Total Easy Moderate Difficult

Question 1 A (10) (3) (6) (1)

Question 1 B (10) 0 (6) (4)
Question 1 C (5) (2) (2) (1)

Question 2.1 (17) (5) (9) (2)

Question 2.2 (3) (2) (1) 0

Question 3.1 (26) (14) (10) (2)

Question 3.2 (4) (4) 0 0

Question 4.1 (5) (5) 0 0

Question 4.2 (6) (6) 0 0
Question 4.3 (15) (10) (4) (1)

(101) (51) (38) (11)

Question 1 25
Question 2 20
Question 3 30
Question 4 25

Exam nr 1
Total
 Nov-19 Student Nr_______________________________ Easy ModeraDifficult
Tax 200
Question 1 A
1 FALSE (1) (1)
2 TRUE (1) (1)
3 FALSE (1) (1)
4 FALSE (1) (1)
5 FALSE (1) (1)
6 FALSE (1) (1)
7 TRUE (1) (1)
8 FALSE (1) (1)
9 TRUE (1) (1)
10 FALSE (1) (1)
(10) (3) (6) (1)

Question 1 B
In the Lategan case (1) it was decided that accrued means "become entitled to"(1) (2) (2)
The "entitled to" principle was extended (1) in Mooi(1) (2) (1) (1)
It was held accrual only takes place when the taxpayer becomes
"Unconditionally entitled"(1) to the amount (1) (1)
People Stores (1) the judge confirmed (1) the "become entitled"(1) to (3) (2) (1)

Example of "accrual": Markers to use discression

- Must be clear Amount NOT received yet (1) (1)
- Subject to a condition, e.g. Age, or time or delivery (1) (1)
(10) 0 (6) (4)

Question 1C
1) No, the sale of the cows will not be subject to CGT, (1) (1)
The cows are his trading stock, and will be included in Gross Income (1) (1)
2) No, the provision will not apply to John. (1) (1)
The sale has to be due to drought, and he decided himself to change breeds (1) (1)
The proceeds of R650 000 will thus be taxed in the 2019 year of assessment. (1) (1)
(5) (2) (2) (1)
Difficult
QUESTION 2 Easy Moderate Difficult
2.1
Transaction Output
Input
VAT Effect Tax
Sales to South African customers R2 280 000 x 15/115 297,391 (1) 0
Purchase of raw materials in SA from vendors R467 500 x 15/115 60,978 (1) (1)
1 Sales to Brazil - export Export: zero-rated 0 (1) (1)
2 Interest received Fin Service: Exempt supply (1) (1)
3 Office rental received R85 000 x 15/115 11,087 (1) (1)
4 Apartment rental received - residential accomodation is an exempt supply 0 (1) (1)
5 Rental paid for fixed property R22 800 x 15/115 2,974 (1) (1)

Purchase of raw materials from non-VAT vendors - did not pay VAT (1) (1)
Purchase of furniture for apartments denied input due to used for exempt supply 0 (1) (1)
Salaries and wages. No VAT. Employment not included in def of enterprise 0 (1) (1)
Air ticket R3 200 x 15/115 417 (1) (1)
Gautrain ticket - Transport farepaying pax by road/rail Exempt supply 0 (1) (1)
Car hire - Use of Motor car: input denied 0 (1) (1)
Water bottles - Entertainment - input denied 0 (1) (1)
Bad debts - only write off when actually go bad R36 000 *14/114 4,421 (1) (1)
Sold to debtor when VAT rate was 14%
Purchase of 2nd hand sanding machine from vendor R40 000 x 15/115 5,217 (1) (1)
Sale of old machine to non-vendor R25 000 x 15/115 3,261 (1) (1)

74,008 311,739
Net output tax payable for October 2019 237,731
Total (17) (5) (9) (2)

2.2 Prof Pepper is a VAT Vendor (1) (1)

And therefore HAVE to charge VAT @ standard rate (15%) (1) (1)
even if the transaction is in cash and at cost price/ Not making a profit (1) (1)
(3) (2) (1) 0
Question 3 Easy Moderate Difficult
CGT Income tax
Cash Sales R7 041 000 x 100/115 6,122,609 (0.5) (1)
Credit sales R2 085 000 x 100/115 1,813,043 (0.5) (1)

Opening stock 200 000 + 60 000 (260,000) (1) (1)

Closing stock 300 000 + 50 000 350,000 (1) (1)

Purchases of raw materials R6 049 800 x 100/115 (5,260,696) (1) (1)

Recoupment of stock donated @ cost price 30,000 (1) (1)

Local Dividends received No WHT if SA Co to SA Co 15,000

Local dividend exemption (15,000) (1) (1)

Foreign dividends 35,000

Foreign dividend exemption R35 000 x 8/28 (10,000) (1) (1)

New machine R205 200 x 100/115(1) x 40%(1) (71,374) (2) (1) (1)

Delivery vehicle R588 000 x 100/115(1) /4 x 266/365(1) (93,155) (2) (2)

Land for new building No allowances 0 (1) (1)

New building R5 025 000 - R45 000 4,980,000 (1) (1)
Allowance 5% (249,000) (1) P (1)

Old building
Land No allowance
Plant - Cost price 600,000
Previous owner did not qualify for any allowances - CAA will not either (1) (1)

Capital gain
Land
Proceeds - Base cost
VD value greater of: (1) P (1)
MV 220,000
TABC 209,091
20% of Proceeds 50,000

Therefore choose MV (1) (1)

R250 000 - R220000 30,000 (1) (1)

Building
Proceeds = R470 000,
Par 20 cost = R600 000
MV = R700 000

Base cost thus greater than Proceeds, but nor MV,

Thus "Kink test 2B" (1) (1)
Base cost is lower of (1) (1)
- MV 700,000
- TABC 581,429
CG = R470 000 - 581 429 (111,429) (1) P (1)
Capital loss - carried forward to next year (81,429) 0 (1) (1)

Rates and taxes Zero rated (29,900) (1) (1)

Dividends paid Not in production of income 0 (1) (1)

2,376,527
Donation to orphanage 30,000 (30,000) (1) P (1)
Limited to 10% of taxable income 237,653 (1) (1)

(26) (14) (10) (2)

45% 20% 15% 20%

Total SDG Lesedi Allen PF MW
Div declared 1,200,000 540,000 240,000 180,000 240,000 (1) (1)
Exempt - Res co (540,000)
Exempt - PBO (240,000)
Exempt - Pension Fund (180,000)
0 0 0 240,000
WHT @ 20% 0 0 0 48,000 (1) (1)
Amount received 540,000 240,000 180,000 192,000 (1) (1)
WHT paid over by 30 June 2019 (1) (1)

(4) (4)
Question 4 Easy Moderate Difficult
Part 1
The legality of the income is irrelevant, it should still be included in Gross Income (1) (1)
- Delagoa Bay Cigarette Co Ltd (1) (1)
The legality of the source of the income does not preclude it from tax (1) (1)
- MP Finance Group CC (1) (1)

Therefore the R350 000 will be included in her income (1) (1)
(5) (5) 0 0
Part 2
Positive test:
Expenditure and losses - meet this (1) (1)
Actually incurred - was actually paid in cash (1) (1)
In the production of income - can be assumed to be Gross Income (1) (1)
During the year of assessment - during 2019 year of assessment (1) (1)
Not of a capital nature - wages and other expenses not capital in nature (1) (1)

The expenses will therefore be deductible for tax purposes (1) (1)
(6) (6) 0 0
Part 3
Sales of stolen cellphones 350,000 (1) (1)
Expenses incurred iro stolen cellphones (100,000) (1) P (1)
Salary R25 000 x 12 300,000 (1) (1)
Use of cell phone - no value mainly used for employment purposes 0 (1) (1)
Cellphone account - release of debt: private use 20% x R48 300 9,660 (1) (1)

Travel allowance R7 500 x 12 90,000 (1) (1)

Km's
- Private 5320+5210 10530
- Business 15810
26340

Deemed cost
Fixed cost72983/26340 2.771 (1) (1)
Fuel 1.16
Maintenance 0.475 (1) (1)
4.406
Business cost x 15 810km (69,656) (1) (1)
Inclusion 20,344 (1) (1)

Subsistance allowanR420(1) x 8(1) 3,360 (2) (1) -1

(7 nights means she was away for 8 days)
Less Highest of: (3,328) 32 (1) P (1)
- Actual 2,940
- SARS allow R416 x 8 3,328

Meal coupons
Cost to MCN (20(1) x R30(0.5) x 12(1)) 7,200 (2.5) (3)
Paid by EE (20 x R16(0.5) x 12) (3,840) 3,360 (0.5) (1)
Alt: (R14(1) x 20(1) x 12(1))
Employees' tax Deducted from Tax per tables 0 (1) (1)

Taxable Income 583,396

(15) (10) (4) (1)

Total (26)