570 000
which was used in a process of manufacture .On the 30 November 2023 the company
decided to donate the machinery non-profit organization however it’s not registered in
terms of sec 18A. The market value of the machinery on that date was R627 000. The
donation tax payable was R20 000. The company bought a brand new machinery to

33
 replace the old machinery at cost R684 000. The machinery was brought into use
immediately.
14. Assessed capital loss carried over from previous year amounted to R600 000

The Commissioner allows 5 years deductions for vehicle and equipment and 3 years
for loose tools

REQUIRED Marks

Calculate the tax payable of Afrisum Ltd as at 30 April 2024. Provide a 60

Brief reason for the inclusion and exclusion. Show your workings.
All amount includes vat unless stated otherwise

Question 7.2 (40 MARKS)

You are a Tax Specialist at Tax Services of South Africa (TSSA) and you are requested to
assist with the tax implication of the following transaction. Bakgatla Ltd is a category A VAT
Vendor

PART A 35 Marks

1. Bakgatla Ltd purchased a new office building for R5 000 000. The office building was
purchased from a non-registered vendor. The purchased consideration and the transfer duty
of R317 000 was paid on 15 November 2023
2. A secondhand light delivery van (not a double cab), was acquired on 01 December
2023 for R136 800 from a non-registered vendor. The vehicle was paid on the 15
December 2023. On 16 December 2023 the free use of the vehicle was given to one of
its hard working employee. Junk Status. As per the agreement Mr. Status will bear the
full cost of the repairs and maintenance of the vehicle
3. On the 5th of January 2024 Mr. Junk status was involved in a fatal car accident, while
delivering the stock to Ncutla village in KZN. The delivery vehicles was beyond repair
and was written off. On the 15 January 2024 the insurance made a payout of R95 000
for the damaged vehicle and the trading stock amounting to R23, 500 was reinstated.
Mrs. Status sued the company R400 000 and the court ordered the company to
compensate widow. Legal cost amounting to R72 400 were incurred by the company in
defending the claims.

34
4. The company bought the coffee machine for employees amounting to R14 500 at Game
store.
5. Bakgatla Ltd paid R12,500 to SARS for late submission of its tax return

You are required to: Marks

Write a memo to the CFO of Bakgatla and discuss all tax implications as 35
at February 2024
(Discuss the normal tax, vat and CGT ) of the above transaction. Show
your calculation Commissioner allows 5 years deductions for
vehicle
Presentation 2 marks

PART B 5
Marks

Lwazi Nsuku is in a business of selling Tupperware. The Tupperware are for the company in
Sandton she is paid the commission of 20% for each product she sold. For the year of
assessment 2024 she sold the Tupperware product to the value of R350 000. All the money
was deposited in Lwazi Nsuku’s Capitec bank account by the clients she sold the products
to.

You are required to: Marks

Advise Lwazi Nsuku whether the amount will be included in her gross 5
income. (included reference to court case principles and related sections in
the Income Tax Act)

35
Question 7.3 (40 MARKS)

Thabo Mongatana South African residents and a Bcompt graduates from University of
Pretoria. After years of working experience at Kolano investment He decided to start his own
Consulting Company called Masindi Business Solution hereafter (MBS) with 100%
ownership.

During the period 01 December 2023 until 31 January 2024, MBS entered into the following
transactions. MBS purchases only from VAT vendors and all amounts include VAT (unless
stated otherwise)
1. During the year ended December 2023, the company purchased trading stock for an
amount of R610 000.20% of the trading stock was bought from non-vendor.
2. MBS imported raw material from Red Sea CC an unconnected person in Kenya (not
a vat vendor) .The cost incurred were as follows:
 Cost price: R92 000
 Freight in cost R2 500
3. MBS made sales during the year of R1 400 000 (excluding VAT). Of this amount
R250 000 was made to a customer in Australia.

36
4. On the 15 January 2024, MBS bought five used computers from two different
suppliers to deal with its administration issues and the running of the business. Three of
these computers were bought from a non-vendor and two from a vendor. The consideration
paid for the computers was R 7 200 each and open market value on the 15 January was
R6 500 each.
5. MBS purchased a VW Polo Vivo on 1 February 2024 for R180 000. The company
sales representative Mr. Junkie Status was immediately given use of the motor car (for the
rest of the year) as Mr Junkie Status did not own a car and needed to transport to fulfil his
role. Mr Junkie Status will bear the maintenance and fuel cost

6. Mr. Mongatana was required to travel frequently from his home in Polokwane to
Dubai on business, he incurred the following costs during the recent trip:
a. Airfare R2 450
b. Hotel Bill (2 nights stay) R4 100
7. During December 2023 a fire started in the trading premises and destroyed some
trading stock and the roof. Repairs to fix the damaged cost R62 000. PM received an
insurance pay-out to the amount of R57 000 in respect of these damages.
8. MBS incurred salaries and wages expenses of R220 000 during the year.
9. MBS owned a yacht that had been bought in the 2023 year of assessment for
R420 000. An Input tax deduction was denied as the yacht was acquired for entertainment
purposes. During the year 2024, an employee had been granted the right of use of the yacht
for a period of 104 days. The employee paid R10 000 in total for the usage of the yacht
.
10. MBS incurred total operating expense of R1 020 000, 40% of the costs relates to the
residential accommodation and 60% to the Hotel.
 Audit fees 450 000
 Water 300 000
 Advertising 20 000
 Electricity 250 000
MBS paid R13 680 municipal rates and taxes to Polokwane municipality
11. MBS bought a microwave at the value of R 3 500 to be used by employees at the
canteen.

You are required to: Marks

Calculate VAT payable or refundable of Masindi Business Solution for 20
the period ending 31 January 2024. Show all your workings and provide

37
 brief reasons where applicable.

QUESTION 8 (120 MARKS)

Question 8.1 (40 MARKS)

McKenzie Ltd commenced trading on 1 January 2024. The company is a wholesaler of

African curios which it purchases from local manufactures and sellers to both local and
foreign customers.
As McKenzie Ltd did not implement an accounting package immediately (There was a delay
in the supply of the software) its accounting records for the months of January and February
2024 were prepared manually by its bookkeeper.
McKenzie Ltd is a registered vendor for VAT purposes and is a “category B” vendor. The
company’s first tax period was from 1 January to 28 February 2024.
The financial accountant of McKenzie Ltd is preparing the VAT return for this first tax period.
For this purpose, he has extracted an analysis of the income and expenditure of McKenzie
Ltd. unless otherwise stated, all amounts are inclusive of VAT, where applicable.

ANALYSIS OF INCOME AND EXPENDITURE FOR THE PERIOD

1 JANUARY 2024 TO 28 FEBRUARY 2024

Notes R
Income

38
Sales 1 175 560
Interest on current account 912
Insurance refund 2 88 920

Expenditure
Purchases 3 73 416
Advertising and marketing 4 5 700
Telephone and postage 1 254
Depreciation 5 8 730
Salaries and wages 74 100
Bad debts 6 13 680
Staff subsistence 7 1 596
Printing and stationery 1 026
Rentals 8 20 634
Fuel 3 192
Insurance premiums 9 1 425

NOTES

1. A breakdown of sales for January and February 2024 is as Follows:

Sales to local customers R118 560
Sales to foreign customers consigned and delivered by McKenzie Ltd R57 000

2. The insurance refund of R88 920 was received in respect of a delivery vehicle that
was hijacked late in January 2024. Fortunately there was no trading stock in the
delivery vehicle at that time. The insurer of McKenzie Ltd deposited the payment of
R88 920 into the company’s bank account on 26 February 2024.

3. All trading stock is purchased from registered vendors.

4. Advertising and marketing expenses comprise of the following:

Printing of pamphlets for distribution R1 710
Cocktail party (food and beverages) R3 990
to introduce products to potential customers

5. Depreciation is charged in respect of the following three assets owned by McKenzie

Ltd
 A new Subaru Forrester (a 4X4 passenger vehicle) driven by the managing
director of Out of Africa (Pty)Ltd which was purchased on 1 January 2024 for
an amount of R199 500 (R175 000 plus VAT of R24 500). The managing
director had the sole use of this vehicle for the entire tax period. All the
running expenses in respect of this vehicle are borne by McKenzie Ltd.
 A new delivery vehicle - delivery vehicle one – which was purchased on
January (and stolen three weeks later – see note 2 above) for an amount of
R93 480 (R82 000 plus VAT of R11 480).
 A second hand delivery vehicle – delivery vehicle two- was purchased on 1
February 2024 to replace the delivery vehicle that was stolen. This vehicle
was purchased from a non-registered person(Non vendor) for an amount of
(R57 000 plus R0 VAT.)

No depreciation has been provided in respect of a plot of land purchased by Out

of Africa on January from a property developer for R228 000 (R200 000 plus VAT
of R28 000). Registration of transfer in respect of the land took place on 10
February 2024. Out of Africa is paying for the property in five equal instalments of

39
 R45 600 each. And the first payment was made on 28 February 2024. McKenzie
Ltd intends to construct its own warehouse and administration offices on the land.
Construction is expected to commence in April 2024

6. The bad debts of R13 680 which was written off, relates to sales to a foreign
customer during January 2024 who has since gone into liquidation. Originally
consigned and delivered by McKenzie Ltd

7. Staff subsistence includes tea, coffee, milk, sugar and biscuits purchased and
provided to staff during working hours

8. Rentals were incurred in respect of the following:

R
a. Administration office and warehouse 17 000
b. Facsimile machine 4 468
c. Photostat machine 1 824
d. Water machine (supplies mineral water to staff & customer) 342

9. The following insurance premiums were paid in respect of the Subaru Forrester 4X 4
and the two delivery vehicles:

Subaru Forrester 4 X 4 456

Delivery vehicle one (Stolen vehicle) 570
Delivery vehicle two (the replacement vehicle) 399

YOU ARE REQUIRED TO: Marks

Calculate VAT refundable or payable by McKenzie Ltd for period ending 28
February 2024. Provide a brief explanation with each amount, if no VAT 40
needs to be recognised, a brief justification must be provided. QE:2001
Adapted
Presentation Mark 2

40
Question 8.2 (60 MARKS)

BigBen Paint is a South African company producing floor polish, carriage vanish and ready
mixed paints. In the ensuing years the company expanded rapidly developing a reputation
for innovation, quality and customer service. BigBen Paint’s operation is a process of
manufacture. BigBen Paint has 30 June year IGNORE VAT.

The tax manager is on leave and you “a recently qualified CA” have been requested to assist
with the following tax matters relating to 2024 year of assessment.

1. BigBen Paint made total sales of R7.2 million during 2024 year of assessment.
2. Total raw material purchased during 2024 year of assessment was R2.1 million, on 1
July 2024 BigBen Paint had opening stock costing R520 000 and market value of
R480 000, the cost of goods sold during R1 960 000.
3. The sales manager took paints with cost price of R7 200 and Market value of R
10 500 for private use “painting the nursery at home”. This transaction is not included
in the cost of gods sold.
4. BigBen Paint have several investments around the globe and following income was
earned during 2024 year of assessment :
a. Gross foreign Dividends of R285 000 form UK company, BigBen Paint holds
15% of voting shares in the UK company
b. Gross foreign dividends of R190 000 from a company in Dubai, BigBen Paint
holds no shares in the Dubai company.
c. Net local dividends of R323 000 and local interest of R210 000.

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5. BigBen Paint spent a total of R 540 000 on uniforms and protective clothes used by
the manufacturing and general sales staff. The uniform is clearly distinguishable.
6. BigBen Paint incurred a penalty of R32 500 for late submission of provisional tax
payment.
7. BigBen Paint paid legal expenses of R42 800 on behalf of an employee who was
going through a divorce.
8. BigBen Paint pays R 33 000 rental per month on one of the premises. The company
recently concluded a lease agreement on 01 May 2024. BigBen Paint paid annual
rent of R396 000 on 01 May 2024.
9. BigBen Paint wanted to open a new store in Thohoyandou, BigBen Paint then
entered into a lease agreement with the municipality to lease a factory building. A 30
years lease agreement was entered into on 31 September 2023 for lease rental of
R55 000 per month starting the 1 October 2023 In terms of the contract BigBen Paint
is required to improve the building for R1.2 million. BigBen Paint commenced with the
improvements on 1 November 2023 and completed on 31 March 2024 and was
brought into use on 1 April 2024.
10. BigBen Paint acquired a design for R55 000 and a patent for R65 000 on 1 March
2024 useful for mixing the water resistant paints.
11. BigBen Paint purchased a portable mixing equipment for R6 500 on 1 February
2024. General binding rule allows 3 years write off.
12. BigBen Paint acquired a second hand machinery on 15 July 2020 for R540 000 and
was brought into use immediately. BigBen Paint decided to move the machinery to
the new factory in Thohoyandou on 31 October 2023. (Refer 10 above) the cost of
moving the machine is R120 000.
13. BigBen Paint purchased a block of flats for R1 800 000 on 1 July 2021. The block
consists of 10 units. BigBen Paint rents out the units out to employees for R2 800 per
unit per month for 2024 year assessment.
14. BigBen Paint wrote off bad debts amounting to R35 000 for a customer who
experienced financial difficulties and liquidation during 2024 year of assessment.
15. O 1 April 2024 a fire occurred at Construction Pty (Ltd) one of BigBen Paint’s clients.
At the time of fire BigBen Paint was delivery paints to the clients and BigBen Paint’s
delivery van was destroyed in the fire. The delivery van cost BigBen Paint R280 000
on 1 November 2020. BigBen Paint received an insurance pay out of R320 000 on
20 April 2024 from the insurance. BigBen Paint used the insurance pay-out to
purchase a new delivery van costing R350 000 on 1 May 2024 and brought it into
use immediately. General binding rules allows 5 years write off period.

YOU ARE REQUIRED TO: MMARKS

Calculate taxable income of BigBen Paint for 30 June 2024 year of

assessment. NOTE: show all your working, section and full
application of a section where necessary as marks will be 60
allocated.

42
Question 8.3 (20 MARKS)

Africa Hardware ‘(AH), is South African company based in Turfloop, it sells hardware and
various building materials. AH is a Category B registered vendor for VAT purposes. AH only
makes taxable supplies. The following transaction were entered into during two-month tax
period from 1 May to 30 June 2024.

1. AH purchased a second hand factory building on 20 May 2024 from a non-vendor

for R4 200 000. The building was brought into use immediately. Transfer duty of
R180 000 was paid on 21 May 2024. AH paid R2 100 000 of the consideration on
15 June 2024 and the balance will be paid during next two VAT period. The
factory building was registered on 20 June 2024.

2. A second-hand delivery van was purchased on 1 June 2024 for R114 000 from a
non-registered vendor. The market value of the delivery van was R120 000.The
purchase consideration was paid on two equal instalments. Half of the cost was
paid on 1 June 2024 and balance will be paid on 31 July 2024. On 1 June 2024
AH gave a free use of delivery van to one of its employees, the employee pays
consideration of R100 per month.

43
 3. During heavy storms and rain May 2024, some of AH trading stock was damaged
and AH received R210 000 indemnity cash payment on 10 June 2024 from the
insurance in respect of the damaged trading stock.

YOU ARE REQUIRED TO: MARKS

Discuss how the above transaction will affect AH’s VAT implication for the 20
period ending 30 June 2024. NOTE: please clearly address the timing and
value of supply.

QUESTION 9 (80 MARKS)

Question 9.1 (45 MARKS)

Ria Hamba (Pty) Ltd (“Ria Hamba”) is a privately owned company and a registered vat
vendor. Ria Hamba means “we are going” is a City transport project aimed at providing
better public transport, reducing congestion on public roads, improving the environment and
creating jobs. It offers fast, safe and affordable public transport on a network of bus routes
across Johannesburg.

Buses run along dedicated routes to ensure speed of service, while the enclosed stations
are designed to be spacious and welcoming.

A high-tech control room monitors the buses and stations, ensuring that Ria Hamba matches
world-class standards. The control room has real-time tracking of bus movements and staff
can communicate with each driver, ensuring that buses run on time and quick solutions are
found for any problems encountered.

44
However, Ria Hamba does not operate in a vacuum; it is a significant part of a city-wide plan
to give the people of Johannesburg a seamless public transport network combining regular
buses, rail, taxis and private vehicles.

Ria Hamba operates weekdays from Monday to Friday from 5am to 9pm and weekends 5am
- 6pm. Buses run at a 5-minute frequency.

Fares are worked out according to distance travelled, with the amount charged per kilometre
decreasing as the length of your trip increases. As of 01 March 2023 the fares were as
follow:

Journey
length 2023/24

0 - 5km R5.80

5.1 - 10km R7.60

10.1 - 15km R9.50

15.1 - 25km R11.30

25.1 - 35km R12.20

10% discount for off-peak travel

45
People travelling during off-peak hours - between 8:31 am and 2:59 on Mondays to Fridays,
and any time on Saturdays, Sundays and public holidays - will be charged 10% less for
affordable and convenient travel.

In order to calculate the tax liability of Ria Hamba the below information should be
considered. (All amount exclude vat unless stated otherwise.)

1. The total of bus tickets the company sold during peak hours amounted to
R3 592 785 in the 2024 year of assessment.

2. Some of the passengers took advantage of the 10% discount during off peak
hours which is between 8:31 am and 2:59 on Mondays to Fridays, and any time
on Saturdays, Sundays and public holidays. Tickets amounting to R1 800 421
were sold at a 10% discount. Mr Petixorn, the financial Manager is unsure on how
to account the 10% discount.

3. Ria Hamba generated revenue through advertisement amounting R452 300.

4. Salaries paid to the bus drivers and other staff members R750 441.

5. The company contributed 25% of the salaries paid to an approved pension fund.

6. Ria Hamba appointed 33 Bus drivers and each driver contribute on average R2
400 to medical aid fund and its cover 40% of the total medical aid cost contributed.
7. On 31 August 2023 the bus drivers embarked on the strike over a salary increase
of 8% whereas the employer is adamant to increase the salaries by 3%. During
the strike one bus was burnt out which was purchased on the 01 September 2021
at a cost of R520 000. By the end of the year R320 000 has been received from
the insurance pay outs in relation to the burnt bus, and no other amount was
expected to be paid out. The Control room was also damaged and the Company
incurred R185 527 to fix the damages.

8. As results of the protest by the bus drivers, the CEO of Ria Hamba suspended
the operation for three weeks and during this period the insurance company made
a pay out of R931 755 which was for loss in revenue

46
9. One of the bus drivers, Mr Maqhele was involved in horrific accident on the M2
route on the 15th of September 2023 and both his legs were amputated after three
months in hospital Mr Maqhele passed away. Upon the investigation it was noted
that the bus was never maintained and the reason of the accident was due to the
brake pads not working as a results he lost the control of the bus. The company
volunteered to cover the funeral cost of Mr Maqhele amounting to R60 000 and it
also made a lump sum pay-out of R500 000 to the family of the passengers who
lost their lives.

10. The wife of Mr Maqhele, Ntombi took the company to Court claiming that the
company was negligent otherwise her husband would have still be alive had they
maintained the bus and now the kids has to grow without the father. To date the
company incurred legal cost of R210 521 The lawyer is confident that the
company will win the case.

11. The company entered into agreement to lease a warehouse adjacent to the
property for a period of 8 years starting from the 1 st of December 2023. The lease
agreement provides for the following:
a) The premium of R320 000 payable on 01 December 2023 to date the
company paid R150 000 in cash.

b) The rent of R12 510 a month, the company paid an annual rent of R150 120.

c) Improvement amounting to R282 200 to be effected to the property, the

improvements were completed at the cost of R350 000 and brought into use
on 30 May 2024.

12. Ria Hamba invested in various portfolio locally and offshore , during the year its
received local interest of R54 314 from Venda Bank Solution(VBS) and net
dividends of R150 800 from SA companies and R19 727 from real estate
investment trust and foreign dividends of R60 000 from an Australian company
where it hold 3% together with other residents . See the table below
Shar
Company Name e

Ria Hamba 3%

Morcopollo 2%

Gau-train 4%

47
 13. In order to appreciate and honour hard working bus drivers the management of
Ria Hamba decided on 30 June 2023 to issue twelve bus drivers with six
qualifying Equity shares as contemplated on Section 8B at consideration of R300
per share while the market value of the share is R2 620.

14. Ria Hamba appointed Mvelo Maqhele 01 March 2021, immediately after he
completed her Bacc degree (NQF level 7) at university of Cape Town. The
learnership was for a period of 3 years. However after the death of his father (31
December 2023) he resigned and started working at some private firm in Midrand.

15. The project accountant of Ria Hamba advised Management to consider revisiting
its current method of procuring the vehicles instead of buying the bus they should
consider leasing, since it is cheaper taking into account financial constraint after
the suspension of the operation for the period of three weeks. On the 01 of
December 2023 management decided to replace the bus that was burnt down
during the protest, the company leased one bus in terms of ICA (instalment Credit
agreement) for R36,480 per month (incl VAT) for the period of 3 years. The cash
price for the bus is R649 800.
76tbg8
16. During Mandela day 18 of July 2023 Ria Hamba donated an old bus which will be
converted into a class room to a primary school in Turfloop. The market value of
the bus on that date R42 000. The bus was purchased on 01 January 2022 at cost
of R515 000. Wear and tear deduction of five years in terms of IN 47.

17. Ria Hamba raised a provision for doubtful debts as follow:

 2016 R42 500
 2017 R53 800
Bad debts amounting to R26 300 was written off and included in the amount was loan (R5
600) to Mr Maqhele who passed away after the horrific accidents and the interest charged
on amount owed of R2 000 was written off.

48
 YOU ARE REQUIRED TO: MARKS

Calculate the tax liability of Ria Hamba for the year end 28 February 2024. Provide a
44
brief reason for the inclusion or exclusion of the amount. Ignore CGT.

Presentation mark for arrangement and layout, clarity of explanation, logical argument
and language usage 1

Question 9.2 (20 MARKS)

Part A

Moreki inherited money in 2011. He bought two residential duplex units close to Mall of the
North in Polokwane of R320 000 each, with his inheritance. He has since received rental
income of R7, 500 per month, which he has declared to SARS. He is immigrating to
Australia and he decided to sell these units. The units were sold at R450 000 each to the
tenants during the 2024 year of assessment. [7]

Part B

49
Rabo Construction was appointed by Polokwane Municipality for the Construction of Access
Road no D4589 in Lebowakgomo. In term of the appointment letter and the contract its state
that:

95% of the contract is due and payable on the completion of the construction of the access
road.

5% of the contract price is retained as “retention money” until the final certificate is issued by
the engineers 12 month after the construction. The tender amount won by Rabo was
R3 544 699. [6]

Part C

Lerato Tshabalala owns a furniture shop in Mokopane. During the 2024 year of assessment
she sold a bedroom suite to a customer for R7200. The customer paid R5000 in cash and
Lerato accepted the customer’s second-hand bedroom suite as a “trade in” for the balance
of R2 200. Three days later she sold the second-hand bedroom to another customer for R3
500. [6]

YOU ARE REQUIRED. MARKS

19
Discuss with reference to case law, in each of the above situations, what amount will be
included in gross income of the respective taxpayer.
Presentation mark for clarity of explanation, logical argument and language usage 1

Source: Tax workbook 2016 and UNISA 2017

50
Question 9.3 (15 MARKS)

The following question consists of case studies relating to expenditure incurred by the
taxpayer:

1. R38 000, being the best estimate at year end of the likely damages to be paid by
Kofifi Ltd to one of its customers who purchased a cup of coffee which was too hot
and, as a result of which, the customer suffered damage to his mouth. Kofifi Ltd
has agreed to a settlement, but is taking advice as to the amount thereof. [3]

51
 2. R115 000, being a ‘provision for returnable containers’ included in the balance
sheet of Bakers R Us Ltd in respect of the likely amount which the company would
have to refund to customers who return their biscuit tins in the following year. [3]

3. R600 000, being damages to be paid by Built it Ltd, a firm of building contractors,
who failed to install a lightning conductor in a home built by them. Lightning struck
the home and killed a resident. [3]

4. R1 850 being the cost of a replacement suit that Mankweng Drycleaners had to
give to a customer when they lost the suit that he had given them to dry-clean.
[3]

5. Tax penalty amounting to R2 500 incurred by Moosa Essa, for submitting tax
return after the due date [2]

YOU ARE REQUIRED: MARKS

14
In respect of each scenario state, with reasons, whether or not the expenditure in question
is deductible.
Presentation mark for clarity of explanation, logical argument and language usage 1

Source UNISA 2017

QUESTION 10 (80 MARKS)

Question 10.1 (10 MARKS)

On 1 January 2024, Monnye Mosema commenced trading as a mower of lawns, in

other words, she cuts grass as her trade since she saw the opportunity and it has
been a rainy year.
Monnye Mosema's turnover in January 2024 was R80 000. In February it increased to
R100 000.

52
All indications are that Monnye Mosema's turnover will not decrease in the future,
except for the three- month period from June to August when grass is unlikely to grow.
It is expected to be approximately R50 000 a month during this three-month period.
Monnye Mosema's debtors pay their accounts within 30 days after invoice date.
Monnye Mosema's purchases are all on credit. She settles her creditors 60 days after
invoice date. Monnye Mosema has not yet registered as a vendor. She is unaware of the
value-added tax registration limit.
Monnye Mosema is now concerned that she has made default under the Value-Added
Tax Act. She has therefore approached you for help.

You are required to:

Provide Monnye Mosema with details of the registration requirements as provided for
in the value- added tax legislation, and inform her on what date she became, or will
become, liable for registration. (10)

Question 10.2 (70 MARKS)

Splash Pools CC commenced trading on 1 March 2024. When it commenced trading, it

immediately registered as a vendor. It provides swimming pool maintenance services.
Set out below are Splash Pools CC' s transactions that took place during the months of
March and April 2024. All amounts include value-added tax when applicable unless
stated to the contrary.
 On 1 March 2024 it secured 50 annual swimming pool maintenance
contracts. It invoiced its customers in both March and April 2024 at a fee of
R500 (excluding value-added tax) a swimming pool a month. This monthly
fee is fixed for the year. During April 2024 it also provide the additional
services to 3 local cash clients who were referred by contract clients.
 During March 2024 it carried out various pool-maintenance services for
other customers and invoiced them R10 000 (excluding value-added tax) in
total.
 On 1 March 2024 it employed four employees (three labourers and a
supervisor). The labourers were paid R5 600 each a month and the
supervisor was paid a monthly salary of R7 000.

On 1 March 2024 it purchased for cash a second-hand truck. This truck was
purchased from a non-vendor for R79 800. The use of this truck was given to
the supervisor as his 'company car' as from 1 March 2024. It paid R342 for

53
 its license. It bears this truck's full cost of fuel and maintenance. During
March 2024 the fuel for this truck cost R1 254. An insurance premium of R684
(including value-added tax), being the truck's insurance cost for the month of
March 2024 was paid on 25 March 2024. This truck was stolen on 31 March
2024. An indemnity award of R74 100 was received from its insurers on 21 April
2024. This truck has not yet been replaced.
 Instead of paying its employees extra cash to cover their transport
expenses to and from work, it purchased taxi coupons. These taxi coupons
are distributed to its employees on a weekly basis. During March and April
2024 it incurred R627 on purchasing bus coupons.
 It purchased for cash second-hand pool-maintenance equipment from a
non-vendor during March 2024 for R32 604. The purchase price was settled
in four instalments of R8 151 each. The first three instalments were settled
on 15 March, 1 April and 15 April 2024. (The last instalment was settled on
1 May 2024.)
 During March and April 2024 it purchased chlorine, acid, chemicals and
other pool maintenance items - these items all constitute part of its trading
stock - for R7 130 and R7 245 respectively.
You are required to:
1. Record all the above transactions that took place during the months of
March and April 2024 in the journal of Splash Pools CC. Your answer must
deal with all the transactions discussed above and be supported by brief
narrations, explanations or determinations.
(57)
2. Determine the net value-added tax due to, or from, the Commissioner for it
for its two-month tax period ended 30 April 2024.
(13)

54