Exam (elaborations)

TAX2601-latest-exam-pack.

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Course
TAX2601 - Principles Of Taxation

Institution
University Of South Africa

TAX2601-latest-exam-pack. MAY-JUNE 2019 1. Denzo (Pty) Ltd 1 March 2018 - 28 February 2019 Income tax liability for the 2019 year of assessment. Details Explanation Calculation Tax inclusion Taxable income(before adjustments) Legal fees (20 000) Restraint of trade Limited to the lower of...

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Uploaded on November 7, 2022
Number of pages 73
Written in 2022/2023
Type Exam (elaborations)
Contains Questions & answers

tax2601 latest exam pack

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TAX2601-latest-exam-pack.

, lOMoARcPSD|8988548

MAY-JUNE 2019
1.

Denzo (Pty) Ltd

1 March 2018 - 28 February 2019

Income tax liability for the 2019 year of assessment.

Details Explanation Calculation Tax
inclusion
Taxable income(before adjustments) 22 750 000
Legal fees (20 000)
Restraint of trade Limited to the lower of: 4000 000 (1 000 000)
-3 years
-4 years 4
Research building-allowance 50% × 5000000 (2 500 000)
New equipment-allowance 50% × 1000000 (1 000 000)
Operating costs 150% × 200000 (300 000)
Annuity payment 2000 × 12 (24 000)
Interest(Overdraft) (1 500)
Contractor(payment) < 100 000 (75 000)
< 6 𝑚𝑜𝑛𝑡ℎ𝑠
Opening stock (4 500 000)
Closing stock 4 700 000
Donations S18A certificate not obtained -
New truck-allowance 1200000 5 (125 000)
×
4 12
New machine-allowance 40% × 1500000 (600 000)
Second hand machine- allowance 20% × 900000 (180 000)
Personal computer (cost) 150 000
2018-allowance 150000 9 (37 500)
×
3 12
2019-allowance 150000 3 (12 500) (12 500)
×
3 12
Tax value 100 000
Scrapping allowance 60 000 − 100 000 (40 000)
Sectional title office -allowance 55% × 5% × 7000000 (192 500)
Taxable income before donation 17 779
500
Donation Limited to the lower of: (1000 000)
−10% × 17779500
−1000000
Taxable income 16 779 500

Income tax liability 28% × 16779500 4 698 260

, lOMoARcPSD|8988548

2.

Sparkles (Pty) Ltd

1 April 2018 - 31 March 2019

Income tax liability for the year of assessment ended 31 March 2019

Details Explanation Calculation Tax
inclusion
Sales 7 560 000
Interest income 33 000
Dividends(local) 12 000
Dividend exempt (12 000)
Machine(Green) cost 590 000
Allowance-2019 590000 × 100% (590 000)
Tax value 0
Recoupment 440 000 − 0 440 000
Adjusted proceeds (440000 − 440000)
Repair expenses (20 000)
Machine(Purple)-allowance Written off 2018 -
Air conditioner-allowance 50% × 30600 (15 300)
Rentals (photocopy machine) (12 700)
Bad debt written off 50000 − 19000 (31 000)
Doubtful debt allowance 2018 25% × 750000 187 500
Doubtful debt allowance 2019 25% × 800000 (200 000)
Salaries 1485000 − 135000 (1 350
000)
Contributions to provident (135 000)
Design (triangle) Capital in nature -
Registration fee (26 000)
Renewal fee (54 000)
Advertising cost(newspaper) (3 100)
Advertising (billboard) Capital in nature -
Penalties and interest Prohibited deduction -
Taxable income 6 373 400

Income tax liability 58930 + 28%(6373400 − 550000) 1 689 482

, lOMoARcPSD|8988548

3.

Moving (Pty) Ltd

1 April 2018 – 31 March 2019

Taxable capital gain/loss for the 2019 year of assessment

Details Explanation Calculations Tax
inclusion
(a)
Manufacturing Machine
Cost 270 000
2018-allowance 40%×270 000 (108 000)
2019-allowance 20%×270 000 (54 000) (54 000)
Tax value 108 000

(b)
Proceeds(selling price) 300 000
Tax value (108 000)
Recoupment 192 000
Recoupment limited (108000+54000) 162 000 162 000
to

(c)
Proceeds 300 000
Recoupment (162 000)
Adjusted proceeds 138 000

(d)
Base cost (Tax value) 108 000

(e)
Adjusted proceeds 138 000
Base cost (108 000)
Capital gain machine 30 000

(f)
Office building
Proceeds 5 200 000
Tax value (1 278 000)
Recoupment 3 922 000
Recoupment limited to 2 982 000 2 982 000

Proceeds 5 200 000

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