Project

Faculty Name: Commerce and Law

Module Code: COTXA2
Module Name: Taxation 2A Block 1
Examiner: Primrose Kavai
Copy Editor: Xolisile Mkhasibe
Date and Time Released: 7 April 2023 at 12:00
Total Marks: 100
Submission Date and Time: 18 April 2023 at 12:30
Section A: Project 100 Marks
Section B: Mark Allocation –
Section C: Plagiarism and Referencing –

This assignment contributes 50% towards the final mark.

Instructions to Student
1. Please ensure that your answer file (where applicable) is named as follows before
submission: Module Code – Assessment Type – Campus Name – Student Number.
2. Remember to keep a copy of all submitted assignments.
3. All work must be typed.
4. Please note that you will be evaluated on your writing skills in all your projects.
5. All work must be submitted through Turnitin.1 The full originality report will be automatically
generated and available for the lecturer to assess. Negative marking will be applied if you
are found guilty of plagiarism, poor writing skills, or if you have applied incorrect or
insufficient referencing. (See the table at the end of this document where the application of
negative marking is explained.)

1
Refer to the Eduvos Policy for Intellectual Property, Copyright and Plagiarism Infringement, which is available on myLMS.
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Eduvos (Pty) Ltd (formerly Pearson Institute of Higher Education) is registered with the Department of Higher Education and Training as a private
higher education institution under the Higher Education Act, 101, of 1997. Registration Certificate number: 2001/HE07/008
6. You are not allowed to offer your work for sale or to purchase the work of other students.
This includes the use of professional assignment writers and websites, such as Essay Box.
If this should happen, Eduvos reserves the right not to accept future submissions from you.
7. Students must submit their own work and are not permitted to copy directly from the internet
or use paraphrasing tools such as Grammarly, Wordtune, Rewriter, Softo, and the like. This
will result in 0 marks for the section involved.

Assignment Format
You must fulfil the requirements when writing and submitting assignments as follows:
• Use Arial, font size 12.
• Include a title page, a table of contents, and page numbers.
• Include the completed Assessment/Project Coversheet (available on myLMS).
• Write no more than the maximum word limit.
• Ensure any diagrams, screenshots, and PowerPoint presentations fit correctly on the page
and are referenced.
• Use the correct referencing method throughout the assignment.
• Include a bibliography based on the applicable referencing method at the end of the
assignment.
• Check spelling, grammar, and punctuation.
• Run the assignment through Turnitin software.
• Print submissions on both sides of the page.

Essential Embedded Knowledge and Skills Required of Students

• Report-writing skills
• Ability to analyse scenarios/case studies
• Understanding of subject field concepts and definitions
• Ability to apply theoretical knowledge to propose solutions to real-world problems
• Referencing skills

Resource Requirements
• A device with internet access for research
• A desktop or personal computer for typing assignments
• Access to a library or resource centre
• Prescribed reading resources

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Delivery Requirements (evidence to be presented by students)
• A typed assignment2
• A Turnitin originality report

Minimum Reference Requirements

At least five references for first year, ten references for second year, and fifteen references for
third year.

Additional reading is required to complete this assignment successfully. You need to include the
following additional information sources:
• Printed textbooks/e-books
• Printed/online journal articles
• Academic journals in electronic format accessed via ProQuest or other databases
• Periodical articles, e.g. business magazine articles
• Information or articles from relevant websites
• Other information sources, e.g. geographic information (maps), census reports, interviews

Note
• It is crucial that students reference all consulted information sources by means of in-text
referencing and a bibliography, according to the applicable referencing method.
• Negative marking will be applied if a student commits plagiarism, i.e., using information from
information sources without acknowledgement of and reference to the original source.
• In such cases, negative marking, also known as ‘penalty scoring’, is the practice of
subtracting marks for insufficient/incorrect referencing.
• Consult the table at the end of this document, which outlines how negative marking will be
applied as well as the way in which it will affect the assignment mark.

2
Refer to the Conditions of Enrolment for more guidance (available on myLMS).

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Section A

Learning Objective
Interpret and apply the Income Tax Act, 58 of 1962.

Project Topic
The taxation of an individual.

Technical Aspects
This research project should not exceed 10 pages.

Marking Criteria
Clarity of thought, logical presentation, and appropriate structures for presentation of calculation
are vital.

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Question 1 80 Marks

Study the scenario and complete the question(s) that follow:

You are a tax specialist, and you operate your own proprietorship (TaxEISHion) solely. You have only
one employee (a good friend) who serves as your personal assistant. However, your friend has no
taxation knowledge and cannot assist you in this regard. You provide exclusive tax services at a charge
out rate of R2 500 per hour. The services that you provide include advice about tax calculations, tax
planning, and acting as a witness in court regarding tax cases and auditing of tax calculations.

You just received an e-mail from Peter Grant, one of your clients, who needs to submit his tax return for
the 2023 year of assessment.

From: Peter Grant

To: TaxEISHion
Subject: Assistance with Tax

Good day,
Thank you for your assistance! I made use of the services of a junior tax consultant, (Thandi) who is a
postgraduate taxation student and works at a small tax consulting firm as a tax clerk.I requested her to
calculate my tax payable for the 2023 year of assessment. I am not very confident in the work she did,
and I am asking you to re-do this work for me.

I am a resident of South Africa and a qualified journalist. I have been trying my hand at farming and for
the past two years, gained enough experience to confidently call myself a farmer of note. I started working
at SportNews in 1995, I was 38 years old then. Since 2000, I have been assigned to report on all
CurrieCup games, which I enjoy because love to travel. I am married out of community of property to
Mary, and we have two children, Zandile and Bryan. Zandile and Bryan are both married and live in
Scotland.

As telephonically discussed, please find attached my normal tax income (Attachment 1) as well as my
farming income (Attachment 2).

Kind regards,
Peter Grant
Source: Kavai, P. 2023

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Attachment 1: Information provided on normal tax.
I have some investments in shares and a fixed deposit. During the year, I received a total of
R50 000 in local dividends and R70 500 in local interest.

SportNews recently migrated to a new payroll system. It is an absolute mess, I tell you! So, we
have not yet been furnished with our IRP 5s for the year. But I can provide you with the
information I have so far.

I received a basic salary of R25 000 per month and commission of R3 000 per month for my
photographs published in newspapers, which usually gets paid on the 7th of the next month. I
also received a bonus of R30 000 in April 2022 as a 13th cheque. I received the same basic
amounts in the 2022 year of assessment. I did not receive any other benefits in the 2022 year
of assessment, except for the right to use residential accommodation.

I received the right of use of the company’s Toyota Fortuner, without a maintenance plan, from
1 March 2022 to 31 December 2022. SportNews purchased the vehicle on 28 May 2020 at a
cost price of R470 000 (including VAT).
For the same period, I kept my logbook updated and have the following information regarding
trips I made to rugby games in the 2023 year of assessment:

Odometer on 1 March 2022 113 964 km

Odometer on 31 December 2022 202 664 km
Odometer on 28 February 2023 204 982 km
Private kilometres 15 169 km
(1 March 2022 – 31 December 2022)

The agreement between me and SportNewswas that I will pay for maintenance and fuel. I paid
a total of R567 for maintenance and have the receipts but unfortunately, I did not keep record
of fuel expenses for the period 1 March 2022 – 31 December 2022.

To edit my photographs, taken at the rugby games, SportNews gave me the right of use of a
laptop with all the necessary software programs from 1 March 2022 until the end of the year of
assessment. I use this laptop mainly for business purposes. SportNews purchased the laptop
on 1 January 2021 for R11 000 including VAT. The market value of the laptop on 1 March

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 2022 and on 28 February 2023 amounted to R8 260 and R7 250 respectively. The laptop gave
me some problems and I had to get an IT guy to come and fix it and paid him R1 500 for this
service. I was allowed to claim this amount back from SportNews.

SportNews has been providing me with residential accommodation since the 2000 year of
assessment. My wife and I live in a 3-bedroom house in Hatfield, which I furnished. SportNews
pays the electricity every month which amounted to a total of R7 000 for the period 1 March
2022 to 31 December 2022. I do not have any interest on the property and have earned the
same salary for the past 2 years.

At SportNews’ year-end function in November 2022, I received an award for my 28th year of
service. I was also provided a 10-day stay in Ballito at a holiday house owned by the company.
This house is usually rented out to the general public at R1 500 per day, per family.

My wife and I liked the house so much that we purchased the holiday house from SportNews
on 31 December 2022 at a cost of R2,7 million and moved in permanently on the same date.
The market value of the house was R3 million. We financed the purchase with a 10% loan from
ABSA, which was subsidised by SportNews. We pay interest of 5% and SportNews also pays
interest of 5% on the loan.

Due to an increase in theft in Ballito, I decided to sell the house, our primary residence, on 28
February 2023 to the old Bulls captain, Victor Matfield for R3.5 million.

I owned 2 yachts; Yacht Brandy was purchased on 30 June 2000 for R300 000. On 16 August
2022, Yacht Brandy, 11 metres long, was sold for R1 500 000. The market value on 1 October
2001 was determined as R650 000 and Time-Apportionment Base (TAB) at R500 000. During
the 2010 world cup, I made improvements to the yacht worth R400 000.

Yacht Coke, 7 metres long, bought in 2010 for R750 000, was sold to the Coca Cola Company,
on 30 November 2022. The Coca Cola Company intended to use it as a prize in a competition
to be held during the 2023 Rugby Challenge. I sold the yacht for R1,5 million.
Both yachts were never used for trade purposes, I just enjoyed taking my wife on a ride
occasionally.

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 I sold some assets in the previous year of assessment and carried forward capital losses of
R25 000.

During the 2023 year of assessment, I made contributions to the following funds:
Lonesome Pension Fund
The employee contribution of R3 600 is from my basic salary. In R3 600 per month for
previous years, an amount of R15 789 of my contributions was not
1 March 2022 –
allowed as a deduction against my taxable income.
28 February 2023

Save-Me Medical Aid Fund

The employer-employee contributions ratio is 1:2. From 1 March 2022
to 28 February 2023, the R1 630 per month constitutes the total
contributions (employee + employer). Mary and I are the only two
members on the fund, and neither of us have any physical disabilities.
Qualifying medical expenses not refunded from the fund amounted to
R8 416.
R1 630 per month
Crying Kiddies Charity Fund R400 per month for the
I received a S18A qualifying certificate. whole (2023) year of
assessment
On 21 February 2023, I decided it was time to retire. Lone-some Pension fund is satisfied that I
am within normal retirement age. The Pension Fund paid out a lumpsum of R920 000 on
27 February 2023, and on the same day Sportpro paid me a lumpsum of R50 000. During the
period, I was a member of Lone-some Pension Fund, contributions of R304 000 were not
deductible for income tax purposes. A couple of years ago, I received a lump-sum of R600 000
from a retirement annuity fund that I was a member of, at which date I was considered to have
reached retirement age.

Attachment 2: Farming Income

Three years ago, I decided to venture into mushroom farming in green houses which, due to
good rains, have yielded an excellent crop. I have recently started farming with sheep as well.
My farming income for the 2023 year of assessment is as follows:
Sheep sold 598 800
Mushrooms 244 000

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 Sheep purchased 1 355 000
Non-capital expenses – all deductible for tax purposes 292 500
Capital development expenditure 105 200

Additional information
1. There were 12 000 sheep on hand on 28 February 2022. I inherited 200 sheep from my
uncle during the 2023 year of assessment. Five sheep were slaughtered as rations for
workers, three were slaughtered for private consumption and two were donated to the
school fête. On 28 February 2023, 11 400 sheep were on hand.
The sheep on hand had a cost price of R270 each, a market value of R520 each and a
standard value of R6 each.
2. Mushrooms on hand at cost price:
Harvested Unharvested
On 28 February 2022 30 400 –
On 28 February 2023 31 200 9 800

Required
1.1 Calculate Peter’s taxable farming income for the 2023 year of assessment. (20 marks)

1.2 Provide detailed calculations of Peter Grant’s tax liability for his 2023 tax year. Marks will
be awarded for providing reasons for the inclusion and non-inclusion of amounts. You may
assume his taxable farming income is R250 000 (60 marks)

Note to Student
• Give reasons for the inclusion and non-inclusion of amounts.
• Amounts to be rounded off to the nearest rand amount.

End of Question 1

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Question 2 10 Marks

Study the scenario and complete the questions that follow:

Employees’ Tax and Provisional Tax

From: SARS Helpline
To: Tax Consultant
RE: Employees Tax and Provisional Tax Registration

Good day,

I was recently appointed in a senior auditing position at SARS. I deal with compliance matters
now, specifically to ensure that taxpayers are, where applicable, correctly registered for
provisional as well as employees’ tax. I am currently having trouble with one specific scenario,
where several taxpayers are involved. I would appreciate your help on the matter.

Crossfit Corporate (Pty) Ltd (“Crossfit”) is in the fitness industry and provides specialised
personal training services. The company has a February year-end. Crossfit currently has four
instructors employed, three of them on a full-time basis. Crossfit is not a labour broker, as
defined. Details of the instructors employed at Crossfit are as follows:

• Instructor Rocky and instructor Strong: Employed on a full-time basis at Crossfit. Both
instructors also run their own separate training centres after hours.
• Instructor Sandy: Employed on a full-time basis at Crossfit.
• Instructor Mellow: Employed on a part-time basis, at Crossfit, on a contract that says she
must work 10 hours per week.

None of these instructors are connected to the shareholders of Crossfit. What bothers me is
that Crossfit only provided their services to one client, PKY Auditors (Pty) Ltd (PKY), for the
full 2023 year of assessment. The instructors of Crossfit go to PKY’s premises daily and
provide training services to PKY’s employees at the hours that are most suitable to each
individual employee. I wonder if this makes Crossfit an independent contractor or personal
service provider.

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 Could you please advise me on the following matters:
1. Define the provisional taxpayer/ taxpayers that is expected to register for provisional tax
according to the Fourth Schedule? (1 Mark)
2. When does a taxpayer have the obligation to withhold employees’ tax? (1 Mark)
3. Which of the parties mentioned above qualify to be provisional taxpayers as defined?
(2 Marks)
4. Does PKY have to withhold employees’ tax from payments made to Crossfit? (3 Marks)
5. Does Crossfit have to withhold employees’ tax from payments to their four instructors? If
so, at which rates does the employees’ tax have to be withheld? (3 Marks)

I really want to make sure I am not missing something.

Thanks in advance,
L Known.
Source: University of Pretoria, 2013.

2.1 You are required to answer all questions listed by the client. (10 Marks)

End of Question 2

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Section B

Mark Allocation for this Project

Criteria Description Marks

• Alphabetical list of references

• Correct referencing for different
Bibliography sources 5 marks
• Number and quality of works
consulted

• Page numbers
• Table of contents
Overall • Headings and sub-headings
5 marks
Presentation • Numbering
• Length
• Language and grammar

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Section C

Plagiarism and Referencing

Eduvos places high importance on honesty in academic work submitted by students and adopts
a zero-tolerance policy on cheating and plagiarism. In academic writing, any source material, e.g.
journal articles, books, magazines, newspapers, reference material (dictionaries), or online
resources (websites, electronic journals, or online newspaper articles), must be properly
acknowledged. Failure to acknowledge such material is considered plagiarism; this is deemed an
attempt to mislead and deceive the reader and is unacceptable.

Eduvos adopts a zero-tolerance policy on plagiarism; therefore, any submitted assessment that
has been plagiarised will be subject to severe penalties. Students who are found guilty of
plagiarism may be subject to disciplinary procedures, and outcomes may include suspension
from the institution or even expulsion. Therefore, students are strongly encouraged to familiarise
themselves with referencing techniques for academic work. Students can access the Eduvos
referencing guides on myLMS.

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Negative Marking

For this Project

• A minimum of 5 additional credible sources must be consulted and correctly cited as per the
Eduvos referencing guides.
• Students are given an opportunity to consult with the lecturer and the academic support office
with a draft before the final submission date.
• Markers must apply the penalties for Category A for insufficient sources and incorrect
referencing style.
• To determine the actual overall similarity percentage and plagiarism, markers must interpret
the Turnitin Originality Report with reference to credible sources used and then apply the
penalties as per the scale in the Policy for Intellectual Property, Copyright and Plagiarism
Infringement.
• The similarity report alone is not an assessment of whether work has or has not been
plagiarised. Careful examination of both the submitted paper/assignment/project and the
suspect sources must be done.

Category A
Minimum Reference Requirements Deduction from Final Mark
a. No additional credible sources have been used or
5%
referenced.
b. One additional information source has been used and
4%
referenced.
c. Two additional information sources have been used and
3%
referenced.
d. Three additional information sources have been used and
2%
referenced.
e. Four additional information sources have been used and
1%
referenced.
f. Poor spelling, grammar, and sentence construction. 1 – 3%

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