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ATX812S-ADVANCED TAXATION-2ND OPP-DEC 2025 |
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n Am I BI A u n IVER s I TY
OF SCI En CE Ano TECH n OLOGY
FACULTY OF COMMERCE, HUMAN SCIENCES AND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING & FINANCE
QUALIFICATION: BACHELOR OF ACCOUNTING HONOURS
QUALIFICATION CODE: 08BOAH
LEVEL: 8
COURSE CODE: ATX812S
COURSE NAME: ADVANCED TAXATION
DATE: DECEMBER 2025
DURATION: 3 HOURS
PAPER: PRACTICAL AND THEORY
MARKS: 100
EXAMINERS:
SECOND OPPORTUNITY EXAMINATION - QUESTION PAPER
E Hamukwaya
MODERATOR: MN Amakali
INSTRUCTIONS
• This question paper is made up of five (5) questions.
• Number each question correctly.
• Answer all the questions in blue or black ink only.
• Round of all amounts to the nearest Namibian Dollar (N$)
• You are advised to pay due attention to expression and presentation. Failure to do so will
cost you marks.
• Start each question on a new page in your answer booklet and show all your workings.
• Questions relating to this paper may be raised in the initial 30 minutes after the start of
the paper. Thereafter, candidates must use their initiative to deal with any perceived error
or ambiguities and any assumption made by the candidate should be clearly stated.
• Clearly state (any) assumptions made (where applicable)
PERMISSIBLE MATERIALS
Non-programmable calculator
Namibian Value Added Tax Act No 10 of 2000
Namibian Income Tax Act No 24 of 1981
THIS QUESTION PAPER CONSISTS OF 8 PAGES {Including this front page)
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QUESTION 1
(20 marks; 36 minutes)
Gladys Harambee is a single parent with four school going children under her care and her
salary was not enough for the size of her family. To supplement her salary, Gladys used her
savings to buy a house in the suburb of Katutura in Windhoek in 2008. She added three
bedrooms and two bathrooms to the house in order for her to receive higher rentals. Since
then, Gladys has been letting this house every year to students that come to Namibia from
Angola to study at the University of Namibia.
However, as from May 2024 Gladys has been finding it very difficult to find tenants for her
house due to the Namibian economy that was not performing well. This was worsened by the
Angolan students that stopped coming to Namibia due to their own financial challenges.
Gladys has had periods where her house was vacant for 6 months and this has been causing
her severe financial challenges. One of her close friends has advised her to sell the house and
invest the money in an interest bearing bank account offering interest rates of 9% per annum.
So in January 2025, Gladys took the advise, started advertising her house and she has found
a buyer willing to buy the house for N$ 1 200 000.00. Gladys is however unsure on whether
she will be taxed from the proceeds received from the sale of this house.
QUESTION 1 REQUIRED
Advice Gladys on whether she will be taxed on the N$ 1 200 000 that she will
receive from the sale of her Katutura house should she decide to sell it by looking
at all components of the gross income definition.
Support your answer with relevant case law and legislation
Communication skills - layout and logical argument
TOTAL MARKS
Marks
19
1
20
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QUESTION 2
40 Marks (72 Minutes)
JP Electricals (Pty) Ltd (hereafter JP Electricals) is a company based in Windhoek that
manufactures and sells electrical gadgets on a cash and credit basis to the public and
wholesalers. The company has provided you with the following information for the year
ending 31 March 2025:
Notes
N$
Sales
2 000 000
Rental income
1
50 000
Dividends received
2
38 000
Profits from an Angolan business
3
350 000
Government stock interest received
4
7 000
TOTAL INCOME
2 445 000
Less expenses:
Purchases
400 000
Stationery expenses
40 000
Depreciation
5
130000
Salaries and wages
6
280 000
Transport costs
7
140 000
Bad debts provision
8
30 000
Annuity paid
9
30 000
Restraint of trade payment
10
200 000
Legal expenses
11
10 000
Leasehold improvements
12
275 000
Lease premium
12
23 000
Rent expense
12
200 000
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Notes
1. JP Electricals has some offices in Okahandja that it lets out to tenants . JP Electricals
bought these offices in the year 2000, when property prices were low.
2. JP Electricals received this dividend from its investment in ABC Furniture (Pty) Ltd, a
Namibian based company that sells furniture around Namibia.
3. JP Electricals has a subsidiary company that operates in Angola and these are the
profits realised during the year from the Angolan business.
4. JP Electricals received interest during the year from Government stock that it
purchased.
5. The following are the assets of JP Electricals:
Asset
Date of purchase
Cost-N$
Machinery
05/01/2025
330 000
Delivery truck
03/03/2024
250 000
Motor vehicle
17/12/2015
200 000
6. 20% of salaries and wages are paid to staff who are directly involved in the
manufacturing process.
7. 100% of transport costs were incurred in transporting materials used in the
manufacturing activities.
8. The accountant provided for bad debts at N$ 180 000 for the current year. The
allowance for the prior year was N$ 150 000. JP Electricals's provision relates to a
specific list of debtors.
9. JP Electricals pays an annuity to one of its former employees that left the company
due to ill-health.
10. JP Electricals entered into a 5 year restraint of trade agreement with John Kennedy
the former manufacturing manager when he resigned from their business.
11. Lawyer's fees paid for the collection of debts.
12. JP Electricals rents the building that it uses for its offices and manufacturing activities.
In terms ofthe lease agreement, JP Electricals were obliged to make improvements of
N$ 250 000 to the building. The lease agreement became effective on 01/05/2024 for
10 years and the improvements were completed on 01/03/2025. In addition, JP
Electricals had to pay a lease premium to occupy the offices and the warehouse.
Rentals of N$ 20 000 were being paid per month .
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Notes
13. Inventory on hand as at 31 March 2024 was N$ 200 000. Inventory on hand as at 31
March 2025 was N$ 300 000.
14. The assessed loss brought forward from 2024 was N$ 66 000.
REQUIRED
Marks
Calculate the taxable income of JP Electricals (Pty) Ltd for the year ended 31 March
2025 . Ignore VAT.
Provide your answer in column format with reference to applicable reasons of the
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Income Tax Act No. 24 of 1981 for the inclusion, deduction or omission of each item in
your answer.
QUESTION 3
10 Marks (18 Minutes)
Voolies (Pty) Ltd is a company incorporated in Australia and is managed and controlled in
Australia. It has substantive business operations in Namibia, which it operates through
branches. The following information relates to Voolies trading in Namibia for the year of
assessment ending 30 June 2020:
Notes N$
Sales in Namibia
471000
Sales - export to Australia
321000
Foreign exchange gain
1
6 321
Dividends declared to Voolies
2
44 000
Less: expenditure
Directors fees
Other deductible expenses
3
6 000
141000
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Notes
1.
The foreign exchange gain was realised on a transaction which involved the export
of goods to Australia.
2.
Voolies used some of its surplus funds to buy shares in a Company based in
Namibia and these are the gross dividends declared to Voolies.
3.
The managing director of the international company, Mr Silas who is based in
Australia came for a board meeting in Namibia and was paid these fees.
REQUIRED:
MARKS
a) Calculate the total taxes due by Voolies in Namibia and clearly state the type of
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the taxes payable.
b) Briefly explain if Mr Silas will be taxed in Namibia and if so, how much is the tax.
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TOTAL MARKS
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QUESTION 4
10 Marks (18 Minutes)
Joshua Anderson and Jonathan Rhys, both residents, had for many years successfully operated
a business in partnership. They had shared profits and suffered losses equally. At the
commencement of the 2025 year of assessment, they incorporated their company. The
reasons for this were:
1.
To limit their personal liabilities;
2. To give the business an opportunity for perpetual succession;
3.
To be able to change the profit or loss sharing ratios; and
4.
To reduce their personal tax liabilities.
Their business' market value was in excess of its net asset value. This meant that a goodwill
account was created in the company. Peter and Paul then advanced funds to the company so
it could pay the partnership for the newly formed company. The creation of the company
resulted in a tax saving for both the former partners.
The Commissioner has informed Joshua and Jonathan that he is going to raise the provisions
of section 95 against them on the grounds that the incorporation of their company was an
impermissible tax avoidance arrangement.
REQUIRED:
MARKS
Discuss whether the Commissioner can apply the General Anti-Avoidance provisions in
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terms of section 95 in respect of the above operation
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QUESTION 5
20 Marks (36 Minutes)
Vicky Haufiku is a Labour Lawyer for a local company Legal Shield (Pty} Ltd. Mrs Haufiku has
been working for this company for the last 25 years of her life.
Mrs Haufiku has two children, one being her biological son of 21 years of age and the other
being her step-daughter of 25 years of age. For the purpose of providing them a post-school
qualification at a reputable University, she took out an education policy for each of her
children . She pays a monthly premium of N$ 1,200 on the policy for her 21 year-old son, and
N$ 2,500 on the 2nd policy for her 25 year-old step daughter. Her step daughter is partially
dependant on Mrs Haufiku as she still lives with Mrs Haufiku and her father and receives
maintenance and support but holds a waitressing job at the local bistro. You can assume that
she is not liable for normal tax. During the year, on 31 December 2024, the 2nd policy on Mrs
Haufiku's step-daughter matured, paying out N$ 150,000 for the purpose of acquiring an
education. Assume that the premium payments ended with the maturity of this 2nd policy. As
Mrs Haufiku has recently purchased a new home, instead of using the Education policy pay-
out for the education of her step-daughter, she used the money and paid it into her home
loan.
Legal Shield (Pty) Ltd gives Mrs Haufiku a travel allowance of N$ 6,900 per month for purposes
of travelling for business purposes around the country. Mrs Haufiku keeps a comprehensive
and accurate logbook of her business kilometres travelled and expenses incurred . The original
cost including VAT of her vehicle, purchased 01 March 2015, was N$ 430,000. Her total
kilometres travelled for business and private purposes were 98,110 kilometres, of which
23,550 kilometres were for private purposes. The following costs were incurred throughout
the year of assessment:
•
Repairs and Maintenance: N$ 15 100.
•
Total Fuel & oil costs: N$ 21,100.
•
Licence renewal: N$ 450.
•
Car Insurance at N$ 1,550 per month. You can assume the car insurance contract was
entered into on N$ 01 March 2015.
During the year-end function in December 2024, Mrs Haufiku was nominated as the most
productive employee of the year. As Mrs Haufiku wanted to take a short holiday to reward
herself for her hard work during the year, Legal Shield provided a weekend away in
Swakopmund. The weekend comprised of three nights' accommodation, including breakfast
and dinner, at the Seaside Hotel & Spa. The cost per night comprised of N$ 2 500 for two
people sharing a room . Mrs Haufiku only needed to cover her own fuel and lunch expenses.
During the current year of assessment, Mrs Haufiku purchased an annuity at Metropolitan of
N$ 350,000 on 01 March 2024. The annuity only started paying out from 01 May 2024, at N$
1,285 per month . It will pay out for 30 years
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Mrs Haufiku received a lump sum of N$ 50 800 in respect of backdated salary for the period
01 January 2015 up to 28 February 2017. Mrs Haufiku has opted to be taxed in three
instalments. Her normal monthly salary amounts to N$ 28,500.
Mrs Haufiku paid N$ 100,100 in PAY-AS-YOU-EARN for the current year of assessment.
REQUIRED:
MARKS
Calculate the tax liability of Mrs Haufiku for the year of assessment ending 28 February 2025
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Individual Incon1e Tax
All individuals (incl. deceased estates and trusts) other than companies.
0-100 000
100 001 - 150 000
150 001 - 350 000
350 001 - 550 000
550 001 - 850 000
-·
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850 001 - 1 550 000
Above 1 550 001
Not taxable
18% for each N$ above 100 000
9 000 + 25% for each N$ above 150 000
59 000 + 28% for each N$ above 350 000
115 000 + 30% for each N$ above 550 000
205 000 + 32% for each N$ above 850 000
429 000 + 37% for each N$ above 1 550 000
Housing loans and mortgage subsidies
Housing Toans provided to empfoyees at a subsidised rate are taxable to
the extent that the interest rate payable by the employee is less than 12%
per annum (p.a .). The taxable value of housing benefits comprising free or
subsidised housing is determined with reference to the location and size of the
housing, as indicated in the following table:
Windhoek
Walvis Bay
Large Tow_ns
Small Towns
500
350
250
125
750
550
375
175
1 000
750
500
250
1 400
1 000
700
300
1 800
1 300
900
450
2 200
1 700
1 100
550
2 800
2 100
1 400
700
3 400
2 550
1 700
850
4 000
3 000
2 000
1 000
END OF SECOND OPPORTUNITY EXAMINATION
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