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TAX2601 Assignment 4 Second Semester 2022
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This document contains workings and answers for assignment 4 of second semester 2022.
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TAX2601ASSIGNMENT 4
SECOND SEMSTER 2022
BY: MTHOMBENI : 0767297208
1
,QUESTIONS ARE THE SAME BUT AMOUNTS ARE NOT, YOU JUST NEED TO SUBTITUTE THE
AMOUNTS ON THE CALCULATIONS I PROVIDED
As a result of the COVID 19 Lockdowns, Ngwenya (Pty) Ltd experienced a couple of breakins at
the shop. The company acquired a watchdog for R7 000. The dog food expense for the watchdog of R12
000 were incurred for the 28 February 2022 year of assessment. The watchdog had to visit the vet during
the 2022 year of assessment at a cost of R2 800.
What amount can Ngwenya (Pty) Ltd deduct for tax purposes with regards to the above costs incurred for
the 2022 year of assessment?
a.
R14 800
b.
R nil
c.
R21 800
d.
R19 000
12000+2800
Ngwenya (Pty) Ltd has a gardening maintence contract with Green Fingers CC to maintain its
corporate headquarters yard. The terms of the contract are that the contract is paid in advance on an
annual basis. Ngwenya (Pty) Ltd made the payment of R140 000 on 1 January 2022 to cover the period
01 January to 31 December 2022.
Determine the amount that is deductible by Ngwenya (Pty) Ltd for its year of assessment ending 28
February 2022. Assume this is the only prepayment that was made by Ngwenya (Pty) Ltd for the 2022
year of assessment.
a.
R23 333
b.
R nil
c.
R116 667
d.
R140 000
140000X2/12
2
,Ngwenya (Pty) Ltd during the 28 February 2022 year of assessment, had the following two
transactions occur which the financial accountant asks you what the tax implications are:
Transaction 1:
Ngwenya purchased trading stock during the current year of assessment at a cost of R36 000. This stock
was given for no consideration to a homeless shelter. The shelter is not a registered PBO. The stock had
a market value of R55 000.
Transaction 2:
Trading stock (specific items) were purchased for an amount of R140 000 during the year of assessment.
None of this trading stock were sold and at year-end after the auditors' stock take, these specific items
had a market value of R78 000.
Which amounts need to be deducted or added in calculating Ngwenya (Pty) Ltd's taxable income for the
2022 year of assessment with regards to transaction 1 and 2.
a.
Transaction 1: R19 000 Transaction 2 R(140 000)
b.
Transaction 1: R19 000 Transaction 2 R(62 000)
c.
Transaction 1: R36 000 Transaction 2 R140 000
d.
Transaction 1: R36 000 Transaction 2 R78 000
55000-36000=19000
140000-78000=62000
A fire occurred at Ngwenya (Pty) Ltd's warehouse on 15 September 2021, trading stock with a value
of R550 000 was destroyed. On 20 January 2022, the insurance company awarded the company R280
000 for the loss of this trading stock.
How much can Ngwenya (Pty) Ltd deduct for tax purposes relating to the insured stock for the
2022 year of assessment.
a.
R550 000
b.
R270 000
c.
Rnil
d.
R280 000
550000-280000
3
, Ngwenya (Pty) Ltd has a 28 February 2022 year end. The company made the following special
payments during the 2022 year of assessment:
1) R35 000 pension annuity payment payable for life to Lelo Shlali a former employee who retired three
years ago as a result of old age.
2) R45 000 payment payable annually for the next 10 years to Shaba Lala who won the lotto and ceased
working.
3) R85 000 annuity payable annually to Sally Shange, a dependant of a former employee, Ricky Shange
who deceased on 1 October 2021.
Calculate the amount that is deductible by Ngwenya for tax purposes for the 2022 year of
assessment.
a.
R165 000
b.
R85 000
c.
R120 000
d.
R35 000
R35000+R85000
Ngwenya (Pty) Ltd has a 28 February 2022 year end. The doubtful debts provsion amounted to
R192 000 on 28 February 2021. A doubtful debts allowance of R48 000 was claimed in the 2021 tax
assessment. The doubtful debt provision was R260 000 at 28 February 2022. The full provision relates to
debtors older than 60 days but less than 120 days. (Assume IFRS 9 is not applied by the company).
Ngwenya (Pty) Ltd has a taxable income of R225 000 before taking into account this information.
Calculate Ngwenya (Pty) Ltd's taxable income after taking the above into account for the 2022 year
of assessment.
a.
R112 000
b.
R242 000
c.
R208 000
d.
R160 000
225000-(260000X25%)
4
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