⋆
]]
⋆
TAX2601: Principles of Taxation
OCT/NOV Examination 2026
Covers Past Papers: Oct/Nov 2023, Oct/Nov 2024 & Oct/Nov 2025
⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆
[ South African Taxation [
_ Exam Revision Guide
TAX2601
Module Code:
Principles of Taxation
Module Name:
Oct/Nov Examination Revision 2026
Paper:
2023, 2024 & 2025
Years Covered:
100 marks per exam
Total Marks:
2 Hours per exam
Duration:
This guide covers authentic past-paper style questions from three consecutive Octo-
ber/November examinations. Study with understanding, not memorisation.
Exam Revision Notes | TAX2601 | 2023–2026
,TAX2601 | Exam Revision Principles of Taxation
O Reference Tax Tables (2025 Year of Assessment)
Key Concept
These tables are typically provided in the exam. Memorise the structure and rate
thresholds, not individual rand amounts.
Table 1: Normal Tax — Companies (2025 YoA)
Entity Type Tax Rate
Normal company 27% of taxable income
Small Business Corpo- 0%
ration (first bracket: 0 –
R95 750)
SBC (R95 750 – 7% of amount over R95 750
R365 000)
SBC (R365 000 – R18 848 + 21% of amount over R365 000
R550 000)
SBC (above R550 000) R57 698 + 27% of amount over R550 000
Table 2: Turnover Tax — Micro Business (2025 YoA)
Taxable Turnover Tax Payable
R0 – R335 000 Nil
R335 001 – R500 000 1% of amount over R335 000
R500 001 – R750 000 R1 650 + 2% of amount over R500 000
R750 001 – R1 000 000 R6 650 + 3% of amount over R750 000
Table 3: Capital Gains Tax Rates
Taxpayer Inclusion Rate Effective CGT Rate
Company 80% 21.6%
Natural person 40% Progressive
Annual exclusion (indi- R40 000 –
vidual)
Table 4: Building Allowances (s13 and s13quat)
Page 2 of 21
,TAX2601 | Exam Revision Principles of Taxation
Type Allowance
Residential building 5% p.a. (s13)
(new)
Commercial building 5% p.a.
Urban Development Zone 20% year 1; 8% p.a. years 2–10
(UDZ) erection
UDZ improvements 20% year 1; 8% years 2–5
Table 5: Small-Scale Intellectual Property Threshold
Threshold Treatment
Cost below R5 000 Immediately deductible (s11(gB))
Cost R5 000 and above Capitalised; claim over useful life
Page 3 of 21
,TAX2601 | Exam Revision Principles of Taxation
Ù PAPER 1: OCT/NOV 2025
University Examinations — Principles of Taxation (100 Marks)
QUESTION 1 [20 marks]
(a) [10 marks]
Question: Solcon (Pty) Ltd is a South African resident company that manufactures
cleaning products. Its year of assessment ends on 28 February 2025. The following
information is available for the 2025 year of assessment:
1. Trading revenue: R4 200 000
2. Cost of sales: R1 800 000
3. The company paid a penalty of R15 000 to a municipality for contravening a local
by-law.
4. The company paid salaries of R620 000, including a R40 000 salary to the wife of the
CEO for secretarial work she actually performed.
5. The company donated R25 000 to an approved public benefit organisation (s18A
receipt received).
6. The company incurred R38 000 on repairs to its production machinery that had
deteriorated due to normal use.
7. On 1 September 2024, Solcon purchased a new delivery vehicle for R350 000 (used
solely for trade). Wear-and-tear is claimable under s11(e) using the prescribed rate of
4 years (25% p.a. straight-line).
Required: Calculate the taxable income of Solcon (Pty) Ltd for the 2025 year of assess-
ment. Show all workings. (10 marks)
Answer:
Key Concept
Taxable Income Formula: Gross Income − Exempt Income − Allowable Deductions
+ Taxable Capital Gains = Taxable Income.
Page 4 of 21
,TAX2601 | Exam Revision Principles of Taxation
. Watch Out
Apportionment of allowances: Where an asset is acquired partway through the
year, the s11(e) wear-and-tear allowance must be apportioned pro-rata based on months
used. Solcon purchased the vehicle on 1 September 2024, which means it was used for 6
months in the 2025 year of assessment (September 2024 to February 2025).
Item R R
Trading revenue 4 200 000
Less: Cost of sales (1 800 000)
Gross profit 2 400 000
Less: Allowable deductions
Salaries (s11(a) – all deductible; spouse salary is for (620 000)
actual services rendered)
Repairs to machinery (s12(a) – repairs to maintain, (38 000)
not improve, the asset)
Donation to approved PBO (s18A limited to 10% (25 000)
of taxable income before donation – provisionally
allowed at this stage)
Wear-and-tear on delivery vehicle: R350 000 × 25% (43 750)
× 6/12
Sub-total deductions (726 750)
Add back: Non-deductible items
Penalty to municipality (s23(o) – penalties for 15 000
contravening legislation are not deductible)
Taxable income (before s18A adjustment) 1 688 250
s18A check: 10% × R1 688 250 = R168 825; dona- Full donation deductible
tion of R25 000 < R168 825
Taxable income of Solcon (Pty) Ltd for 2025 R1 688 250
⋆ Exam Tip
Penalty deductions (s23(o)): Always disallow penalties imposed for contravening
any law. This is a favourite exam trap. The penalty is added back.
Page 5 of 21
, TAX2601 | Exam Revision Principles of Taxation
Salary to connected person: A salary paid to a spouse or director’s relative is de-
ductible IF the work is actually performed and the amount is not excessive. Here it
passes both tests.
(b) [10 marks]
Question: Using the taxable income you calculated in (a) above, calculate Solcon (Pty)
Ltd’s normal tax liability for the 2025 year of assessment. Also calculate the tax liability
if Solcon qualifies as a small business corporation (SBC) as defined in s12E of the Income
Tax Act. Compare the two liabilities and briefly explain TWO conditions that Solcon must
meet to qualify as an SBC. (10 marks)
Answer:
Normal Company Tax:
Calculation R
Taxable income 1 688 250
Normal company tax rate 27%
Normal tax liability R455 828
Small Business Corporation Tax (s12E rates):
Bracket R
R0 – R95 750: 0% 0
R95 751 – R365 000: 7% × (R365 000 – R95 750) = 7% × R269 250 18 848
R365 001 – R550 000: 21% × (R550 000 – R365 000) = 21% × R185 000 38 850
R550 001 – R1 688 250: 27% × (R1 688 250 – R550 000) = 27% × R1 138 250 307 328
SBC tax liability R365 026
Comparison: An SBC saves R455 828 − R365 026 = R90 802 in tax relative to a normal
company.
Two conditions for SBC qualification (s12E):
• Gross income test: The company’s gross income for the year of assessment must not
exceed R20 million.
Page 6 of 21
]]
⋆
TAX2601: Principles of Taxation
OCT/NOV Examination 2026
Covers Past Papers: Oct/Nov 2023, Oct/Nov 2024 & Oct/Nov 2025
⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆
[ South African Taxation [
_ Exam Revision Guide
TAX2601
Module Code:
Principles of Taxation
Module Name:
Oct/Nov Examination Revision 2026
Paper:
2023, 2024 & 2025
Years Covered:
100 marks per exam
Total Marks:
2 Hours per exam
Duration:
This guide covers authentic past-paper style questions from three consecutive Octo-
ber/November examinations. Study with understanding, not memorisation.
Exam Revision Notes | TAX2601 | 2023–2026
,TAX2601 | Exam Revision Principles of Taxation
O Reference Tax Tables (2025 Year of Assessment)
Key Concept
These tables are typically provided in the exam. Memorise the structure and rate
thresholds, not individual rand amounts.
Table 1: Normal Tax — Companies (2025 YoA)
Entity Type Tax Rate
Normal company 27% of taxable income
Small Business Corpo- 0%
ration (first bracket: 0 –
R95 750)
SBC (R95 750 – 7% of amount over R95 750
R365 000)
SBC (R365 000 – R18 848 + 21% of amount over R365 000
R550 000)
SBC (above R550 000) R57 698 + 27% of amount over R550 000
Table 2: Turnover Tax — Micro Business (2025 YoA)
Taxable Turnover Tax Payable
R0 – R335 000 Nil
R335 001 – R500 000 1% of amount over R335 000
R500 001 – R750 000 R1 650 + 2% of amount over R500 000
R750 001 – R1 000 000 R6 650 + 3% of amount over R750 000
Table 3: Capital Gains Tax Rates
Taxpayer Inclusion Rate Effective CGT Rate
Company 80% 21.6%
Natural person 40% Progressive
Annual exclusion (indi- R40 000 –
vidual)
Table 4: Building Allowances (s13 and s13quat)
Page 2 of 21
,TAX2601 | Exam Revision Principles of Taxation
Type Allowance
Residential building 5% p.a. (s13)
(new)
Commercial building 5% p.a.
Urban Development Zone 20% year 1; 8% p.a. years 2–10
(UDZ) erection
UDZ improvements 20% year 1; 8% years 2–5
Table 5: Small-Scale Intellectual Property Threshold
Threshold Treatment
Cost below R5 000 Immediately deductible (s11(gB))
Cost R5 000 and above Capitalised; claim over useful life
Page 3 of 21
,TAX2601 | Exam Revision Principles of Taxation
Ù PAPER 1: OCT/NOV 2025
University Examinations — Principles of Taxation (100 Marks)
QUESTION 1 [20 marks]
(a) [10 marks]
Question: Solcon (Pty) Ltd is a South African resident company that manufactures
cleaning products. Its year of assessment ends on 28 February 2025. The following
information is available for the 2025 year of assessment:
1. Trading revenue: R4 200 000
2. Cost of sales: R1 800 000
3. The company paid a penalty of R15 000 to a municipality for contravening a local
by-law.
4. The company paid salaries of R620 000, including a R40 000 salary to the wife of the
CEO for secretarial work she actually performed.
5. The company donated R25 000 to an approved public benefit organisation (s18A
receipt received).
6. The company incurred R38 000 on repairs to its production machinery that had
deteriorated due to normal use.
7. On 1 September 2024, Solcon purchased a new delivery vehicle for R350 000 (used
solely for trade). Wear-and-tear is claimable under s11(e) using the prescribed rate of
4 years (25% p.a. straight-line).
Required: Calculate the taxable income of Solcon (Pty) Ltd for the 2025 year of assess-
ment. Show all workings. (10 marks)
Answer:
Key Concept
Taxable Income Formula: Gross Income − Exempt Income − Allowable Deductions
+ Taxable Capital Gains = Taxable Income.
Page 4 of 21
,TAX2601 | Exam Revision Principles of Taxation
. Watch Out
Apportionment of allowances: Where an asset is acquired partway through the
year, the s11(e) wear-and-tear allowance must be apportioned pro-rata based on months
used. Solcon purchased the vehicle on 1 September 2024, which means it was used for 6
months in the 2025 year of assessment (September 2024 to February 2025).
Item R R
Trading revenue 4 200 000
Less: Cost of sales (1 800 000)
Gross profit 2 400 000
Less: Allowable deductions
Salaries (s11(a) – all deductible; spouse salary is for (620 000)
actual services rendered)
Repairs to machinery (s12(a) – repairs to maintain, (38 000)
not improve, the asset)
Donation to approved PBO (s18A limited to 10% (25 000)
of taxable income before donation – provisionally
allowed at this stage)
Wear-and-tear on delivery vehicle: R350 000 × 25% (43 750)
× 6/12
Sub-total deductions (726 750)
Add back: Non-deductible items
Penalty to municipality (s23(o) – penalties for 15 000
contravening legislation are not deductible)
Taxable income (before s18A adjustment) 1 688 250
s18A check: 10% × R1 688 250 = R168 825; dona- Full donation deductible
tion of R25 000 < R168 825
Taxable income of Solcon (Pty) Ltd for 2025 R1 688 250
⋆ Exam Tip
Penalty deductions (s23(o)): Always disallow penalties imposed for contravening
any law. This is a favourite exam trap. The penalty is added back.
Page 5 of 21
, TAX2601 | Exam Revision Principles of Taxation
Salary to connected person: A salary paid to a spouse or director’s relative is de-
ductible IF the work is actually performed and the amount is not excessive. Here it
passes both tests.
(b) [10 marks]
Question: Using the taxable income you calculated in (a) above, calculate Solcon (Pty)
Ltd’s normal tax liability for the 2025 year of assessment. Also calculate the tax liability
if Solcon qualifies as a small business corporation (SBC) as defined in s12E of the Income
Tax Act. Compare the two liabilities and briefly explain TWO conditions that Solcon must
meet to qualify as an SBC. (10 marks)
Answer:
Normal Company Tax:
Calculation R
Taxable income 1 688 250
Normal company tax rate 27%
Normal tax liability R455 828
Small Business Corporation Tax (s12E rates):
Bracket R
R0 – R95 750: 0% 0
R95 751 – R365 000: 7% × (R365 000 – R95 750) = 7% × R269 250 18 848
R365 001 – R550 000: 21% × (R550 000 – R365 000) = 21% × R185 000 38 850
R550 001 – R1 688 250: 27% × (R1 688 250 – R550 000) = 27% × R1 138 250 307 328
SBC tax liability R365 026
Comparison: An SBC saves R455 828 − R365 026 = R90 802 in tax relative to a normal
company.
Two conditions for SBC qualification (s12E):
• Gross income test: The company’s gross income for the year of assessment must not
exceed R20 million.
Page 6 of 21
