0 ‘GRADED QUESTIONS ON INCOME TAX IN SOUTH AFRICA, Chesterfield Couches (Pty) Limited Chesterfield Couches (Pty) Limited’s delivery van was written off in an accident, It was insured at its replacement value. During its current tax period ended 31 October 2021 it was awarded R207 000 by its insurer as compensation forthe loss of its delivery van. juences to Chesterfield Couches (Pty) Limited that arise out of What are the value-added tax conseq) this insurance award? ott Domkrag You are required to draft a reply to each of the above queries that you have received from your from ice ra The following (30 minutes) bs ‘when applicable 29.12 “Fils GUetion WT Stone 119, SID) HLS, 60, OT, 6D) and TS of the Value AGRET] Tax Act and sections 59, 74(1), 221 to 224 inclusive, 235 and 239 to 243 inclusive of the Ta ee fy, nd ace Ricket Execom, a vendor, is cont 1 substantial amount of value-added tax. ales of sy % . Aftcan head oft Ricket Execom is, however, concemed about the merits of this ‘arrangement’, His concem is its ad offic validity. He is unsure whether it constitutes tax evasion or tax avoidance. Ricket Execom is aware of the existence of penalty provisions in the Value-Added ‘Tax Act and the ‘Tax Administration Act but does not know their details. He has also been informed that the value- aude tax legislation contains a tax avoidance provision similar to section 80A of the Income Tax Act a letter to Ricket Execom setting out the difference between tax evasion 1 various penalty provisions contained in the Value-Added Tax Act end ‘application of section 73 of the Valve Payment receveg supplies dlrs Cash sls fom This trading. 2021 and vas ase, You are required to write and tax avoidance, listing th fax Administration Act and discussing the possible Indemnity award fy Bolen in transit to ind ‘Added Tax Act ~ being its tax avoidance provision, ae Atice Comal ese (15 minvtes) Expenditure Sularies Fig Gueaion TSE Sons 1G 30) STD. SH) 50, OO, Oh GA) GS and 73 of te VF Tar AUt and sections 59, 74(), 221 t0-224 inchsive, 235 and 239 to 243 inclusive of "Adnnstration Act It also tests section (15) ofthe Transfer Duty Act 7 You are a tax consultant in private practice. A client of yours, Justice Jagges, an atomey, his wea you to review an extract (see below) from a sale agreement he has drafted forthe legs sal hopping complex. The shopping complex is leased to a numberof tenants who wil ri aaetponer of tir shops under thei lease agreements. Te purchese consideration forthe shopping c omplox is R41 400 000. Both the seller and purchaser are ors The enetveduest | FPPC, South the sale agreements 1 March 2022 ise oF ane Bish cos An extract fom the draft sale agreement follows a “The seller and purchaser both agre thatthe shopping complex is disposed of 8 @ EE UMM IRa., p, 6° Plt plex wil be a RCE | ig 8 New motor concern, The seller and purchaser further agree that the shopping c . Gaming activity on the date of transfer and that the assets necessary for camyin 07 ae enterprise are disposed of by the seller to the purchaser. Electricity ang Watt . Telephone a Pie 85 of tra rading st Pi of eatertaning pop W delive “The consideration for the sale of the shopping complex is R41 400 000, payable by = nh purchaser to the seller on registration of transfer. “The transfer duty payable for this sale shall be bome by the purchaser.” has requested your comments regarding the treatment of the Vehicles ay ice of det . ery veh (retired 10 determ for its latest: Justice Jaggers ‘wansfer duty for this sal. You are required to comment on whether the value-added tax and transfer du in the draft agreement as set out above are correct. uty treatment