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TAX3701: Taxation of Business Activities
OCT/NOV Examination 2026 Preparation Guide
Covers Past Papers: 2023, 2024 & 2025
⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆
[TAX] Taxation — University of South Africa (UNISA)
Exam Revision Guide
TAX3701
Module Code:
Taxation of Business Activities
Module Name:
OCT/NOV Examination 2026 Prep
Paper / Exam:
Past Papers 2023 – 2024 – 2025
Coverage:
100 marks per paper
Total Marks:
3 Hours
Duration:
This guide covers UNISA TAX3701 Oct/Nov examination questions and model an-
swers from 2023 to 2025. Study all topics thoroughly. Focus on calculations, the
general deduction formula, VAT, CGT, provisional tax and dividends tax.
Exam Revision Notes | TAX3701 | 2023–2025 | OCT/NOV 2026
,TAX3701 | Exam Revision OCT/NOV 2026 Prep | 2023–2025
PAPER 1
TAX3701 — Oct/Nov 2024 Examination
Examiner: Mr Mhlanguli Nare | 100 Marks | 3 Hours
Page 2 of 48 [*]
,TAX3701 | Exam Revision OCT/NOV 2026 Prep | 2023–2025
Question 1 — Value-Added Tax (VAT) [25 marks]
Question: Cycle for Life (Pty) Ltd is a South African resident company registered as
a VAT vendor on the invoice basis. The company sells bicycles and related cycling ac-
cessories. The company’s two-month VAT period ends on 31 October 2024. All amounts
include VAT unless otherwise stated.
You are provided with the following transactions for the period ended 31 October 2024:
1. Sales of standard bicycles totalled R862 500 (including VAT). These are taxable
supplies at 15%.
2. Sales of second-hand bicycles to a non-VAT vendor totalled R46 000 (including
VAT).
3. The company purchased new bicycle stock from a registered vendor for R345 000
(including VAT).
4. Cycle for Life donated 5 bicycles to a registered public benefit organisation (PBO).
The cost of each bicycle was R4 600 (excluding VAT) and the open market value was
R5 290 (excluding VAT) each.
5. The company purchased a delivery vehicle for R345 000 (including VAT) and uses it
80% for business deliveries and 20% for private use by the director.
6. Cycle for Life paid R17 250 (including VAT) for staff entertainment at the annual
year-end function.
7. Bad debts of R23 000 (including VAT) were written off. These debts relate to taxable
supplies previously made.
8. A customer returned a defective bicycle for which the company issued a credit note for
R4 830 (including VAT).
REQUIRED: Calculate the VAT payable to or refundable by Cycle for Life (Pty) Ltd
for the two-month period ended 31 October 2024. Provide brief reasons for any nil effects.
Answer:
Key Concept
VAT Calculation Framework: Net VAT = Output Tax − Input Tax. Output tax
arises on taxable supplies made. Input tax is claimable on taxable supplies received,
subject to denial rules. The VAT rate is 15%.
Page 3 of 48 [*]
, TAX3701 | Exam Revision OCT/NOV 2026 Prep | 2023–2025
Exam Tip
Always label each item and state whether it produces output tax, input tax, or a nil
effect with a brief reason. The examiner awards marks for correct treatment AND the
reason.
VAT Calculation for Cycle for Life (Pty) Ltd — Period ended 31 October 2024
Item Output Tax Input Tax
(R) (R)
Output Tax
1. Sales of new bicycles: R862 500 × 15/115 112 500
2. Sales of second-hand bicycles to 6 000
non-vendor: R46 000 × 15/115
4. Donation to PBO — deemed supply 3 968
(open market value): 5 × R5 290 × 15%
8. Credit note issued (reverses output tax): (630)
(R4 830 × 15/115)
Input Tax
3. Purchase of bicycle stock: R345 000 × 45 000
15/115
5. Delivery vehicle (80% business use): 36 000
R345 000 × 15/115 × 80%
6. Staff entertainment: Nil — denied —
(s17(2))
7. Bad debts written off: R23 000 × 15/115 3 000
Total 121 838 84 000
Net VAT Payable to SARS R 37 838
Notes on nil effects:
• Item 6 — Staff entertainment (Input tax denied): In terms of s17(2)(a) of the
VAT Act, input tax on entertainment is denied unless the vendor is in the business of pro-
viding entertainment. Year-end functions constitute entertainment; therefore, input tax of
R2 250 is denied.
• Delivery vehicle — partial denial: Only 80% input tax is claimable because the vehi-
cle is used 20% for private purposes. The 20% private use portion of input tax is denied.
Page 4 of 48 [*]
]]
TAX3701: Taxation of Business Activities
OCT/NOV Examination 2026 Preparation Guide
Covers Past Papers: 2023, 2024 & 2025
⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆
[TAX] Taxation — University of South Africa (UNISA)
Exam Revision Guide
TAX3701
Module Code:
Taxation of Business Activities
Module Name:
OCT/NOV Examination 2026 Prep
Paper / Exam:
Past Papers 2023 – 2024 – 2025
Coverage:
100 marks per paper
Total Marks:
3 Hours
Duration:
This guide covers UNISA TAX3701 Oct/Nov examination questions and model an-
swers from 2023 to 2025. Study all topics thoroughly. Focus on calculations, the
general deduction formula, VAT, CGT, provisional tax and dividends tax.
Exam Revision Notes | TAX3701 | 2023–2025 | OCT/NOV 2026
,TAX3701 | Exam Revision OCT/NOV 2026 Prep | 2023–2025
PAPER 1
TAX3701 — Oct/Nov 2024 Examination
Examiner: Mr Mhlanguli Nare | 100 Marks | 3 Hours
Page 2 of 48 [*]
,TAX3701 | Exam Revision OCT/NOV 2026 Prep | 2023–2025
Question 1 — Value-Added Tax (VAT) [25 marks]
Question: Cycle for Life (Pty) Ltd is a South African resident company registered as
a VAT vendor on the invoice basis. The company sells bicycles and related cycling ac-
cessories. The company’s two-month VAT period ends on 31 October 2024. All amounts
include VAT unless otherwise stated.
You are provided with the following transactions for the period ended 31 October 2024:
1. Sales of standard bicycles totalled R862 500 (including VAT). These are taxable
supplies at 15%.
2. Sales of second-hand bicycles to a non-VAT vendor totalled R46 000 (including
VAT).
3. The company purchased new bicycle stock from a registered vendor for R345 000
(including VAT).
4. Cycle for Life donated 5 bicycles to a registered public benefit organisation (PBO).
The cost of each bicycle was R4 600 (excluding VAT) and the open market value was
R5 290 (excluding VAT) each.
5. The company purchased a delivery vehicle for R345 000 (including VAT) and uses it
80% for business deliveries and 20% for private use by the director.
6. Cycle for Life paid R17 250 (including VAT) for staff entertainment at the annual
year-end function.
7. Bad debts of R23 000 (including VAT) were written off. These debts relate to taxable
supplies previously made.
8. A customer returned a defective bicycle for which the company issued a credit note for
R4 830 (including VAT).
REQUIRED: Calculate the VAT payable to or refundable by Cycle for Life (Pty) Ltd
for the two-month period ended 31 October 2024. Provide brief reasons for any nil effects.
Answer:
Key Concept
VAT Calculation Framework: Net VAT = Output Tax − Input Tax. Output tax
arises on taxable supplies made. Input tax is claimable on taxable supplies received,
subject to denial rules. The VAT rate is 15%.
Page 3 of 48 [*]
, TAX3701 | Exam Revision OCT/NOV 2026 Prep | 2023–2025
Exam Tip
Always label each item and state whether it produces output tax, input tax, or a nil
effect with a brief reason. The examiner awards marks for correct treatment AND the
reason.
VAT Calculation for Cycle for Life (Pty) Ltd — Period ended 31 October 2024
Item Output Tax Input Tax
(R) (R)
Output Tax
1. Sales of new bicycles: R862 500 × 15/115 112 500
2. Sales of second-hand bicycles to 6 000
non-vendor: R46 000 × 15/115
4. Donation to PBO — deemed supply 3 968
(open market value): 5 × R5 290 × 15%
8. Credit note issued (reverses output tax): (630)
(R4 830 × 15/115)
Input Tax
3. Purchase of bicycle stock: R345 000 × 45 000
15/115
5. Delivery vehicle (80% business use): 36 000
R345 000 × 15/115 × 80%
6. Staff entertainment: Nil — denied —
(s17(2))
7. Bad debts written off: R23 000 × 15/115 3 000
Total 121 838 84 000
Net VAT Payable to SARS R 37 838
Notes on nil effects:
• Item 6 — Staff entertainment (Input tax denied): In terms of s17(2)(a) of the
VAT Act, input tax on entertainment is denied unless the vendor is in the business of pro-
viding entertainment. Year-end functions constitute entertainment; therefore, input tax of
R2 250 is denied.
• Delivery vehicle — partial denial: Only 80% input tax is claimable because the vehi-
cle is used 20% for private purposes. The 20% private use portion of input tax is denied.
Page 4 of 48 [*]
