TAX2601
Assignment
5 Semester
1 2023
[School]
[Course title]
, TAX2601 Assignment 5 Semester 1 2023 (701094)
QUESTION 1 (30 marks)
You are a junior tax consultant at Easy Tax, a firm performing accounting
and tax related services for its clients. You are currently assigned to the client
SA Metals (Pty) Ltd (“SA Metals”) and your manager has asked you to
complete the income tax liability calculation of the company. You obtain the
following information about the company: SA Metals is a South African
company that manufactures a wide range of steel products. The company has
a corporate office in Johannesburg and two factories, one in Johannesburg
and one in Gqeberha (in the Eastern Cape). The company’s year of
assessment ends on 31 March 2023. It is not a small business corporation as
defined in the Income Tax Act. The company accountant supplies you with a
taxable income figure of R12 653 000 (assume correctly calculated) before
taking the tax consequences for each of the assets/transactions below into
account. The following information is provided to you for the company’s 2023
year of assessment:
1. Extract from the asset tax register Below is a summary of specific assets for
which the income tax consequences have not been taken into account for the
current year of assessment. Asset name Cost Date purchased and brought into
use Additional information Manufacturing machine (SP10) R750 000 27 July
2022 SP10 was purchased new. Manufacturing machine (RT4) R450 000 16
August 2020 RT4 was purchased second hand. On 1 November 2022 it was
moved from the Gauteng factory to the Gqeberha factory. Transport costs of
R16 400 were incurred. Manufacturing machine (DP1) R500 000 10 July 2022
DP1 was purchased new and brought into use specifically for a research and
development project SA Metals entered into on 1 July 2022 (refer to note 3
below). Printer R6 499 1 September 2022 New printer acquired for office use.
Delivery van R380 000 1 September 2022 New delivery van purchased.
Manufacturing machine (EB09) R900 000 22 October 2021 EB09 was
purchased new. Machine EB09 no longer met the manufacturing
specifications and was sold for R770 000 on 20 January 2023 to an
unconnected person. Asset name Cost Date purchased and brought into use
Additional information Heavy duty truck (HD1) R560 000 1 March 2022 A
Assignment
5 Semester
1 2023
[School]
[Course title]
, TAX2601 Assignment 5 Semester 1 2023 (701094)
QUESTION 1 (30 marks)
You are a junior tax consultant at Easy Tax, a firm performing accounting
and tax related services for its clients. You are currently assigned to the client
SA Metals (Pty) Ltd (“SA Metals”) and your manager has asked you to
complete the income tax liability calculation of the company. You obtain the
following information about the company: SA Metals is a South African
company that manufactures a wide range of steel products. The company has
a corporate office in Johannesburg and two factories, one in Johannesburg
and one in Gqeberha (in the Eastern Cape). The company’s year of
assessment ends on 31 March 2023. It is not a small business corporation as
defined in the Income Tax Act. The company accountant supplies you with a
taxable income figure of R12 653 000 (assume correctly calculated) before
taking the tax consequences for each of the assets/transactions below into
account. The following information is provided to you for the company’s 2023
year of assessment:
1. Extract from the asset tax register Below is a summary of specific assets for
which the income tax consequences have not been taken into account for the
current year of assessment. Asset name Cost Date purchased and brought into
use Additional information Manufacturing machine (SP10) R750 000 27 July
2022 SP10 was purchased new. Manufacturing machine (RT4) R450 000 16
August 2020 RT4 was purchased second hand. On 1 November 2022 it was
moved from the Gauteng factory to the Gqeberha factory. Transport costs of
R16 400 were incurred. Manufacturing machine (DP1) R500 000 10 July 2022
DP1 was purchased new and brought into use specifically for a research and
development project SA Metals entered into on 1 July 2022 (refer to note 3
below). Printer R6 499 1 September 2022 New printer acquired for office use.
Delivery van R380 000 1 September 2022 New delivery van purchased.
Manufacturing machine (EB09) R900 000 22 October 2021 EB09 was
purchased new. Machine EB09 no longer met the manufacturing
specifications and was sold for R770 000 on 20 January 2023 to an
unconnected person. Asset name Cost Date purchased and brought into use
Additional information Heavy duty truck (HD1) R560 000 1 March 2022 A
