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TAX3761 - Exam Notes - Learning Unit 10 - 17 Notes/Summary 2024
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Summary A Student's Approach to Income Tax - Taxation of business activities and Individuals (TAX3761)
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Summary A Student's Approach to Income Tax - Taxation of business activities and Individuals (tax3761)
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TAX3761ASSIGNMENT 1 2021
UNIQUE NO 663717
QUESTION 1
PART A
i. If Transpaco (Pty) Ltd was not a registered VAT vendor, what
would
the requirements have been for Transpaco to register as a VAT
vendor in relation to the 12-month period ended 30 April 2021.
In terms of section 23(1), a person is required to register in three instances:
At the end of the month during which the total value of the taxable supplies for the
preceding 12 months exceeded R1 million, that is to say we will consider past
supplies;
At the beginning of the month, if it is anticipated that the total value of the taxable
supplies in terms of written contractual agreements will exceed R1 million for the
following 12 months, that is to say we will consider future supplies.
The third instance that could require compulsory VAT registration relates to foreign
suppliers of electronic services, who also have specific registration requirements
Transpaco (Pty) Ltd turnover has a turnover of R920 000 for 12 months (excluding
VAT)
therefore; the company does not need to register as a VAT Vendor.
If Transpaco (Pty) Ltd wanted to apply for Voluntary VAT
Registration:
Voluntary registration results in the levying of VAT on all taxable supplies, but this
allows the
vendor to claim input tax credits in the case of goods or services that he has
acquired from
vendors. It is not always beneficial for a person to register voluntarily.
The nature of his clients and the goods or services rendered usually determine
whether a
specific person should register. A person may wish to register if he is supplying
mainly to
vendors or if he supplies zero-rated goods (for example farmers or exporters).
There are four instances where a person can apply for voluntary VAT registration. A
person
may register voluntarily if that person is conducting an enterprise and
• The value of the taxable supplies of all his enterprises are more than R50 000
during a
previous 12-month period (that is to say we consider past supplies); or
, • The total value of taxable supplies of that person has not yet exceeded R50 000,
but can
reasonably be expected to exceed R50 000 within 12 months from the date of
registration
as a vendor (that is to say we consider future supplies).
Where a vendor deregisters solely because the total value of taxable supplies in the
preceding 12 months did not exceed the voluntary registration threshold of R50 000
or the
compulsory registration threshold of R1 000 000. The Minister determined by
regulation
(GNR.211 of 19 March 2010) that the output VAT payable in respect of the
deregistration
should be paid within six months (section 8(2E)).
ii. Calculate the VAT payable by or refundable to Transpaco (Pty)
Ltd
for the two-month tax period ended 30 April 2021. Show all
calculations and indicate reasons for not claiming input tax or for
not accounting for output tax.
Transpaco (PTY) Ltd VAT Payable for the two-month tax period
ended 30
April 2021
Output tax
Sales [R220 000 × 15%] R33 000
Export – 10 roller coaster carts to UK [zero –rated supply] -
Fringe Benefit – Managing Director:
[(R340 000 ×100/115
) × 0.3%) – R85) ×15/115
× 2] R209
R33 209
Input tax
Purchase of Motor Vehicle [input tax denied] -
Fuel Cost [zero –rated supply] -
Accommodation [R15 500 × 15%] R2 325
Gautrain tickets [exempt supply] -
Second-Hand Mirror Purchase:
[Tax fraction × (lesser of) consideration paid (R13 500) ;
or open market value (R12 000) = × R3 500 = R457 R457
Computer – Change of Use:
[R6 700 ×
× 100% R874
Electricity Cost [R1 800 × 15%] R270
Bank Charges [R540 × 15%] R81
Interest Paid [financial service – exempt supply] -
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