Exam (elaborations)
TAX3703 EXAM PACK 2023
- Course
- Tax3703
- Institution
- University Of South Africa (Unisa)
LATEST UPDATED QUESTIONS & ANSWERS
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TAX3703EXAM
PACK 2023
LATEST UPDATED QUESTIONS &
ANSWERS
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4 TAX3703
Oct / Nov 2021
QUESTION 1 (33 marks, 40 minutes)
André Piniesta (RSA ID: 530212 5032 086) died on 9 September 2020 at 8 Lagoon Drive, Durban
South Africa, where he resided with his whole life. He is survived by his wife Shanti (RSA ID: 580316 0113
088), to whom he was married out of community of property (without accrual) and his two major sons, Xavi
and Lionel.
The following assets, liabilities and interests were found in André’s deceased estate with a Master’s refe-
rence number of: 791/2020:
R
1. André was the owner of a helicopter, which he purchased for an amount of
R4 300 000 in 2017. It is valued at ……………………………………………………… 6 600 000
2. André owned the residential home in Durban which he and Shanti resided in. It
was purchased in 2008 for R3 750 000. It was valued at……………………………… 5 900 000
3. André received an annuity every year. The annuity had been created in his late
father's will.
An annual amount of R30 000 was payable to him from the profits of a business
that André's father bequeathed to André’s brother, Tinto. Tinto will be 56 years old
on his next birthday. The annuity ceased upon André's death.
4. Personal assets valued at………………………………………………………………. 2 800 000
5. A 40% unlisted local shareholding in Football Academy (Pty) Ltd (‘Football’). André
acquired this shareholding for investment purposes for R850 000 in 2016. The
auditor’s valuation of the entire company (‘Football’) at André’s death was
R1 500 000.
6. There were no other assets in the deceased estate. The only outstanding liabilities
was a credit card liability of R8 000 and the Master's fees, executor's remuneration
and estate duty that must still all be provided for. (The appointed executor of
André’s deceased estate is not a registered VAT vendor.)
7. Andre’s valid will stipulated that Shanti must inherit the house in Durban as well as
a R3 000 000 cash legacy. The residue of the estate was to be divided equally
between their two sons. The executor, with the permission of the Master and all
the interested parties, sold all the assets at their valuation values, except for the
house that Shanti was to inherit.
REQUIRED: MARKS
1.1 Compile a complete executor's account in the estate of André Piniesta for submis-
sion to the Master of the High Court. Ignore capital gains tax. 28
1.2 For this part of the required only, assume that André and Shanti were married in
community of property and that André died intestate. Prepare the distribution
account indicating what amounts each beneficiary would be awarded based on 5
these assumptions.
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Oct / Nov 2021
QUESTION 2 (28 marks, 34 minutes)
Tebogo Khune died a widower on 5 May 2020 at the age of 68 in Tzaneen, Limpopo, South Africa, where
he lived his whole life. He is survived by his son, Vusi. The appointed executor obtained the following
information regarding his deceased estate:
Assets:
R
1. Private residence in Tzaneen, Limpopo, which Tebogo purchased for R2 000 000
in 2015. Vusi, paid an amount of R8 000 for a single garage to be built at the residence
in 2017. The house at valuation at Tebogo’s death was………………………………… 5 300 000
Had this garage not been built the value of the house would have been R5 288 000.
2. The usufruct over a farm, Letsitele, in Tzaneen which Tebogo used for bona-fide
maize farming. Tebogo inherited the usufruct eight years ago from his uncle and at
that time the farm was valued at R2 000 000. The market value of the farm has in-
creased to R4 000 000 at the time of Tebogo’s death. After his death the bare
dominium holder (Tebogo’s 41-year old son, Vusi) will become the full owner of the
farm.
3. Tebogo owned 20 000 shares in AgriFeed Ltd. The closing price of the shares on the
Johannesburg Stock Exchange was R12,50 per share on 5 May 2020. The executor
sold the shares for R17,80 per share on 5 June 2020.
4. Vehicles and farming equipment at valuation....……………………………………… 2 000 000
5. Proceeds of a domestic life insurance policy A (not in terms of an antenuptial contract)
on Tebogo’s life was paid out directly to his son, Vusi. 900 000
Premiums amounted to R70 560 (including compounded interest of R5 050 correctly
calculated at a rate of 6%) and had been paid by Vusi…………………………………….
6. Proceeds of a domestic life insurance policy B on Tebogo’s life was paid to his estate.
Tebogo paid premiums of R32 000 (including compounded interest of R30 668 cor- 450 000
rectly calculated at a rate of 6%) on the policy……………………………………………
Liabilities:
- Funeral & administrative costs (considered fair by the Commissioner), including
- Master’s fees amounted to…………………………………………………………………. 67 950
Executor’s remuneration must still be provided for at current legal tariffs.
(The appointed executor is not a registered VAT vendor.)
Stipulations of the valid will:
- The vehicles and farming equipment are bequeathed to Tebogo’s son, Vusi.
- An amount of R35 000 was donated to a local charity organisation which was registered as a public
benefit organisation.
- The residue of the estate is bequeathed to Vusi, the son.
Other relevant information:
Tebogo’s late wife Lerato, died in 2017 at the age of 60. They were married out of community of property
(without the accrual system). Lerato’s estate made use of R2 300 000 of the estate duty abatement avail-
able when she passed away.
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QUESTION 2 (continued)
REQUIRED: MARKS
2.1 Calculate the estate duty payable in Tebogo Khune’s estate. 24
2.2 Calculate the apportionment of the estate duty payable and state who is liable for 4
such duty.
QUESTION 3 (13 marks, 15 minutes)
Richie Rich died on 3 November 2020 and is survived by his wife (to whom he was married out of com-
munity of property, without the accrual system) and their only one, minor child. The assets in his deceased
estate were dealt with as follows:
1. Private residence in Pretoria which Richie purchased for R2 150 000 in 2010 and where he and his
family resided from the date of purchase. Transfer duty fees of R92 000 were also incurred by Richie
in addition to the purchase price.
The residence was transferred to Richie’s child according to his valid will. The market value of the
residence at the time of Richie’s death was R3 900 000.
2. Motor vehicle which Richie purchased for R800 000 in 2019. The value of the vehicle at the time of
his death was R750 000. The executor of his deceased estate sold the vehicle for R700 000. Richie
received a travel allowance from his employer in respect of this vehicle
3. Richie purchased local listed shares for R250 000 in 2015 for investment purposes.
The listed value of the shares at the time Richie ’s death was R433 250. The shares were be-
queathed to Richie’s surviving spouse according to the valid will.
4. A holiday flat in Ballito, Kwa-Zulu Natal.
Richie purchased the flat in 1998 for R600 000. The valuation date value of the flat was R900 000
as at 1 October 2001. At the time of his death, the flat was valued at R4 100 000. The executor of
his deceased estate sold the flat for R4 350 000 on 15 January 2021.
REQUIRED: MARKS
3.1 Calculate the taxable capital gain or capital loss of the deceased, Richie Rich.
Clearly indicate and provide a brief reason where you think certain assets are not
subject to capital gains tax. 11
3.2 Calculate the capital gain/loss of the holiday flat in Richie Rich’s deceased estate. 2
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