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TAX621S-TAXATION 202-2ND OPP -DEC 2025 |
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n Am I BI A u n IVER s ITY
OF SCI En CE Ano TECH n OLOGY
FACULTY OF COMMERCE, HUMAN SCIENCES & EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOR OF ACCOUNTING
QUALIFICATION CODE: 07BOAC
COURSE: TAXATION 202
SESSION: December 2025
DURATION: 3 HOURS
SECOND OPPORTUNITY EXAMINATION
LEVEL: 6
COURSE CODE: TAX621S
PAPER: THEORY & CALCULATIONS
MARKS: 100
t5t EXAMINER:
Mr. Y Elago
2nd EXAMINER: Mrs. Y van Wyk; Mr. J Erastus and Ms. Y Tjejamba
MODERATOR:
Dr. Z van der Walt
~NSTRUCTIONS TO CANDIDATES
l. This paper consists of 5 pages (excluding cover page and the Annexure).
12. You are reminded that answers may NOT be written in pencil. NO tippex may be used.
B. Answer the questions by the use of:
- Effective structure and presentation; clear explanations.
- Logical arguments; and clear and concise language.
l5. Show all calculations clearly. Round off calculated amounts to the nearest Rand.
6. Questions pertaining to this question paper should be raised in the initial 30 minutes after the
start of the paper. Thereafter candidates must use their initiative to deal with any perceived
error or ambiguities and any assumption made by the student should be clearly stated.
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QUESTION 1
(20 marks)
The following statements pertain to South African tax legislation. Each statement should be analysed
within the framework of South African tax laws and regulations. Consider how these laws apply to
individual taxpayers and businesses alike. Ensure that each scenario is understood in light of current
tax provisions in South Africa.
1. If a person's receipts or an accrual is of capital nature it is not included in his gross income.
2. The Supreme court of appeal (previously the Appellate Division of the Supreme Court) has
confirmed that the term "accrued to" means 'due and payable' to the taxpayer.
3. The term "capital nature" is defined in the Income Tax Act.
4. The preamble to the so-called special inclusions to the definition of gross income results in an
amount that is of capital nature being included in gross income.
5. The world-wide receipts and accruals of a resident are subject to normal tax in the Republic of
South Africa .
6. Law books to a bookseller are his trading stock and when sold, the amount received or accrued
is gross income.
7. The preamble to the so-called special inclusions to the definition of gross income results in an
amount that accrues to a non-resident from a foreign source being subject to normal tax in the
Republic of South Africa.
8. All physical receipts of a taxpayer that are not of a capital nature will be included in his gross
income.
9. For an amount to be included in a taxpayer's gross income, it must be "received" by him.
10. Paragraph (c) of the definition of gross income applies only to transactions that result from an
employer- employee relationship.
11. A person who is ordinarily resident in the Republic of South Africa and has not lived in the
South Africa since 2021 is a resident for the 2024 year of assessment.
12. Adam Smith, an Australian resident, receives an annual royalty income of R600 000 from a
South African company which uses a patented process (invented by Adam in Australia) in South
Africa . This royalty is exempt.
13. Annuities received are exempt from normal tax.
14. The full amount expended for business purposes in respect of a travel allowance will be
deductible from the allowance received, if it exceeds such allowance received.
15. Local interest received by a natural person is fully exempt from normal tax.
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REQUIRED:
For each of the above statements, write down the number and indicate whether the statements is
True or False, Write down the reasons for your answer.
QUESTION 2
45 MARKS
Sima, works as head of security at a large oil firm (a VAT vendor).
He is 67 years old and a South African Resident. He has a wife, Aymarh, and two minor children,
Hope and Faith.
In the previous year of assessment, he earned remuneration of R280 000.
In the current tax year, Sima received a salary of R24 000 per month. He also received a bonus of
R22 000 in December 2024.
Sima contributed 8% of his salary towards the company's pension fund. In addition, Sima contributes
RS 000 a month into a retirement annuity fund (RAF).
Sima contributed to a medical aid fund. He paid R4 200 per month to cover himself and his three
dependents. During the year Hope had to have extensive psychological counselling. This cost was not
covered by the medical aid and came to an additional R26 000 for the tax year. Faith also required
extensive plastic surgery to clear his nasal passages as he was continually wheezing. This cost of R17
000 was also paid for by Sima as it was not covered by his medical aid.
Sima uses his 2022 VW T-Cross for private and business use. The car had a cash cost of R269 000
(including VAT) on acquisition date. He financed the car over five years and pays finance costs of R2
300 per month (related to the interest portion only). The company gave Sima a car allowance of R7
000 per month to compensate him. He travelled 39 000 kilometers in that tax year, 13 000 of which
were private. He kept a logbook and paid all maintenance on the car. During the year he replaced the
tyres and had two services. The tyres cost RS 500 (including VAT) and the services cost R2 140 in total
(including VAT). During the year he also paid R25 000 for all petrol. He has retained proof of his
expenditure.
Sima was given a cellphone allowance amounting to RS00 per month. He had no itemized billing on
his cellphone so could not prove any of the business calls.
The company bought two books in the year which they gave to Sima. The first was "Security
Techniques and Counter Espionage" by Craig Williamson and cost R348 (including VAT). The other
was "How to grow beautiful orchids" by Keith Gardner at R514 (including VAT).
Sima had the use of a company unit in Beacon Isle Hotel for summer vacation. The unit was donated
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by the company, and they pay a levy of R4 400 per year. The unit is normally let out to the public for
R8 500 per week. Sima used it for one full week, i.e. seven days a year. He also used the company
boat which was anchored in Plettenberg Bay. The boat had a market value of R440 000 (including
VAT) when Sima used the boat for the week, he was in Plettenberg Bay at the Beacon Isle Hotel.
The company also gave Sima a loan of R300 000 for the period 1 March 2024 to 1 October 2024. The
loan was repaid on 1 October 2024. The loan was secured and interest of 5% was charged. The official
rate was 10%.
The company expected Sima to entertain certain guests. He was given an entertainment allowance
of R2 200 for the year.
Sima was given the use of a house by the company from 1 June 2024, as the company required Sima
to be available near the company's main oil refinery in Milnerton. Sima moved into the company
house on 1 June 2024. The house had three bedrooms, a lounge, kitchen, dining room and two
bathrooms. The company paid all electricity and water bills and furnished the house. The house was
owned by the company.
During the year Sima saved a pensioner, Mr lndongo Wooda, and prevented a tanker exploding, when
fire was caused by a burning tanker truck that lost control on Nelson Mandela Boulevard. Sima was
hailed as a hero and received a certificate from the city for saving Mr Wooda's life and averting what
could have been a major disaster in the city. The company bought Sima a flat-screen TV as a way of
recognising his bravery and the positive press from his action. The TV costs R12 400 (including VAT).
Sima had recently invested some money offshore. For the current tax year, he received interest of
R2 000 from the UK and dividends of R4 000 from investments in Germany. These were listed
investments and the dividends received are not exempt under section 108 (2).
REQUIRED:
Calculate Si ma's normal tax payable for the year of assessment ended 28 February 2025.
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QUESTION 3
(25 marks)
Shikulumbwati (Pty) Ltd is a registered VAT vendor. Shikulumbwati (Pty) Ltd is a sports equipment
manufacturer. They specialize in racquets (tennis, squash, badminton and so forth). The process is a
process of manufacture as defined. The company has a 30 September year end. The accountant has
prepared the financial statements, and the company has a net profit before taxation of Rl 200 000.
The amounts exclude VAT
The following information relates to the year of assessment ending 30 September 2024 and was
considered correctly for accounting purposes (where applicable) in the above net profit figure:
1. The company had an expense for annuities paid:
i. Rl 500 per month from 1 February 2024 to Rodger Feds (a former employee who resigned at
the age of 24 to become a professional squash player).
ii. R300 per month paid to the dependents of a former employee. This amount has been paid
since 1 August 2022.
2. Advertising expenses according to the Statement of Comprehensive Income amounted to R185
000. The amount was made up as follows:
i. An advertising campaign to launch a new tennis racquet in the market. This campaign cost
R150 000.
ii. General advertising of R35 000 on the radio, television and in magazines promoting general
brand sales.
3. The company's driver got several traffic fines. The amount of the expenses in the financial
statements amounted to R3 000.
4. Shikulumbwati (Pty) Ltd wrote off trade debtors that became bad to the value of R40 000 during
the year.
5. Shikulumbwati (Pty) Ltd paid Jan Potgieter an amount of R400 000 as a restraint of trade for the
next 2 years. This amount was paid on 1 September 2024. The accountant spent the full amount on
this year's financial statements.
6. Shikulumbwati (Pty) Ltd's factory workers wear a uniform. These are blue overalls which have the
company logo printed on the back. Included in the Salaries and Wages expense is an amount of
R15 000 which relates to the uniform allowance paid to factory workers.
7. Depreciation of assets amounted to R50 000 and consists of:
i. Delivery vehicle purchased on 1 October 2017. The accounting policy is to depreciate the asset
over 6 years on the straight-line method. Depreciation amounted to R12 000.
ii. R38 000 for factory plant and equipment which were purchased new and unused and taken
into use on 1 July 2024 for R200 000. The plant and equipment are depreciated at 20% per
annum on the diminishing balance method.
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(The write off period per Interpretation Note 47 and Binding General Ruling (Income Tax 7) for
delivery vehicles is 4 years. The plant and equipment will qualify for the Section 12C allowance.
8. Shikulumbwati (Pty) Ltd pays rent on its office building. The rental expense for the year amounted
to R120 000.
9. Shikulumbwati (Pty) Ltd earned investment income from the following sources:
i. Dividends from South African companies R200 000
ii. Dividends from an American company R50 000
iii. Interest in bond investment R250 000
Cassey invested in an interest-bearing bond on 1 July 2024 for a period of three years. The
instrument was issued for RlO million and has an annual interest coupon of 5%. The
instrument will be redeemed at a premium of 20% on 30 June 2027.
The contractual cash flows of the instrument are as follows:
Date
1 July 2024
30 June 2025
30 June 2026
30 June 2027
Cash flow
Rands
(10 000 000)
500 000
500 000
12 500 000
3 500 000
The R3 500 000 represents a yield to maturity on an annual accrual period of
10.9851194%.
10. The lease premium of R30 000 (was not considered in determining the net profit before tax) was
paid by Shikulumbwati for the premises currently used by it as a retail establishment for its trading
activities . The lease was entered into on 1 March 2023. The lease is for a period of 30 years from 1
July 2024, when it took occupation ofthese premises.
REQUIRED:
Calculate the income tax payable by Shikulumbwati (Pty) Ltd (starting your calculation with the Net
Profit before Tax of Rl 200 000) . If an amount should not be included or deducted in your calculation
of taxable income provide a reason .
Note: Show all calculations clearly.
Round off all amounts to the nearest RAND. Ignore Capital Gains Tax.
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QUESTION 4
(10 marks)
! A. What are the requirements for a company to be allowed to carry forward their ! (l)
: assessed loss?
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! B. Discuss when an amount will be allowed as a deduction from taxable income as a ! (2)
: bad debt.
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i i C. Determine whether the following three transactions would be deductible as a bad
: debt. Provide a reason for each case.
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a. Personal loan to a former employee
! (2)
b. Debtor purchased from another party
c. Debtor incurred in the previous year of assessment
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END OF SECOND OPPORTUNITY EXAMINATION
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/-\\rJ1\\J EtliR E
TAX RATES • IN'D,I\\ZJDUALS -~ 2025
Taxable income
R
0 - R 237 100
R 237 101 - R 370 500
R 370 501 - R 512 800
R 512 801 - R 673 000
R 673 001 - R 857 900
R 857 901 - R1 817 000
R1817001 +
Rates of tax
18% of each R1
R 42 678 + 26% of the amount over
R 77 362 + 31 % of the amount over
R121 475 + 36% of the amount over
R179 147 + 39% of the amount over
R251 258 + 41 % of the amount over
R644 489 + 45% of the amount over
R 237 100
R 370 500
R 512 800
R 673 000
R 857 900
R1 817 000
TAX RATES IN,DIVl'DUALS - 2026
Taxable income
R
O - R 237 100
R 237 101 - R 370 500
R 370 501 - R 512 800
R 512 801 - R 673 000
R 673 001 - R 857 900
R 857 901 - R1817000
R1 817 001 +
Rates of tax
18% of each R1
R 42 678 + 26% of the amount over
R 77 362 + 31 % of the amount over
R121 475 + 36% of the amount over
R179147 + 39% of the amount over
R251 258 + 41 % of the amount over
R644 489 + 45% of the amount over
R 237 100
R 370 500
R 512 800
R 673 000
R 857 900
R1 817 000
Persons under 65
Persons 65 and under 75
Persons 75 and over
Taxable income
2025
2026
R 95 750
R 95 750
R148 217
R148 217
R165 689
R165689
I m RfiBAf~S
Amounts deductible from the tax payable
Persons under 65
Persons 65 and under 75
Persons 75 and over
2025
R17 235
R26 679
R29 824
2026
R17 235
R26 679
R29 824
MEDICAL AID
Monthly amounts deductible from tax payable 2025
Main member
R364
Main member with one dependant
R728
Main member with two dependants
R97 4
2026
R364
R728
R97 4
Each additional dependant qualifies for a credit of R246 (2023 : R234)
per month.
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DEDUCTIONS IT"RAVEL EXPENSES
The deduction in respect of business travel is limited to the allowance
granted and may be determined using actual expenditure incurred or on a
deemed cost per kilometre basis in accordance with the table below.
Accurate records of the opening and closing odometer readings must be
maintained in all circumstances.
As from 1 March 2010, the claim must be based on the actual distance
travelled for business purposes, supported by a detailed log book.
The cost of the vehicle includes VAT but excludes finance costs.
Where actual expenditure is used the value of the vehicle is limited to
R800 000 (2023 : R665 000) for purposes of calculating wear and tear, which
must be spread over a seven year period.
The finance costs are also limited to a debt of R800 000 (2023 : R665 000).
In the case of a leased vehicle, the instalments in any year of assessment
may not exceed the fixed cost component in the table.
DEEMED EXPENDITURE - 2025
Cost of vehicle
Does not exceed R100 000
Exceeds R100 000 but not R200 000
Exceeds R200 000 but not R300 000
Exceeds R300 000 but not R400 000
Exceeds R400 000 but not R500 000
Exceeds R500 000 but not R600 000
Exceeds R600 000 but not R700 000
Exceeds R700 000
Fixed
R
34 480
61 770
89 119
113 436
137 752
163 178
188 653
215 447
Fuel
C
151,7
169,4
184,0
197,9
211,8
243,0
247,1
251,2
Repairs
C
46,0
57,6
63,5
69,3
81,5
95,6
107,3
118,9
DEEMED EXPENDITURE - 2026
Cost of vehicle
Does not exceed R100 000
Exceeds R100 000 but not R200 000
Exceeds R200 000 but not R300 000
Exceeds R300 000 but not R400 000
Exceeds R400 000 but not R500 000
Exceeds R500 000 but not R600 000
Exceeds R600 000 but not R700 000
Exceeds R700 000
Fixed
R
33 940
60 688
87 497
111 273
135 048
159 934
184 867
211 121
Fuel
C
146,7
163,8
177,9
191,4
204,8
234,9
238,9
242,9
Repairs
C
47,4
59,3
65,4
71,4
83,9
98,5
110,5
122,5
VARIABLE
Variable remuneration, such as commission, bonuses, overtime, leave pay,
night shift or standby allowances and reimbursive travel, is taxed on a
payment basis.
As from 1 March 2023, this includes performance-based remuneration. The
rule applies to the deduction of PAYE, the employee's gross income inclusion
and the employer's income tax deduction.
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