TAX REVISION:
QUESTION 2 - TAX FRAMEWORK (Theory & Calculation) [20 MARKS]
Sibo Kholisi is the owner and director of Storm (Pty) Ltd, a business
that manufactures rugby balls and other sporting equipment.
The business also offers coaching services for young players.
Mr. Nene is the business accountant and he has recently completed
the financial statements for the latest financial year that ended on
31 January 2020.
You are a tax consultant hired by Mr. Kholisi to assist with the tax calculations
for Storm (Pty) Ltd. The following information has been provided to you:
1. Monthly credit sales of rugby balls amount to R175 000 and all deliveries
have been made by 31 January 2020.
2. Investment income of R27 000 was earned by Storm (Pty) Ltd on
31 December 2019. It is comprised of dividends from companies in which
Storm (Pty) Ltd holds a 0,01% interest in each entity:
a. R11 000 dividend income from Sport Warehouse Ltd in South Africa;
and
b. R16 000 dividend income from a Australian company, Wannabe Ltd.
3. Interest income earned on the savings account of Mr. Kolisi for the 2020 tax
year was R12 800.
4. Storm (Pty) Ltd incurred a fine of R10 300 from the Competition Commission
of South Africa for unfair collusion practices with another rugby equipment
manufacturer.
5. Storm (Pty) Ltd entered into a contract with a high school rugby team to
provide coaching services at a cost of R35 000 for the 2020 tax year. All
coaching was done by the end of December 2019. However, as per the
contract, the amount will only be paid to Storm (Pty) Ltd if the team wins the
Gauteng Schools Tournament on 31 April 2020.
6. Storm (Pty) Ltd also incurred the following expenses for the 2020 tax year:
, a. Rent paid: R245 000
b. Water & Electricity (due to City Power and Rand Water on
7 February 2020): R157 000
c. Tax penalties paid to SARS R18 000
d. Purchase of a small plot of land for the purposes of opening an onsite
coaching school R67 000
REQUIRED:
1.
2.
Calculate the taxable income of Storm (Pty) Ltd, for the 2020
(1 February 2019 – 31 January 2020) year of assessment. Use the table format
shown below and include reasons (from Gross income and general deduction
theory) for each answer. If there is no amount to include or deduct, show this as a
zero in your answer and provide a reason. Ignore VAT.
(20)
Amount
No. Description & Reason
R
e.g. Cash Sales – amounts earned have been received by 720 000
Storm
1
___________________________________________________________________
QUESTION 3 – THEORY [10
Marks]
3.
4.
QUESTION 2 - TAX FRAMEWORK (Theory & Calculation) [20 MARKS]
Sibo Kholisi is the owner and director of Storm (Pty) Ltd, a business
that manufactures rugby balls and other sporting equipment.
The business also offers coaching services for young players.
Mr. Nene is the business accountant and he has recently completed
the financial statements for the latest financial year that ended on
31 January 2020.
You are a tax consultant hired by Mr. Kholisi to assist with the tax calculations
for Storm (Pty) Ltd. The following information has been provided to you:
1. Monthly credit sales of rugby balls amount to R175 000 and all deliveries
have been made by 31 January 2020.
2. Investment income of R27 000 was earned by Storm (Pty) Ltd on
31 December 2019. It is comprised of dividends from companies in which
Storm (Pty) Ltd holds a 0,01% interest in each entity:
a. R11 000 dividend income from Sport Warehouse Ltd in South Africa;
and
b. R16 000 dividend income from a Australian company, Wannabe Ltd.
3. Interest income earned on the savings account of Mr. Kolisi for the 2020 tax
year was R12 800.
4. Storm (Pty) Ltd incurred a fine of R10 300 from the Competition Commission
of South Africa for unfair collusion practices with another rugby equipment
manufacturer.
5. Storm (Pty) Ltd entered into a contract with a high school rugby team to
provide coaching services at a cost of R35 000 for the 2020 tax year. All
coaching was done by the end of December 2019. However, as per the
contract, the amount will only be paid to Storm (Pty) Ltd if the team wins the
Gauteng Schools Tournament on 31 April 2020.
6. Storm (Pty) Ltd also incurred the following expenses for the 2020 tax year:
, a. Rent paid: R245 000
b. Water & Electricity (due to City Power and Rand Water on
7 February 2020): R157 000
c. Tax penalties paid to SARS R18 000
d. Purchase of a small plot of land for the purposes of opening an onsite
coaching school R67 000
REQUIRED:
1.
2.
Calculate the taxable income of Storm (Pty) Ltd, for the 2020
(1 February 2019 – 31 January 2020) year of assessment. Use the table format
shown below and include reasons (from Gross income and general deduction
theory) for each answer. If there is no amount to include or deduct, show this as a
zero in your answer and provide a reason. Ignore VAT.
(20)
Amount
No. Description & Reason
R
e.g. Cash Sales – amounts earned have been received by 720 000
Storm
1
___________________________________________________________________
QUESTION 3 – THEORY [10
Marks]
3.
4.
