Exam (elaborations)
Tax 2601 Assignment 4 Semester 2 2023
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- University Of South Africa (Unisa)
Exam of 195 pages for the course Principles of Taxation at Unisa (Get distinctions)
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TAX2601 Assignment 4 (COMPLETEANSWERS) Semester 2 2023 - DUE 9
October 2023
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TAX2601
Assignment 4 Semester 2 2023
Unique Number:
Due Date: 9 October 2023
Quiz
Assessment 4
Opened: Wednesday, 27 September
2023, 3.00 PM
Closes: Monday, 9 October 2023,
10:00 AM
TAX2601: Assessment 4 -
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UMISA » 2023 » TAX2601-23-52 » Assessment 4
Question 1
Complete
Mark 1.00 out of 1.00
On 1 February 2023, Ubuntu (Pty) Ltd acquired a second-hand machine for R1 800 000. The machine was brought into use the
same day in a process of manufacture. Calculate the capital allowance to be claimed by Ubuntu (Pty) Ltd on this machine for
the 2023 year of assessment ending 28 February. Assume Ubuntu (Pty) Ltd is a Small Business Corparation, as defined in the
Act.
a. R900 000
b. R720 000
c. R1800000
d. R75000
Calculations:
Calculation of the capital allowance to be claimed by Ubuntu (Pty) Ltd on the second-hand
machine for the 2023 year of assessment ending 28 February, assuming Ubuntu (Pty) Ltd is a
Small Business Corporation.
Small Business Corporations (SBCs) in South Africa are eligible for accelerated capital
allowances.
The calculation for the capital allowance on the machine is as follows: Cost of the machine:
R1 800 000
For Small Business Corporations, you can claim a 100% allowance for machinery and
equipment (Section 12C of the Income Tax Act). So, the capital allowance for the machine is:
Capital allowance = Cost of the machine Capital allowance = R1 800 000
Therefore, the correct answer for the capital allowance to be claimed by Ubuntu {Pty) Ltd
on the machine is: c. R1 800 000
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UMISA » 2023 » TAX2601-23-52 » Assessment 4
Question 2
Complete
Mark 1.00 out of 1.00
Mgwenya (Pty) Ltd purchased a trademark called Mix on 1 November 2022 and a patent called Tix on 1 December 2022. The
trademark cost was R720 000 and the cost of the patent was RE70 000. Calculate the deduction or allowance available to
Mgwenya (Pty) Ltd for the year of assessment ending 28 February 2023,
a. Trademark RO Patent R33 500
b. Trademark R12 000 Patent R8 375
c. Trademark RO Patent RE 375
d. Trademark R36 000 Patent R33 500
Calculations
The correct answer is (d) Trademark RO Patent R33 500
Assumptions:
e The trademark was acquired on 1 November 2022.
¢ The patent was acquired on 1 December 2022.
o Ubuntu (Pty) Ltd is a Small Business Corporation (SBC).
Calculation of deduction or allowance for trademark and patent:
The Income Tax Act of South Africa does not allow any deduction or allowance for the
acquisition of trademarks. However, the Income Tax Act does allow a deduction for the
acquisition of patents. The deduction is calculated at a rate of 5% per year over a period of
20 years.
For the 2023 year of assessment, the deduction for the patent acquired on 1 December
2022 would be:
R670 000 (cost of patent) x 5% = R33 500
Therefore, the deduction or allowance available to Ngwenya {Pty) Ltd for the year of
assessment ending 28 February 2023 is:
Trademark = RO
Patent = R33 500
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