Activity 1 - Betty Blue

TAXABLE INCOME FOR THE YEAR ENDED 31/12/2020

Taxable income
Gross income - given 2 356 000

Legal costs - trade debtors (85 000)

Legal costs - staff debtors - capital in nature -
Legal costs - CCMA case (55 000)
Legal costs - SARS imposed taxes -
Legal costs - Lease contract - capital in nature -
Restraint of trade - 260 000/3 (86 667)

Bad debts - relating to 2017 year sales (26 400)

Bad debts - relating to 2018 year sales (12 850)
Bad debts - relating to 2018 year staff debtors -
Liquidation bad debt (8 000)
Current year doubtful debts - 25% x 45 000 (11 250)

Salaries and wages (1 200 000)

Contribution to medical aid (180 000)
Contribution to pension fund (110 000)
Dividends paid -

Annuties paid - former financial director -

Annuties paid - due to ill health (12 500)

Insurance premium
Current year - 5/12 x 245 000 (102 083)
Period more than 6 months - Aggregate with others
Switch board
Current year - 6/7 x 40000 (34 286)
Prepaid period less than 6 months - 1/7 x 40 000 (5 714)
Photocopy machine
Current year - 2/12 x 28 000 (4 667)
Period more than 6 months - Aggregate with others
Car deposit - capital in nature -
Prepayment over 6 months
Prepayment Insurance - 7/12 x 245 000 142 917
Prepayment photocooy year - 10/12 x 28 000 23 333
Greater than R100 000, therefore no deduction 166 250 -

John learnership
Commencement - 6/12 x 60 000 (30 000)
Completion - 1 x 60 000 (60 000)
Peter learnership
Commencement - 6/12 x 40 000 (20 000)
Completion - 1 x 40 000 (40 000)
Faith learnership
Commencement - 12/12 x 20 000 (20 000)
Completion - nil -

Trademark - renewal (75 000)

Trademark - purchase -
Patent purchased - 500 000 x 5% (25 000)
Design purchased - 120 000 x 10% (12 000)

Penalties and interest - prohibited deduction -

Sale of stock to staff - R30 x 40 1 200

Recoupment of stock at cost (50 - 30) x 40 800
Donated stock - recoupment at market value - not a PBO 14 000
Donated stock - marketing deduction (14 000)

Wife's travel - prohibited deduction -

Repairs
Unpaved parking (50 000)
Extention - not a repair -
Machine Z - 500 000 x 0,4 (200 000)
Truck - (800000/4x1/12) (16 667)
Burglar alarm - (60 000/6x10/12) (8 333)
Manufacturing building (2 500 000 x 5%) (125 000)
Second hand building - 0% -
Machine A - Disposal of asset
Selling price limmited to cost 100 000
Less tax value 160 000
Cost 200 000
Less: Current period allowances (200000x20%) (40 000) (40 000)
Less: Prior period allowances -
Scrapping loss (60 000) (60 000)

Taxable income (358 417)

Donations made - not deductible - Carry forward
Assessed loss - carried forward (90 000)
Assessed loss - carried forward (448 417)
 VenusFly Trap - Activity 2
TAXABLE INCOME FOR THE YEAR ENDED 28/02/2020

Taxable income
Sales 1 690 000

Interest 27 000

Dividend 120 000

Exemption -120 000
- -

Purchases (180 000)

Opening stock (720 000)
Closing stock 100 000

Donated stock - deemed to be acquired at market value (18 000)

Closing stock - donated stock 18 000

Salaries (370 000)

Water & electricity (10 000)

Bad debts (10 000 - 2 000) (8 000)

Compensation (23 250)

Legal expenses - compensation (3 000)

Travel - wife of CEO -

Restraint of trade (66200/5) (13 240)

Bonus provision -

Taxable income 489 510

Tax @ 28% 137 063

First provisional tax amount (62 000)

Second provisional tax amount (72 000)

Tax payable 3 063

Activity 3
Whizzers
TAX COMPUTATION FOR THE YEAR ENDED 30/04/2019

Taxable income

Taxable income - given 910 000

Machine B - 500 000 x 40% (200 000)

Disposal of machine Z

Selling price limited to cost R 25 000

Less tax value
Cost (228 000 x 100/114)+10000 R 210 000
Moving costs R 5 000
Less PY allowances (210 000 x 20%)x 5 R -210 000
Less CY allowances R - -
Less moving costs wear and tear (5000x100%) R -5 000 (5 000)
Recoupment R 25 000

Defer recoupment over life of replacement asset 25 000 x 40% 10 000

Interest paid (7 585)

Lease premium ((80 000/(10+5)x12)x10 (4 444)

Rentals (10 000 x 6) Only from when brought into use (60 000)

Lease hold improvements (480 000/10+5x12-3)x6 (16 271)

Excess amount (500 000 - 480 000)x5% (1 000)

Disposal of fax machine

Selling price limited to cost 500
Less tax value -
Recoupment 500 500
Lease payments (95 350)
Fringe benefit deduction (438900x100/114x14/114x0,3%x10) (1 418)
Taxable income 626 199
Tax @ 28% 175 336
Tax liability 175 336