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TAX601Y-TAXATION 201-1ST OPP-NOV 2025 |
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nAm I BIA un IVE RSITY
OF SCI En CE Ano TECH n OLOGY
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: TAX601Y
DATE: OCTOBER/NOVEMBER 2025
DURATION: 150 MINUTES
SESSION: THEORY & CALCULATIONS
MARKS: 100
ASSESSMENT 6 - FIRST OPPORTUNITY EXAMINATION
EXAMINER:
Mr I-K. Kenaruzo
MODERATOR: Mrs Y. van Wyk
INSTRUCTIONS TO CANDIDATES
1. This paper consists of 8 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. Answer the 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
Mark(s)
Time allocated (minutes)
Legislation
1
45
2
30
3
25
68
South African Taxation
45
South African Taxation
37
Namibian Taxation
Total
100
150
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TAX601Y, Assessment 6
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QUESTION 1
(45 MARKS)
Faith Immanuel, a resident of the Republic, farms in the Polokwane area of Limpopo. She has
not yet attained the age of 65 years and is not registered VAT vendor. She has supplied the
following information for the 2025 year of assessment:
Receipts and accruals
ZAR
Produce sold
Livestock sold
Subsidy received for his new dam
Director's fees for serving on the board of a co-operative society
Expenditure
Livestock purchased (note 3}
Farm operating costs - all deductible in the determination of his farming
income
Dam construction costs
Erection of fences
Eradication of noxious plants
Prevention of soil erosion
Sinking of borehole and pumping plant purchased (note 3}
Interest incurred - Land and Agricultural Bank of South Africa loan
78 70(
105 600
6 250
390 000
' ZAR
289 300
52 250
19 250
3 500
5 750
4350
6050
2100
Notes
1.
Faith Immanuel's opening and closing stock are as follows:
Opening Stock
Closing stock
Produce (at market value} 7 600
9100
Produce (at average cost of 6400
9400
production}
Livestock (at standard 18 000
31250
values)
Livestock (at market values) 242 000
492 000
2. In April 2024 Faith Immanuel's grandfather (Immanuel Snr) passed away. Fatih inherited a
small herd of cattle from Immanuel Snr with an open market value of R19 200 and originally
cost Immanuel Snr R13 600.
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3. During the 2025 year of assessment, Faith Immanuel increased the water resources on her
farm by building a new dam and by sinking a borehole on the farm. Satisfied that she would
have enough water for the winter, she increased the number of livestock on her farm. She
purchased 30 heads of cattle for R216 000. This amount is included in livestock purchases for
the year of R289 300. These animals have also been included in the closing stock value of
livestock at their standard values. On 1 January 2025 Faith sold her old borehole pump to her
neighbor for RlS 000, the full allowance for R28 000 of the old borehole was fully claimed in
the previous years.
4. Every year, Faith Immanuel gives each of her employees a cow as part of their Christmas
bonus. In December 2024 the market value of a cow was RS 000. These gifts as employee
rations and the cost of these animals were R13 000 in total.
5. At the end of the 2024 year of assessment, Fatih Immanuel had an unredeemed capital
development expenditure balance of RlS 000.
6. Faith Immanuel purchased a brand-new John Deere tractor from a dealer in Tzaneen on 20
May 2024, which will qualify for s12B and Faith Immanuel will utilise it. The tractor was
immediately brought into use and cost R146 000 excluding VAT. As the farm is situated far
away from the nearest town and Faith Immanuel did not want to waste planting time by
travelling, she purchased R16 790 (including VAT) worth of spare parts for the tractor together
with the tractor.
7. During the financial year, produce from the farm was used for family consumption. The
estimated cost of the produce consumed was R3 200, with a corresponding open market
value of R3 600.
8. During the year, Faith Immanuel donated to charitable institutions as follows :
• Livestock- These animals had originally been acquired at a historical cost of N$8,900, but
their fair market value at the date of donation was N$12,400.
• Produce - The produced cost are valued at R6 700 and fair market value on the date of the
donation was RlO 800.
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REQUIRED:
QUESTION 1 (45 Marks)
Sub-totals Total
Calculate Faith Immanuel's taxable income for her 2025 year of
(44)
assessment. Show all your workings. Round off all amounts to the
(45)
nearest rand (R).
(1)
Presentation and la'i_out
Question 2
30 Marks
ALL AMOUNTS INCLUDE VAT, WHERE APPLICABLE UNLESS OTHERWISE STATED
I BACKGROUND INFORMATION
Richard Uaai, 67 years old, is a collector of high value commodities who is ordinarily resident
in Germany. Richard Uaai is not ordinarily resident in South Africa. He is a major shareholder
of a rare stone group in Germany. He first visited the Republic from 1 July 2019 to 30
September 2019 and returned during a working holiday in 2020. During the2021 year of
assessment, he was in South Africa from 1 April 2020 until 15 February 2021. He enjoyed his
stay in South Africa. He visited South Africa again from 1 June 2022 to 31 December 2022.
During November 2023 and December 2023, he again visited South Africa for eight weeks (56
days). During the 2024 calendar year, the King Daimond Group Limited ("KDG Ltd") in South
Africa employed him on a contract basis from 1 March 2024 to 31 December 2024 to assist
the rare diamonds markets in their production process and to increase their income. (The
Commissioner of SARS indicated that he would be regarded as an employee of KDG Ltd for
Income Tax purposes.) KDG Ltd is a registered VAT vendor. All amounts include VAT where
applicable.
ITAXABLE INCOME INFORMATION
Richard is married and has no children. The following relates to the 2025 year of assessment:
1. KDG Ltd paid Richard a salary of R95 000 a month.
2. It is expected from Richard to entertain clients (although he hates it). Richard
entertained clients and staff of different types of diamond manufactures in the group.
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He spent RSS 300 on entertainment during the 2025 year of assessment. He kept
evidence to support these expenses. The employer refunded the amount of RSS 300.
3. Richard primarily worked from the head office in Johannesburg, and the company
must pay or supply the following if he needed to visit hotels in other provinces:
• He hates to fly and therefore he and his wife will only fly business class - she
will accompany him on every visit.
• Accommodation of his choice including breakfast and lunch.
He was sent to the hotel in Cape Town to manage the renovation of the restaurant section. It
took two full months to manage this project. The airfare tickets were bought and the company
paid R35 000 for the two return tickets. Economy class would have cost the company only
Rl0 000. The accommodation costs Rl 500 per person per day and R2 200 a day per person
sharing. The company paid R2 200 a day for the accommodation for 61 days.
4. He contributes RS 400 per month in medical aid contributions and his wife is the only
dependent. KDG Ltd contributed the 135% of the amount contributed by Richard to
the medical aid. Qualifying medical expenses not covered by the medical aid
amounted to R3 600 for the year of assessment.
REQUIRED:
QUESTION 2 {30 Marks)
Sub- Total
totals
A Based on the information provided under "Background" only, discuss (14)
whether Richard Uaai is a resident as defined for the 2025 year of
assessment. Provide reference to legislation and case law (if
applicable) to support your answer.
{15)
Decision-making
(1)
B For this part of the question, assume that Richard Uaaiand his wife
will be South African residents for Income tax purposes for the 2025
(15) (15)
year of assessment Calculate Richard Padro's Income tax payable for
the 2025 year of assessment.
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QUESTION 3
25 MARKS
Junior John, a Namibian resident, established JJ Foods (Pty) Ltd, a fast-food delivery company
based in Windhoek, which specialises in transportation of food from well-established
restaurants within the city. The company's financial year-end is the last of September each
year.
On 1 November 2024, he signed a fifteen-year lease agreement for premises in the Southern
Industrial Area for parking of the delivery scooters, with a monthly rental of N$15,000. As part
of the lease terms, JJ Foods (Pty) Ltd was required to improve the building at a cost of
N$235,000, with an additional 15% lease premium based on the agreed value of the
improvements as per the agreement. The improvements were completed on 1 January 2025,
ultimately at a cost of N$225,000.
To set up operations, the company purchased seven fuel efficient scooters for N$35 000 each
at the end of October 2024, incurring N$250 in delivery charges in total and N$50 for each
scooter for the installation costs of phone holders to enable the scooter to be user friendly
for their operations.
During the 2025 year of assessment, JJ Foods (Pty) Ltd reported a net profit before tax of
N$970,000. These profits were arrived at after taking the below into account correctly in
terms of IAS & IFRS only:
1. Local dividends of N$3,750 from Trustco (a Namibian owned company) and N$11,000
interest from a loan granted to Junior's cousin.
2. The company incurred N$700,000 in wages, consisting of N$270,000 for permanent
staff, N$400,000 for casual workers, and a N$30,000 pension fund contribution for
permanent staff.
3. Administrative costs included N$20,000 for rent of software for the mapping the city
of Windhoek renewed annually at the same cost, N$7,450 in municipal costs, and
N$250,000 in telephone expenses, which includes a navigator system valued at
N$180,000 which will be used for five years in terms of IAS 38 (Intangible
Assets).Following an unfortunate incident, King Speedy, a delivery personnel, was
killed during the while head-on collision, and due to his widow's financial distress, JJ
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Foods (Pty) Ltd decided to pay her an annuity of N$2,000 per month for two years.
Additionally, the company recorded depreciation expenses on various assets, including
a motor vehicle, printing equipment, and office furniture. Refer to the table below for
depreciation provided for:
Item
Purchase date Cost Price
Depreciation
Motor vehicle
1/6/2023
125,000
16,667
Office Furniture
1/1/2024
60,000
3,333
4. A bad debt including interest of N$7,720 was written off in respect of a loan granted
to King Speedy for private vehicle repairs, with an interest charge of N$1 720
accounted for. Other deductible expenses for tax purposes amounted to N$365,000.
REQUIRED:
QUESTION 3 (25 Marks)
Sub- Total
totals
A Calculate the normal tax liability of JJ Foods (Pty) Ltd for the 2025 year (24) (25)
of assessment, commencing with the net profit before tax of
N$970,000.
(1)
Presentation and la'l,out
END OF ASSESSMENT 6 - 100 MARKS
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APPENDIX A - South African Tax
Section 6 Rebates (Natural Persons) - 2025/2026
Rebate
--·---·-•· --- --------
Primary Rebate
Amount
R 17 235
Who Qualifies
All natural persons
Secondary Rebate
R9444
Persons aged 65 years or older
Tertiary Rebate
R 3 145
Persons aged 75 years or older
APPENDIX B - South African Tax
MEDICAL AID TAX CREDITS
Monthly amounts deductible from tax payable 2025
2026
Main member
Main member with one dependant
Main m ember w ith two dependants
R364
R728
R974
R364
R728
R974
Each additional dependant q ualifies fo r a cred it ot R246 {2023 : R234)
per month.
APPENDIX C - South African Tax
,TAX RATES INDIVIDUALS - 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 - R1 81 7 000
Rl 817 001 ·I
Rates of tax
18% of each R1
R 42 678 + 26% of the amount over
R 77 362 + 31 % of the amount over
R12 1 475 + 36 % of t e amount' over
R179 147 + 39 % of the amount over
R251 258 + 41% of the amount over
R644 489 + 45% of the amoun t over
R 237 100
R 370 00
R 512 800
R 673 000
R 857 900
R1 817 000
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