TAX3701 Assignment 2 Semester 2 2024 (798141) - DUE 13 September 2024. ; 100% TRUSTED Complete, trusted solutions and explanations.
TAX3701 Assignment 2 (VERIFIED ANSWERS) Semester 2 2024 (798141) - DUE 13 September 2024
TAX3701 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024 (798141) - DUE 13 September 2024
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University of South Africa
Taxation of Business Activities
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,QUESTION 1 (35 marks, 63 minutes) Tau Steelworks (Pty) Ltd
(Tau) is a South African company manufacturing a range of
steel products used in building construction for the local and the
export market. The company is not a small business corporation
as defined and is also registered as a VAT vendor with the South
African Revenue Service (SARS). The company’s process of
manufacturing has been approved by SARS and its financial
year ends on 29 February 2024. All amounts exclude VAT
unless specifically stated otherwise. The accountant presented
you with the following information for the 2024 financial year:
1. The total sales amounted to R. Included in this amount is an
amount of R17 500 related to export sales made to a client from
Germany. On 25 February 2024 Tau received a letter from a
German attorney, representing the German client, that the
German client has filed for liquidation and was finally liquidated
on 7 March 2024. 2. The cost of sales comprised the following:
R Opening stock Purchases Closing stock () Cost of sales The
market value of the opening stock on 1 March 2023 was R and
the market value of the closing stock on 29 February 2024 was
R. 3. Tau paid the following employee related expenses for the
2024 tax year: • Salaries and wages – R. • Contributions to a
pension fund for all employees – R195 200. • An annuity of R52
500 to Mrs. Dorcas Mabete, the wife an employee who died
during the 2024 year of assessment. • Tau made a restraint of
, trade payment of R150 000 to Mr. Ndlovu, the marketing
manager, who has retired on 31 December 2023. Mr. Ndlovu is
restrained from competing with Tau for four years from the date
of payment. The full amount is taxable in the hands of Mr.
Ndlovu. 4. Tau entered into a learnership agreement with an
employee with a NQF level 5 qualification for a 12-month
period on 1 August 2023. The employee was still employed with
Tau on 29 February 2024. 5. Tau received a doubtful-debt
allowance of R37 500 for the 2023 year of assessment. The
accountant provided you a list of doubtful debts on 29 February
2024 amounting to R290 000. Of this amount 80% is in arrears
for more than 90 days, but less than 120 days. Tau does not
apply IFRS 9. 6. Tau incurred the following legal expenses for
the 2024 year of assessment: • R12 500 paid to Impi Attorneys
for collecting outstanding staff loans. • R17 870 paid to Vula
Attorneys for collecting outstanding debtors for sales. 4
QUESTION 1 (continued) 7. Tau donated R150 000 to Abba
Homes, a public-benefit organisation and received the relevant
section 18A income tax certificate in this regard. 8. Tau
purchased a new steel manufacturing machine, Delta, from Italy
on 30 November 2023 for $75 000. Machine Delta was by ship
(FOB on 30 November 2023) and was received by Tau on 7
January 2024 and brough into use on 10 January 2024. The $75
000 was paid on 15 March 2024 to the Italian supplier. The
following spot rates applied: 30 November 2023 $1 = R17.75 7
January 2024 $1 = R18.25 29 February 2024 $1 = R18.55 15
March 2024 $1 = R18.68 9. Tau paid the annual insurance for
the period 1 October 2023 to 30 September 2024 amounting to
R240 000 on 25 September 2023. 10. The accountant provided
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