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GTA711S-TAXATION 310-2ND OPP- JULY 2025 |
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n Am I BIA u n IVER s ITY
OF SCIEnCE Ano TECHn0L0GY
FACULTY OF COMMERCE, HUMAN SCIENCES& EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOROF ACCOUNTING
QUALIFICATION CODE: 07BAOC
LEVEL: 7
COURSE CODE: GTA7115
COURSE NAME: TAXATION 310
SESSION: JULY 2025
PAPER: THEORY& APPLICATION
DURATION: 3 HOURS
MARKS: 100
SECOND OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINER(S) Mrs. Y van Wyk, Mr. J Erastus & Mrs. G Meintjies
MODERATOR: Ms. F Haimbala
INSTRUCTIONS
1. This question paper is made up of THREE(3) questions.
2. Answer ALL the questions and in blue or black ink.
3. Start each question on a new page in your answer booklet.
4. Draw a line through all unused spaces in your answer booklet.
5. The names of people and businesses used throughout this examination paper do not
reflect reality and may be purely coincidental.
6. Questions relating to this examination 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 & any assumption made by the candidate should be
clearly stated.
THIS QUESTION PAPER CONSISTS OF 7 PAGES (excluding this front page)
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QUESTION 1
(45 MARKS)
This question consists of three (3) independent parts
PART A
(20 MARKS)
Bags& More CC,a manufacturer of bags, caps, hats etc. are based in Windhoek and imports their
raw material from Dubai and Thailand. Bags& More CChas a 30 June year-end, assume that this
also represents their tax year.
During the year, the entity imported a machine from the United Kingdom which will industrialize
their current manufacturing process. The cost of the machine was£ 30,900.
The machine arrived at the Walvis Bay harbour on 01 July 2024. Assume that on this date the
risks & rewards have transferred to Bags & More CC. The creditor will be paid in 3 equal
instalments. The first instalment being due on 31 August 2024, the 2nd instalment being due on
31 October 2024 and the final instalment will be paid on the balance on 30 June 2025.
During the financial year, Bags & More CC has also purchased 500 kilograms of leather material
at Dirham O150/kg and 700 kilograms of canvas material at Dirham O130/kg from Dubai. This
shipment arrived on 30 November 2024, when the risks and rewards were transferred. The
creditor was paid on 20th of December 2024.
The following exchange rates have been provided:
01 July 2024
31 August 2024
31 October 2024
30 November 2024
20 December 2024
30 June 2025
N$ to 1 Pound (£)
17.50
18.00
16.50
16.50
16.00
17.25
N$ to 1 Dirham (D)
4.80
5.00
4.50
5.50
5.20
4.90
REQUIRED:
Calculate the foreign exchange gain or loss that Bags & More CCshould take into account in its
taxable income for the year of assessment ending 30 June 2025. Show all workings. Round off all
amounts to the nearest Namibian dollars (N$}.
(20)
PARTB
(10 MARKS)
Accounting (Pty) Ltd is an accounting and tax consulting company operated from the private
residence of Wilmore Stranger, the sole shareholder of the company. He has converted a granny
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flat, located on the same stand as his private residence, into company offices. Accounting (Pty)
Ltd has concluded the following transactions for the year of assessment ended 28 February 2025
and requires your advice on the correct tax treatment of each of the transactions below:
1. N$3 700 paid to Maintenance Man on 15 September 2024 to replace the front door of the
offices that was damaged by an angry client. Fortunately, the full amount could be recovered
from the company's insurance.
(5)
2. N$750 paid to NamRA on 31 October 2024 for administrative penalties relating to the late
submission of the annual income tax return for the 2023 year of assessment.
(2)
3. N$100 000 paid into the company's property reserve account for future renovations to the
business premises.
(3)
REQUIRED:
Briefly discuss for each of the above transactions whether the amounts will be deductible by
Accounting (Pty) Ltd for the 2025 year of assessment in respect ofthe general deduction formula
(section 17) or prohibited deductions (section 24) of the Income Tax Act.
(10)
PARTC
(15 MARKS)
Kanye Kim has been a cattle farmer in Karibib district in Namibia all his life. His main source of
income is the sale of milk from the dairy that he has on his farm. Ninety five percent of Kanye's
income is obtained from selling milk to Namibia Diaries. He concluded the following transactions
during the 2025 year of assessment:
Due to heavy rains and flooding during January 2025, part of Kanye's fence around his property
was destroyed. He was underinsured and the full damage was not covered. He also did not have
the cash on hand to repair the fence. Due to the urgency of the matter, Kanye decided to sell
some of his cattle to cover the repair of the fence. In order to obtain the best price, Kanye took
10 cattle to the local stud fair, to show the quality of his herd of cattle to the attending farming
community. He placed an advertisement in the local paper, as well as the nationally published
Farmer's Weekly. On 15 February 2025 he sold 20 cattle at N$8 000 each to a neighbouring cattle
farmer.
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REQUIRED:
Discuss,with reference to case law, whether the sale of the cattle was capital or revenue nature
in the hands of Kanye Kim in terms of the gross income definition. Do not discuss any other
elements of the gross income definition.
(15)
QUESTION 2
(30 MARKS)
Jack & Jill are partners in a business, providing consulting services to politicians in Namibia and
South Africa. They are both residents of Namibia.
They share profits in the ratio 40:60 respectively. An extract of the income statement for the
year ending 28 February 2025 reveals the following:
Income:
N$
Consulting Fees
812,200
"Local" dividends
120,000
Bad debts recovered (note 3)
10,000
Expenses:
Partners' salaries: Jack
120,000
: Jill
180,000
Interest on capital accounts paid: Jack
45,000
: Jill
67,500
Insurance premiums (note 1)
18,750
Bad debts (note 2)
20,000
Donation to charity (no certificate received)
12,250
Depreciation (note 6)
16 800
Design costs (note 5)
20,000
Net Profit for the year
441,900
Notes:
1. The insurance premiums paid are on the joint lives of the partners.
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2. Included in the N$20,000 for bad debts is N$10,000 which was lent to an employee who
is unable to pay it back.
3. During the 2025 year of assessment, the partners recovered N$10,000 from Tom, a client.
In the 2024 year of assessment the partners had rendered services to Tom. Tom
experienced financial difficulties when he was fired as the police minister by the new
president, therefore the partners decided to write off his debt.
4. Jill received interest of N$50,000 on a savings account held at Netbank Namibia.
5. The partners incurred N$20 000 to design their business logo "ANCEF" on 1 January 2025.
The design will be used for the next 4 years.
6. The entity acquired furniture and fittings for their office from Nictus Namibia at the
beginning of the previous (prior year). The useful life of the furniture and fittings is 4 years
according to the accounting standards applied.
REQUIRED:
Calculate the taxable income of each of the partners for the 2025 year of assessment. Provide
reasons for nil effects. Show all workings. Round off all amounts to the nearest Namibian dollars
(N$).
(30)
QUESTION 3
{25 MARKS)
Leather Wear (Pty) Ltd manufactures leather products for the local and export market. The
company is a registered VAT vendor in Namibia. The following information has been extracted
from the accounting records of the company in respect of its two-month VAT period ending on
31 May 2025. All amounts listed below include VAT at 15%, where applicable.
Income:
Local sales
Export sales
Interest on overdue accounts
Bad debts recovered
Indemnity receipt
Notes
1
2
N$
136 800
43 200
456
1966
28 500
Expenditure:
Purchases of raw materials
Salaries and wages
79 800
45 400
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Motor vehicles repairs & maintenance
Insurance of motor vehicles
Motor vehicle purchases
Motor vehicle depreciation
Discount allowed on local sales
Entertainment & subsistence
Rental of business premises
Rental of computer
3 534
1995
3 155 000
5 260
3 920
4
2 622
11400
1 710
Notes
l. Two debts which had been written off in previous tax periods were recovered during the
current tax period:
1.1. An amount of N$1 502 was recovered from Jim Daly relating to a local sale made to him
in August 2022.
1.2. An amount of N$464 was recovered from an export debtor in respect of a sale during
January 2023.
2. The indemnity receipt represents an insurance payout from the company's insurers. A motor
vehicle of the company was stolen on 30 April 2025 and has since not been recovered. The
vehicle, a MK Golf motor car had been acquired at a cost of N$35 000 (including VAT) on 30
April 2023 from which date onwards a salesman at the company had the right of use (the
company bears all running costs). The book value of the vehicle on 30 April 2025 was N$28
000.
3. The following motor vehicles were purchased by the company during the tax period:
3.1. Volkswagen Pick-up. The vehicle was purchased to replace the stolen MK Golf (see note
2 above). The salesman chose a second-hand bakkie, not a double cab and was acquired
on 1 April 2025 at a cost of N$40 000. No Vat was payable on the transaction as the
bakkie was acquired from a non-vendor.
3.2. Toyota Hilux bakkie. This bakkie is used by the company for the transport of goods. The
vehicle cost N$115 000 (including VAT).
4. Entertainment & subsistence expenditure includes the following:
4.1. Staff tea and coffee, N$684.
4.2. Club subscriptions for the managing director's membership of the local golf club, N$798.
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4.3. Hotel costs incurred by the managing director while away on business, N$1140.
5.
Rental expenses include the following:
5.1. Rental of business premises, N$11 400 per month.
5.2. Rental of printer/copier machine, N$1 710 per month.
REQUIRED:
Calculate the net VAT payable to or refundable from Nam RA by Leather Wear (Pty) Ltd in respect
of its two-month VAT period ending 31 May 2025. Provide reasons for nil effect. Show all
workings. Round off all amounts to the nearest Namibian dollars (N$).
(25)
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ANNEXURE
Individual Incorne Ta,-x
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
850 001 - 1 550 000
Above 1 550 001
HOUSING BENEFITS
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
Windhoek
Walvis Bay,
Large Towns
Small Towns
500
,:~50
250
125
750
550
375
175:
.~ • • I
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 EXAMINATION PAPER
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