Exam (elaborations)
TAX2601 EXAM PACK 2023
- Institution
- University Of South Africa (Unisa)
QUESTIONS AND ANSWERS
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TAX2601EXAM
PACK 2023
QUESTIONS WITH
ANSWERS
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UNIVERSITY EXAMINATIONS
Oct/Nov 2021
TAX2601
Principles of Taxation
100 Marks
Duration 2 Hours
(plus 60 minutes for upload)
This paper consists of nine (9) pages plus the annexure (p i).
IMPORTANT INSTRUCTIONS:
1. All amounts exclude VAT unless stated otherwise.
2. All persons mentioned are residents of the Republic of South Africa unless stated otherwise.
3. SARS = South African Revenue Service
The answering of this paper:
1. This paper consists of four (4) questions.
2. Answer all the questions.
3. Start each question on a new (separate) page.
4. Write your student number on the top of each page.
5. Show all workings, where applicable. Where an amount is subject to a limitation, clearly indicate the appli-
cation of the limitation. Where any item is exempt from tax or not allowable as a deduction, this must be
indicated, and a brief reason provided. All amounts must be rounded to the nearest Rand.
6. Proposed timetable (try as far as possible not to deviate from this timetable):
Question Topic Marks Minutes
1 Income tax liability of a company 25 30
2 Income tax liability of a small business corporation 25 30
3 Capital gains tax 25 30
4 Provisional tax payments and gross income definition 25 30
- Additional time for upload of your answer file in pdf - 60
TOTAL 100 180
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Oct / Nov 2021
Honesty Declaration:
By submitting my exam solution, I declare that:
• I know what plagiarism is, that plagiarism is wrong and that disciplinary steps can be taken against me if I
am found guilty of plagiarism;
• This exam solution, submitted by myself, is my own work;
• I have not assisted any other student in any manner, and I have not had the assistance of any other person,
in completing this exam;
• I know that if I am found to be in violation of this declaration, I will receive 0% for this examination.
Please note: You do not have to sign the declaration. By clicking the honour pledge when submitting your
answer file, you automatically declare that you adhere to all the above with regards to this specific exami-
nation.
Submission instructions:
The exam paper will remain available throughout the examination session.
Commence the submission (uploading) of your answers as soon as you have completed the
assessment, do not wait for the session to conclude.
You MUST start uploading your answer file at 13:00 (2 hours after the start of the exam session) at the
latest, to allow enough time for any delays in the process. Cut-off time for submission is 14:00.
You have to submit your answers in ONE PDF FILE – ensure ALL your pages are in one file.
The file name of your pdf document must be in the following format:
Student number, space, TAX2601. For example: 33445566 TAX2601.
Go back to the link where you downloaded your examination paper myExams.
Follow the instructions on the screen.
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QUESTION 1 (25 marks, 30 minutes)
GoSolar (Pty) Ltd (GoSolar) is a South African company that manufactures solar panels for commercial
and residential use, in an industrial area of Johannesburg. The company’s year of assessment ends on
31 March 2021. It is not a small business corporation as defined in the Income Tax Act.
Since the company’s accountant is unfamiliar with tax matters, they have requested your assistance to
calculate the tax liability of the company. The company has provided you with a list of items relating to
the current year of assessment, which must be used to do your calculation for taxation purposes.
Each item and the information per the notes must be addressed:
Income Note R
Sales 1 21 779 000
Lease premium & rental 2 ?
Expenses
Capital allowances on assets 3 ?
Dividend 4 350 000
Doubtful debts & prior year allowance 5 332 000
Penalties and interest (late payment of skills development levy) 23 777
Provisional tax payment 6 2 679 000
Salaries 7 7 000 000
Rented office equipment 8 800 000
Notes:
1. Sales
Included in sales, is an amount of R2 000 000 received on 31 March 2021 from a new customer
of GoSolar for residential solar panels purchased on the same date. GoSolar was only able to
deliver these solar panels on 2 April 2021.
2. Lease premium & rental
On 1 June 2020, GoSolar purchased a piece of vacant land for R350 000 in Johannesburg and
constructed a two-floor office block on the land. The construction cost R1 400 000 and soon after
its completion the company entered into a lease agreement with a tenant for the rental of the
entire office block. The agreement was signed on 1 February 2021 between the parties. The
agreement stipulates a lease premium of R110 000 must be paid once-off, once the agreement
is signed. Monthly rental of R20 000 was paid at the beginning of February 2021 and March 2021
to GoSolar. The tenant paid the lease premium on 1 April 2021.
3. Capital allowances on assets
Below are the details of the assets:
Asset Cost Relevant information
R
1. Factory building 4 000 000 A newly built building that was purchased
from a developer and brought into use on
1 November 2019.
The factory building is in an Urban Deve-
lopment Zone.
2. New two-floor office block Land purchased and building erected by
(refer to note 2 above): GoSolar. Construction completed on
- Land 350 000 16 January 2021, brought into use on
- Construction 1 400 000 1 February 2021.
(Not in an Urban development zone)
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