Calculate the normal tax liability of SA Metals (Pty) Ltd for the year of assessment ending 31 March 2023. Start your answer with the taxable income of
... [Show More] R12 653 000 and provide brief reasons where amounts are not taxable or not deductible. SA Metals has elected the section 11(o) scrapping allowance, where applicable. Ignore all capital gains tax consequences. Taxable income 12 653 000 Manufacturing Machine @ cost - Sec 10 7 500 000 Capital allowance - 2022 (7 500 000 x 40%) - 300 000 300 000 Manufacturing Machine RT4 450 000 Capital allowances year - 2021 (450 000 x 40%) - 180 000 Capital allowances year - 2022 (450 000 x 20%) - 90 000 Capital allowances year - 2023 (450 000 x 20%) - 90 000 - 90 000 Manufacturing Machine DP1 500 000 Capital allowances year - 2023 (500 000 x 50%) - 250 000 - 250 000 Equipment - Printer 6 499 Allowance Equipment (6 499/5 x 6/12) - 650 650 Delivery van 380 000 Allowance Delivery van (380 000/4 x 6/12) - 47 500 - 47 500 Manufacturing Machine 900 000 Capital allowances year - 2022 (900 000 x 40%) - 360 000 Capital allowances year - 2023 (900 000 x 20%) - 180 000 - 180 000 Tax value 360 000 Proceeds - 770 000 Recoupment 410 000 410 000 Heavy Duty truck Cost 560 000 Capital allowances (560 000/3) - 186 667 - 186 667 Tax value 373 333 Proceeds - 95 000 Scrapping allowance 278 333 - 278 333 Office Suite 1 800 000 Capital allowances (1 800 000 x 5%) - 90 000 90 000 Downloaded by: 24900ipeleng | [email protected] Distribution of this document is illegal Want to earn R13,625 per year? Stuvia.com - The study-notes marketplace Disclaimer Extreme care has been used to create this document, however the contents are provided “as is” without any representations or warranties, express or implied. The author assumes no liability as a result of reliance and use of the contents of this document. This document is to be used for comparison, research and reference purposes ONLY. No part of this document may be reproduced, resold or transmitted in any form or by any means. Factory Building (Joburg) 3 700 000 Capital Allowance (3 700 000 x 5%) - 185 000 185 000 Repairs and mantainance - 840 000 Factory Building (Ggeberha) 12 000 000 Capital allowances 2022 (12 000 000 x 20%) - 2 400 000 Capital allowances 2023 (12 000 000 x 8%) - 960 000 - 960 000 Design registration cost - Sec 11g - 30 000 Acquisition of a trademark - Research and development costs Research Consumables (375 000 x 150%) - 562 500 Sales promotion - 158 000 Traffic fines(not deductible) - Taxable Income 10 055 650 Tax @ 28% 2 815 582 QUESTION 2 Discuss whether the receipt of the R10 000 deposit would constitute gross income of Siyahamba (Pty) Ltd as defined in the Income Tax Act 58 of 1962 for the year of assessment ending 31 March 2023. List all the requirements, discuss and apply each one and briefly refer to case law to strengthen your argument. Requirement Discussion Received by or accrued to taxpayer Siyamba received R10 000 deposit Amounts in cash or otherwise Siyamba received R10 000 deposit in cash Earned or accrued to taxpayer Siyamba received the amount for their own benefit. The R10 000 has not accrued yet, as no goods/services have been Downloaded by: 24900ipeleng | [email protected] Distribution of this document is illegal Want to earn R13,625 per year? Stuvia.com - The study-notes marketplace Downloaded by: 24900ipeleng | [email protected] Distribution of this document is illegal Want to earn R13,625 per year? Stuvia.com - The study-notes marketplace Disclaimer Extreme care has been used to create this document, however the contents are provided “as is” without any representations or warranties, express or implied. The author assumes no liability as a result of reliance and use of the contents of this document. This document is to be used for comparison, research and reference purposes ONLY. No part of this document may be reproduced, resold or transmitted in any form or by any means. delivered. A taxpayer is taxed on the earlier of accrual or receipt. In this case, they received the money before accrual Not of capital nature Siyamba revenue is derived from the organisation events, and the deposit was received as payment for their services. hence any amounts received for such services are not capital in nature. During year of assessment The R50 000 was received on 10 March but the service only offered after year end. Therefore the amount received will be taxed in the in which in was received. CONCLUSION Based on the above analysis, the receipt of the R10 000 deposit would NOT constitute gross income for Siyahamba (Pty) Ltd as defined in the Income Tax Act 58 of 1962 for the year of assessment ending 31 March 2023, since not all the requirements have been met. In the case of CIR v Standard Bank of South Africa Ltd 1985 (4) SA 656 (A), it was held that a deposit received by a bank was income as it constituted payment for services rendered. Similarly, in the case of Commissioner for Inland Revenue v Julius Rosenwald Fund Inc 1928 AD 276, it was held that a deposit received by a company was income as it was received in respect of the company's business operations. Therefore the R10 000 deposit does not constitute income in terms of gross income for the year of assessment ending 31 March. . QUESTION 3 Calculate the normal tax liability for Funky Pants (Pty) Ltd for the year of assessment ended 28 February 2023. Ignore all capital gains tax consequences. Downloaded by: 24900ipeleng | [email protected] Distribution of this document is illegal Want to earn R13,625 per year? Stuvia.com - The study-notes marketplace Disclaimer Extreme care has been used to create this document, however the contents are provided “as is” without any representations or warranties, express or implied. The author assumes no liability as a result of reliance and use of the contents of this document. This document is to be used for comparison, research and reference purposes ONLY. No part of this document may be reproduced, resold or transmitted in any form or by any means. Sales 907 000 Dividend Income 100 000 Manufacturing machines FP1 cost 400 000 Capital allowances 2022 - 400 000 Capital allowances 2023 - - Manufacturing machines FP2 cost 320 000 Installation 37 000 357 000 Capital allowances 2023 - 357 000 - 357 000 Delivery vehicle cost 350 000 Capital allowances 2021 (350 000/4 x 9/12) - 65 625 Capital allowances 2022 (350 000/4 x 9/12) - 65 625 Tax value 218 750 Proceeds - 60 000 Scrapping allowance 158 750 Limited to previously granted capital allowance (65 625 x 2) 131 250 Inventory sold below value (32 000 - 22 000) 10 000 Office and computer equipment cost 230 000 Capital allowances 2021 (7/12 x 230 000/3) - 44 722 Capital allowances 2022 (230 000/3) - 76 667 Capital allowances 2023 (230 000/3) - 76 667 76 667 Taxable Income 867 917 Tax @ 28% 243 017 Downloaded by: 24900ipeleng | [email protected] Distribution of this document is illegal Want to earn R13,625 per year? Stuvia.com - The study-notes marketplace [Show Less]