, TAX3701 Assignment 2 (COMPLETE ANSWERS)
Semester 2 2024 (798141) - DUE 13 September 2024
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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
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