TAX2601 Assignment 3 Semester 2 2023 (SOLUTIONS/ANSWERS)
QUESTIONS ASKED:
TAX2601
2023 Semester 2
ASSESSMENT 3 — QUESTIONS
The due date for this assessment is 4 September 2023 @ 10h00.
The assessment covers learning units 3 — 5.
TAX2601/2023/Semester 2/Assessment 3
Instructio...
, QUESTION 1
Assumptions:
1. All amounts exclude VAT unless stated otherwise.
2. All persons mentioned are residents of the Republic of South Africa unless stated
otherwise.
3. SARS = South African Revenue Service.
Question 1: Part A - Health Harmony (Pty) Ltd
Preliminary Taxable Income: R6,785,000
1. Dividends Received: R50,000
• Dividends received from a South African company are generally exempt from
income tax.
Reason: Exempt from tax as it's a local dividend.
2. Rental Income & Improvements:
• Monthly Rent: R15,000
• Lease Period: 9 months (July 2022 to March 2023)
• Total Rental Income: R15,000 x 9 = R135,000
• Improvement costs by the tenant: R130,000
• The improvements are a capital expenditure and won't reduce rental income for tax
purposes.
Reason: Improvements are a capital expense by the tenant, not deductible from the
rental income.
Additional Incomes to be considered:
• Dividends Received: R0 (Exempt)
• Rental Income: R135,000
Additional Expenses to be considered:
• Marketing expense: R90,000
• Patents & related costs: R95,000
Reason: These are capital in nature but could potentially be amortized.
• Bad debts: R71,000
• Restraint of trade: R1,000,000
Reason: This is usually amortized over the period of the restraint. Needs further
details for accurate treatment.
Calculations:
• Preliminary Taxable Income: R6,785,000
• Additional Income: R135,000
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller itsbesttutors. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.82. You're not tied to anything after your purchase.