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TAX601Y-TAXATION -2ND OPP-DEC 2025 |
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nAm I Bl A un IVERSITY
OF SCIEnCE Ano TECH no LOGY
FACULTY OF COMMERCE, HUMAN SCIENCES & EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION : BACHELOR OF ACCOUNTING (CHARTERED ACCOUNTANCY)
QUALIFICATION CODE: 07BACC
LEVEL: 6
COURSE: TAXATION 201
COURSE CODE: TAX601 Y
DATE: DECEMBER 2025
SESSION: THEORY & CALCULATIONS
DURATION: 150 MINUTES
MARKS: 100
ASSESSMENT 6- SECOND OPPORTUNITY EXAMINATION
EXAMINER:
Mr I-K. Kenaruzo
MODERATOR: Mrs Y. van Wyk
INSTRUCTIONS TO CANDIDATES
1. This paper consists of 11 pages (including cover page and appendices).
2. You are reminded that answers may NOT be written in pencil. NO tippex may be used.
3. The marks shown against the requirement(s) for every question should be regarded as an
indication of the expected length and depth of your answer.
4. Answerthe questions by the use of:
- Effective structure and presentation; clear explanations.
- Logical arguments; and clear and concise language.
5. Show all calculations clearly. Round off calculated amounts to the nearest NAD/ZAR.
Question
1
2
Mark(s)
76
24
Time allocated (minutes)
114
36
Legislation
South African Taxation
Namibian Taxation
Total
100
150
TAX601Y, Assessment 6 (2N° Opportunity)
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QUESTION 1
76 MARKS
ALL AMOUNTS EXCLUDE VAT UNLESS STATED OTHERWISE OR THE CONTRARY IS
APPARENT FROM THE WORDING.
You are a chartered accountant working in the tax department of a medium-sized consulting firm.
You have received the following tax queries from clients. The queries received are from clients
independent of each other unless otherwise indicated.
I Client 1: Hogwatts (Pty) Ltd
Hogwatts (Pty) Ltd ('Hogwatts') is a company that manufactures and sells candles. It started off as
an informal business in 2003 where the sole owner, Dora Dumble, was inspired to make and sell
candles after she received praise from making candles for an Easter service hosted by her community
church.
The candles are manufactured with normal or custom designs. Hogwatts sells these candles to both
a South African and international market. Hogwatts is a registered category A VAT vendor and makes
taxable supplies in excess of 95%. You can assume that the company is in possession of all valid
documents required. Hogwatts' financial year end is 31 July. Hogwatts is not a 'small business
corporation' as defined in section 12E. Hogwatts also has a small investment portfolio that consists
of shares and a property.
The manufacturing of candles is considered to be a process of manufacture by the South African
Revenue Service (SARS). Profit before tax for the financial year ended 31 July 2025 was calculated as
R924 205 after taking the following into account:
1. Sales
Hogwatts made sales during the 2025 financial year which was correctly included in profit before tax
at an amount of R2 300 000 and consists of the following:
• Local sales of Rl 760 000.
• Foreign sales (candles exported by Hogwatts to foreign customers) of R540 000 (correctly
converted to Rands).
2. Cost of sales and other expenses
Cost of sales and other expenses consist of the following:
• Opening stock (1 August 2024), amounting to R185 600.
• Closing stock (31 July 2025) amounting to R46 780.
• Purchases amounting to R460 875, which consists of:
o Local purchases from registered VAT vendors, amounting to R253 481.
o The balance is from non-registered VAT vendors
TAX601Y, Assessment 6 (2N° Opportunity)
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• Hogwatts paid factory employees and office employees total monthly salaries
of R19 000 and R29 000 respectively. These employees were employed by Hogwatts
for its entire 2025 year of assessment and there were no increases in their salaries
during the year of assessment.
• Depreciation for the current year (in respect of old and new assets) amounted to
R768 250.
• Depreciation indicated above includes depreciation on the following assets
Hogwatts acquired during the financial year ended 31 July 2025:
o On 1 August 2024, Hogwatts purchased a second-hand candle
manufacturing machine from a non-VAT vendor for R450 000. The machine
was transported from the seller's premises in Johannesburg to
Hogwatts's factory on 1 August 2024, at the expense of the seller, and was
brought into use on the same day.
o On 1 June 2025, Hogwatts purchased a new and unused Volkswagen Crafter
Van (delivery van - not a 'motor car' as defined) from a motor car dealer.
The van will be used to deliver orders to customers and will be brought into
use immediately. The cost of the new delivery van amounted to R817 000.
This delivery van was a replacement for a previous van that was disposed of
earlier this year (please refer to the bullet point below for further
information).
• Depreciation included above includes depreciation on the following assets
Hogwatts acquired during previous financial years:
o Hogwatts purchased a new and unused medium-sized factory building for
the cost of R934 000. It was purchased on 31 October 2022 and brought into
use on the same day.
o Hogwatts purchased a medium-sized office space from a property-
developer for Hogwatts to conduct their administration activities. The
building was purchased new and unused at total cost of R670 000. It was
purchased on 1 September 2023 and brought into use on the same day.
o Hogwatts sold an old delivery van, a 2023 Hyundai H-1 (delivery van - not a
'motor car' as defined), which was purchased new and unused by Hogwatts
on 31 March 2023 at cost of R359 000 and was brought into use on 1 April
2023. Hogwatts sold it to an unrelated third party (non-VAT vendor) for R385
000 on 1 November 2024.
• Fuel costs relating to deliveries made with the delivery van amounted to R45 100.
• Hogwatts paid maintenance expenses of R9 000 for the delivery vans and
manufacturing assets during the year of assessment.
3. Other Income - Other income consists of the following:
• Hogwatts holds 5% equity shares and voting rights in a private Chinese company, and
earned a gross cash dividend during the year of R62 500 (correctly translated to
Rand). The Chinese company is not a controlled foreign company.
TAX601 Y, Assessment 6 (2N° Opportunity)
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• Hogwatts rented out six low-cost residential accommodation units ('low-cost
residential units' as defined). These units were purchased to earn extra income. The
six residential units generate monthly rental income of RlS 450 in total. The
residential units were acquired on 31 May 2024 at a cost of R300 000 per unit.
Additional information:
Binding General Ruling No. 7 states that delivery vans have a write-off period of 4 years (if
applicable).
I Client 2: Brenda Vassie
You received the following email from your manager regarding one of the firm's clients,
Brenda Vassie:
To: taxPR@taxfirm.com
From: brendavassie@gmail.com
Subject: Fwd: Brenda Vassie - Retirement benefits query
Date: 1 March 2025
Good day
I received this email from one of our clients, Brenda, and she needs help with determining
her normal tax payable on the retirement lump sums that she received. Please see her
email I forwarded to you below.
I calculated her taxable income {R692 000 (excluding any lump sums)) and her
remuneration for the year {RSl0 000) but I didn't get to complete the calculation. Her
retirement lump sums and retirement fund contributions have not been taken into
account, so may you please complete it for me? I have a business trip that I need to go
on, so I won't be able to help Brenda in time.
Kind regards
Tax
TAX601Y, Assessment 6 (2N° Opportunity)
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Fwd:
Hi Tax Manager
I hope you are doing well.
My name is Brenda Vassie, and I am a 65-year-old lecturer at a music and entertainment
university known as Special Weekend Academy (Pty) Ltd (SWA').
I have retired this year, and I want to know how my retirement pay outs will be affected
by tax.
I was a member of the Special Weekend Academy Pension Fund (SWAPF') until my
retirement on 31 December 2024 as my 65th birthday was in December 2024. SWA
contributed to the pension fund at 5% of my basic annual cash salary (my basic
annual cash salary amounts to R480 000) and I made monthly contributions of Rl0
000 out of my own pocket to the same pension fund.
I also contributed R16 000 during my current tax year to a private retirement annuity
fund (RAF). SWA and I contributed to the SWAPF until the date of my retirement on
31 December 2024.
I had no capital disposals during my year of assessment.
Thank you very much and I look forward to your feedback.
Kind regards
Brenda Vassie
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I Client 3: Mr Jones
Mr. Jones is 45 years old and is a provisional taxpayer due to the fact that he has additional
income over and above his salary, of rental income on a number of property investments.
Mr. Jones received his 2022 assessment on 15 May 2023. The taxable income for this
assessment amounted to R350 000. Mr. Jones did not dispose of any capital assets during the
2022 year of assessment.
Mr. Jones received his 2023 assessment on 19 August 2024. The taxable income for this
assessment amounted to R450 000. This included a capital gains tax amount of R30 000
relating to a property he sold during that year.
Mr Jones is currently in a dispute with SARS regarding his taxable income for the 2024 year of
assessment. He has not received his 2024 assessment yet.
During his 2025 year of assessment, Mr. Jones' employer deducted an amount of RS 000 per
month as employees' taxes and paid this over to SARS.
Mr. Jones' calculation of his taxable income for the year 2025 of assessment amounts to R415
000.
(Adapted from /AS)
REQUIRED
a) !Refer to Client 1: Hogwatts (Pty) Ltd - Calculate the value-added
~ax (VAT) payable by Hogwatts (Pty) Ltd in respect of all ta~
periods from 1 August 2024 to 31 July 2025.
MARKS
SUB- TOTAL
TOTAL
Provide brief reasons for each entry as well as Rnil value effects.
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• Where the same reason applies to multiple items, you may
group the items together and provide the reason once-off.
• Assume all amounts have been correctly taken into account
in profit before tax for financial reporting (accounting)
purposes.
Communication skills - presentation
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1
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b) 'Ile/er to Client 1: Hogwatts {Pty Ltd} - Calculate the normal tax 22
payable by Hogwatts (Pty) Ltd in respect of its 2025 year of
assessment. Start your calculation with the profit before tax o1
R924 205.
Provide a brief reason for each adjustment or when no
adjustment is necessary.
Communication skills - presentation
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c)
Refer to Client 2: Brenda Vassie - Calculate the normal tax payable
by Brenda Vassie in respect of her 2025 year of assessment.
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Only consider amounts and information provided .
d) Refer to client 3: Mr Jones - Calculate the first and second
provisional tax payments for Mr. Jones for the 2025 year 01 20
assessment as well as when the payments are due.
TOTAL MARKS
23
12
20
76
TAX601Y, Assessment 6 (2N° Opportunity)
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QUESTION 2
(24 MARKS)
Johanna Junior, 24-year-old Namibian citizen had become an employee of "First for Women"
Insurance on ist February 2023.
Her receipts and accruals for the year of assessment include:
• A monthly salary of N$20 000.
• Annual bonus payable in December, N$20 000.
• Sales commission of N$25 000 for the year.
• The private use of a motor car with a cost of N$210 000 excluding VAT. The employer
paid all the expenses, except fuel. The total fuel expenses for the year amount to N$23
000 from which N$7 500 was for private trips.
• A cellular phone allowance of N$400 per month. Her business calls amounted to N$4
000 for the year. Junior kept all the relevant records.
• The employer contributed 7% of Junior' annual basic salary towards a pension fund.
Junior' contribution amounts to 8% of her basic annual salary.
• Junior belongs to a medical aid fund for which her contributions amount to N$18 500
per year. Her employer pays 60% of the annual fee.
• Sarah's divorce was finalized during the year and in terms of the court order, her ex-
husband pays her N$3,000 alimony per month. In addition, the settlement also awarded
her their holiday home at the coast. The holiday cottage is valued at N$950,000.
• Interest and dividends from a Bank Windhoek on a savings account, N$15 000 and N$12
000 respectively.
• Francine also received a monthly annuity of N$1,500 from Old Mutual Namibia, which
arose from a once-off capital contribution of N$250,000. The annuity payments are based
on a life expectancy of 22.65 years.
REQUIRED
Calculate the taxable income of Johanna Junior for the 2024 year of
assessment.
Presentation and communication
MARKS
SUB- TOTAl:.
TOTAL
23
24
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END OF EXAMINATION PAPER
TAX601Y, Assessment 6 (2N° Opportunity) 8
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APPENDIX A
DEEMED EXPENDITURE - 2025
Cost of vehicle
Does no exceed R100 000
Exceeds R100 000 but not R200 000
Exceeds R200 000 but not R300 000
Exce ds R300 000 but not R400 000
C ds R400 000 but not RSOO 000
xceeds R500 000 bui not R600 000
Exceeds R600 000 but not R700 000
Exceeds R700 000
DEEM D EXPENDITURE - 2026
Cost of vehicle
Does no 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 RSOO 000 but not R600 000
Exceeds R600 000 but not R?OO 000
Exceeds R700 000
Fixed
R
34 480
61 770
89 119
113 436
137 752
163 178
188 653
2 47
Fuel
C
151,7
169,4
184,0
197,9
11,8
243,0
247,1
251,2
Repairs
C
46,0
57,6
63,5
69,3
81,5
95,6
107,3
118,9
Fixed
R
33 940
60 688
87 497
11 1 273
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
TAX601Y, Assessment 6 (2N° Opportunity) 9
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TAX RATES INDIVIDUAt.S - 2025
Taxable income
R
0-R 237100
R 237 101 - R 370 500
R 370 501 • R 512 800
R 51 2 801 - R 673 000
R 673 001 ~ R 857 900
R 857 901 - R1 817 000
R1 817 001 +
Rates of tax
18% of each R1
R 42 678 + 26% .of the amount over
R 77 362 + 31 % of he amo nt over
R.121 475 + 36% of he amount over
R179 147 + 39'¾ of the amount over
R2 1 2 8 + 41 ¼ 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 INDIVIDUALS - 2026
Taxable income
Rates of tax
R
O- R 237 100
18% of each R1
R 237 101 - R 370 500 R 42 678 + 26% of he amount over R 237 00
R 370 01 - R 512 800 R 77 362 + 31% of the amount over R 370 500
R 512 801 - R 673 000 R12 1 475 + 36% of the amount over R 512 800
R 673 001 • R 857 900 R1791 47 + 39% of he amount over R 673 000
R 857 901 - R1 817 000 R251 258 + 41% of the amount over R 857 900
R1 817001 ·I·
R644 489 • 45% of the amount over R1 817 000
Im lHRESHOlDS
Persons under 65
Persons 65 and under 75
Persons 75 and over
Taxable income
2025
2026
R 95 750
R148 21 7
R165 689
R 95 7 0
R148 217
R165 689
[?!I REBATES
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
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MEDICAL AID TAX CREDITS
Monthly amounts deductible from tax payable 202.5
2026
Main member
Main member with one dependant
Main member with two dependants
R364
R728
R97 4
R364
R728
R97 4
Each additional dependant qualifies for a credit of R246 (2023 : A234)
per month .
TAX601Y, Assessment 6 (2N° Opportunity) 11
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