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TAX701Y-TAXATION 300-2ND OPP-DEC 2025 |
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1 Pages 1-10 |
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1.1 Page 1 |
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n Am I BI A u nl VE Rs ITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCES AND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOR OF ACCOUNTING (CHARTERED ACCOUNTANCY)
QUALIFICATION CODE: 0?BACC LEVEL: 7
COURSE CODE: TAX701Y
COURSE NAME: TAXATION 300
SESSION: November 2025
PAPER: THEORY & CALCULATIONS
DURATION: 180 MINUTES
READING: 30 MINUTES
WRITING: 150 MINUTES
MARKS: 100
Assessment 6 - Second Opportunity Examination
EXAMINER:
Mrs. Y. van Wyk
INTERNAL MODERATOR:
Mrs. S. Schwartz
EXTERNAL MODERATOR:
Mr. N. Phalane
INSTRUCTIONS TO CANDIDATES
1. This question paper consists of 12 pages of information, including annexure and
excluding the cover page.
2. You are allowed to use SAICA Student handbook volume 3, 2024/2025 or older.
3. You are reminded that answers may NOT be written in pencil. No tippex.
4. All open spaces on your answer sheets must be drawn through in its entirety
with a pen line. If this is not done, you will not qualify for a remark.
5. Clearly show all calculations and round to the nearest RAND.
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QUESTION 1
25 MARKS
Connie Coetzer is 42 years old and unmarried. She emigrated from Republic eight (8)
years ago and is no longer ordinarily resident in the Republic. She has never been to the
Republic in the last eight (8) years, except for the current year of assessment, when she
visited the Republic for 90 days.
She earned the following from a South African source during the 2025 year of assessment:
R
Investment income:
Gross dividend on shares in a South African company
12 000
Gross interest from a South African bank
37 000
Royalty income:
Net royalties for the use of his patent in South Africa
Fee (after tax) for assisting a company with advice in
relation to the patent Process (a "royalty" as defined in s49A)
105 000
31 250
Rental income:
Net rental from fixed property situated in the RSA (not deemed
to be business carried on through a permanent establishment in the
Republic) .
145 500
On 25 February 2025, Connie sold property situated in the Republic she owned for R2 785
000 to a South African resident. Connie purchased the property in 2006 for R1 320 000
(excluding VAT) . She had to pay agent's commission of R175 000 (excluding VAT) on the
sale of the house.
Annuity:
Before she emigrated , she purchased a ten-year annuity from an insurance company in
the Republic. She paid R50 000 and receives a monthly annuity of R700.
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REQUIRED:
QUESTION 1 (25 Marks)
(a) Discuss, with reference to legislation and case law, the normal tax
consequences of the annuity purchased by Connie Coetzer. Support
your discussion with calculations, where necessary. Round off all
amounts to the nearest rand (R) .
MARKS
7
Presentation, logical flow and communication
1
(b) Calculate the normal tax liability of Connie Coetzer for the 2025 year of
assessment. Reference to legislation and provide reasons for nil
17
effects, where applicable. Show all workings. Round off all amounts to
the nearest rand (R).
TOTAL MARKS
25
QUESTION 2
38 MARKS
Brewing (Pty) Ltd ("Brewing") is a South African company that specializes in the production
of local South African beers, an alcoholic beverage. The company has a 30 June year-end.
Due to the uniqueness of Brewing's beers as well as the recent drive in South Africa to
support proudly South African products, Brewing has expanded rapidly from a small
brewery (factory) in Paarl, Western Cape to two large breweries (factories) situated in Cape
Town and Johannesburg. As a result of the expansion, Brewing had to register as a VAT
vendor during the current year of assessment as its taxable supplies exceeded the
threshold during the previous year. SARS regards the production of beer as a process of
manufacture .
The taxable income of Brewing was R15 500 000 before taking into account the following
information. All amounts include VAT, unless stated otherwise.
Production facilities:
CBC Ltd, a company specializing in sport event coordination, recently approached
Brewing to provide beers for the goody bags given out to competitors at various events.
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Since Brewing has been unsuccessful in trying to expand its product range, it saw this as
a great opportunity to enter the sports market. The company therefore accepted the
contract.
Since Brewing's production facilities were already at full capacity, it decided that it would
need to acquire new production facilities. However, due to the poor state of the real estate
market, it battled to find a production facility that it could purchase and decided to lease
a building instead.
The lease agreement for a five-year (Syear) lease was signed during November 2024 and
the lease commenced on 1 December 2024. On this date, a payment of R248 400 was
made to the lessor, Amstel Ltd, as an advance payment of rent for the next 12 months.
Included in the lease agreement was the requirement to improve the production capacity
to the value of RS00 000 (excluding VAT) . The improvements, which cost Brewing R480
000 (excluding VAT), were completed on 30 April 2025 and brought into use on 31 May
2025.
Plant, machinery, and computer equipment
Due to cash flow issues, the Chief Executive Officer (CEO) donated Machine A to Brewing
on 1 January 2023. This machine cost the CEO R20 000. On the date of the donation, the
open market value of the machine was R17 000. Unfortunately, on 31 October 2024, the
Cape Town factory was flooded, and the machine was destroyed beyond repair. Brewing
received RS 000 from the insurance company that was used to purchase a replacement
machine for R22 800. The replacement machine, which was new and unused , was brought
into use on 1 December 2024.
Machine B, also used in the process of manufacture was purchased from SAB Ltd for R57
000 on 1 March 2023 for the Johannesburg factory. SAB Ltd had previously used the
machine in its process of manufacturing beer. The open market value on the date of
purchase was R45 000 (excluding VAT) .
New computer equipment used by the head office was purchased using the proceeds of
the sale of old equipment on 1 January 2025 for an amount of R82 800 from IT Connection.
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The old computer equipment was purchased on 1 January 2024 for R58 650 (also from IT
Connection) and sold on 1 December 2024 for R42 550. These proceeds remained in
Brewing's bank account and were available for immediate use to purchase a replacement
computer.
Trading Stock:
Opening stock included 100 000 units that cost Brewing R12 per unit to produce. While
closing stock at 30 June 2025 was 50 000 units that cost Brewing R13 per unit to produce.
Thirty thousand (30 000) units which cost R12 per unit to produce were given to employees
as Christmas gifts in December 2024 when the market value per unit was R14.
Investment income:
Amounts reflected on Brewing's bank statement:
Interest received from South African investments
Dividends received from South African companies
Dividends received from a British company registered in the United Kingdom
R
35 000
63 750
45 000
Brewing holds 8% of the equity shares in the investment in the British company. No
withholdings tax has been levied in the United Kingdom on these dividends.
Dividends paid:
Brewing declared a dividend of R575 000 to its shareholders in respect of their
shareholding in the company during the 2025 year of assessment. The payment of the
dividends was only made on 4 August 2025.
The shareholders of the company comprise the following:
• Broke (Pty) Ltd, a South African resident company - 30% shareholding
• Mr Joshua Jackson, a South African resident - 45% shareholding
• Mrs Zenobia Koch, s German resident - 25% shareholding
Additional Information:
• Unless otherwise stated or shown by the context, all amounts include VAT (where
appropriate) and all parties are registered VAT vendors.
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• All qualifying assets are written off in terms of section 11 (e) over three years.
• Brewing would like to defer any tax consequences where possible.
• Brewing uses the FIFO method of accounting for trading stock.
• Brewing is not a connected person to any of the persons with whom it has transacted
with during the year of assessment.
REQUIRED:
QUESTION 2 (38 Marks)
MARKS
(a) Calculate the taxable income of Brewing (Pty) Ltd for the year of
assessment ending 30 June 2025. Provide reasons for nil effects. Show 30
all workings where applicable. Round off all amounts to the nearest
rand (R).
(b) Discuss, supported by calculations the dividends tax consequences on
the dividends paid by Brewing (Pty) Ltd. Clearly indicate who is liable 7
for the dividends tax and when it is due to SARS. Ignore any double
tax agreements.
Presentation, logical flow and communication
1
TOTAL MARKS
38
QUESTION 3
37 MARKS
This question consists of two (2) independent parts
PART A
17 MARKS
Cyril Makwena (38 years old and unmarried) is a registered provisional taxpayer and is
employed as a human resources manager.
His second provisional tax payment is due on 28 February 2025, and he wants to pay the
minimum amount without incurring penalties and interest.
The 2023 year of assessment was the last year Cyril was assessed. The date of the
assessment is 15 July 2023. According to this assessment, his taxable income was R535
000. The taxable income includes a taxable capital gain of R8 000, which he realised with
the disposal of his primary residence during July 2022.
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Cyril's calculated taxable income for the year of assessment ended 29 February 2024 is
R578 000, according to his own calculation.
Below are details of Cyril's income and expenses for the year of assessment ended 28
February 2025:
Income
R
Salary
720 000
Foreign dividends received
32 000
Expenses
Medical aid fund contributions - own
36 000
Notes:
1. Cyril's first provisional tax payment amounted to R800.
2. Cyril's employer withheld R205 685 as employees' tax for the 2025 year of
assessment.
REQUIRED:
QUESTION 3 - PART A (17 Marks)
MARKS
(a) Determine the basic amount in respect of the second provisional tax
payment for Cyril Makwena's 2025 year of assessment. Show all 4
workings. Round off all amounts to the nearest rand (R).
(b) Determine the minimum amount that Cyril needs to pay for his second
provisional tax payment for the 2025 year of assessment, without
13
incurring any penalties or interest. Show all workings. Round off all
amounts to the nearest rand (R).
TOTAL MARKS
17
PARTB
20 MARKS
Gloria Kirstenbosch, a resident of the Republic, is a qualified horticulturist (a gardening
specialist). She worked for a large landscaping business in Durban for a number of years
before resigning and commencing her own landscaping business on 1 March 2025. Gloria
Kirstenbosch trades through the means of a close corporation , named, "Glorious Gardens
CC". Gloria is the sole member of Glorious Gardens CC.
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Glorious Gardens C.C provides various landscaping and garden maintenance services.
On 1 March 2025, Glorious Gardens CC secured ten annual garden maintenance
contracts for offices and factories (customers) in, and around, Durban. Glorious Gardens
CC invoiced its customers in both March and April 2025 at a fee of R8 500 (excluding VAT)
per customer per month. This monthly fee is fixed for the year.
Set out below are some of the transactions that took place during March and April 2025.
1. On 1 March 2025, Glorious Gardens CC purchased a second-hand truck from a
non-vendor for R80 500 and paid the purchase price in full . The use of this truck
was given to the supervisor as his "company car". Glorious Gardens CC bears the
full cost of fuel and maintenance. During March 2025, the fuel for this truck cost R1
250. An insurance premium of R684 (including VAT) , being its insurance cost for
the month of March 2025 was paid on 25 March 2025. This truck was stolen on 31
March 2025 and an indemnity award of R74 100 was received from its insurers on
21 April 2025. This truck has not yet been replaced.
(8)
2. A second-hand double cab light delivery vehicle was also purchased by Glorious
Gardens CC on 1 March 2025 for R105 000 (excluding VAT) from a registered
vendor. Gloria Kirstenbosch did not draw a salary during both March and April
2025. However, she was given the use of this double cab light delivery vehicle as
her "company car". She bears its full cost of fuel and maintenance.
(4)
3. Glorious Gardens CC purchased second-hand gardening equipment from a non-
vendor during March 2025 for R32 604 (including VAT). The purchase price will be
settled in four instalments of R8 151 each. The first three instalments were settled
on 15 March, 1 April and 15 April 2025 respectively. (The last instalment was settled
on 1 May 2025).
(2)
4. Instead of paying its employees extra cash to cover their transport expenses to and
from work, Glorious Gardens CC purchased bus coupons. It distributes these bus
coupons to its employees on a weekly basis. During March and April 2025 Glorious
Gardens CC incurred R626 on purchasing bus coupons.
(2)
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REQUIRED:
QUESTION 3- PART B (20 Marks)
MARKS
(a) Briefly discuss, with reference to legislation, whether Glorious Gardens
CC is required to register for value-added tax (VAT). Assuming the close
corporation is required to register as a VAT vendor, indicate the category
4
vendor the close corporation will be classified as, providing one (1)
reason .
(b) Assume for this part of the required that Glorious Gardens CC is a
registered VAT vendor. Determine the total net VAT payable or
refundable by/to Glorious Gardens CC for the above transactions (1 to
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4) assuming a two-month VAT period ended 30 April 2025. Provide
reasons for the inclusion or exclusion of an amount in your calculation.
Show all workings. Round off all amounts to the nearest rand (R).
TOTAL MARKS
20
TOTAL MARKS - QUESTION 3
37
TOTAL ASSESSMENT 6 - SECOND OPPORTUNITY EXAMINATION
100
MARKS
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ANNEXURE
TAX RATES INDIVIDUAlS - 2025 ••
Taxable income
Rates of tax
R
0-R 237100
18% of each R1
R 237 101 - R 370 500 R 42 678 + 26% of the amount over R 237 1oo
R 370 501 - R 512 800 R 77 362 + 31 % of the amount over R 370 500
R 512 801 - R 673 000 R121 475 + 36% of the amount over R 512 800
R 673 001 - R 857 900 R179 147 + 39% of the amount over R 673 ooo
R 857 901 - R1 817 000 R251 258 + 41 % of the amount over R 857 900
R1 817 001 +
R-644 489 + 45% of the amount over R1 817 ooo
m 'n11RESHOl,.DS • '. •
Persons under 65
Persons 65 and under 75
Persons 75 and over
Taxable income
2025
2026
R 95 750
R148 217
R 95 750
R148 217
R165 689
R165 689
-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
MEDICAL AID 'TAX CREDITS '
Monthly amounts deductible from tax payable 2025
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: R234)
per month.
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DEEMED EXPENDITURE - 2025
Cost of vehicle
Does not exceed R100 000
Exceeds R100 000 but not R200 000
Exceeds R200 ooo but not A300 ooo
Exceeds A300 000 but not R400 ooo
Exceeds R400 000 but not R500 ooo
Exceeds R500 ooo but not A600 ooo
Exceeds R600 ooo but not R700 ooo
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
Lump sums accruing between 1 March 2023 and 28 February 2026
Taxable portion of lump sum
Rates of tax
A
O- R 550 000
Nil
A 550 001 - A 770 000
18% of tile amount over R 550 000
A 770 001 - R1 155 000 A 39 600 + 27% of the amount over R 770 000
R1 155 001 +
R143 550 + 36% of the amount over R1 155 ooo
Lump sums accruing between 1 March 2023 and 28 February 2026
Taxable portion of withdrawal Rates of tax
R
O- R 27 500
Nii
R 27 501 - R 726 ooo
18% of the amount over R 27 500
A 726 001 - R1 089 000 R125 730 + 27% of the amount over A 726 ooo
R1 089 001 +
R223 740 + 36% of the amount over R1 089 ooo
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LIFE EXPECT.-\\.!"CY TABLE (TABLE ..\\)
The expectation of life and the present \\':UUe of RI per annum for life capitalised at 12 per cent over the expectation of life
of males and females of\\·arious ages.
Age
next
birthday
0
I
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
IS
19
20
21
22
_r .,
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Expectation
oflife
Male Female
64,74 72.36
65,37 72.74
64,50 71 ,87
63,57 70,93
62 ,63 69,97
61 ,69 69,02
60,74 6S.06
59,7S 67,09
58,Sl 66,11
57,83 65,14
56,85 64.15
55,86 63,16
54,87 62,lS
53,90 61.19
52,93 60.21
51,98 59.23
51 ,04 5S,26
50,12 57,29
49,21 56.33
48,31 55,37
47,42 54.41
46,53 53,45
45,65 52,50
44,77 51 ,54
43,SS 50.5S
43.00 49.63
42,10 48,67
41,20 47,71
40,30 46.76
39,39 45,S1
38,48 44,86
37.57 43,91
36,66 42,96
35,75 42,02
34,S4 41.07
33,94 40,13
33,05 39,19
32.16 38,26
31.28 37,32
30,41 36,40
29,54 35.48
28,69 34.57
27,85 33,67
27.02 32,77
26,20 31,89
25,3 8 31 ,01
Present \\'alue ofRI Age E:...-pectation
per annum for life
of life
Male Female
Male Female
8,327 91 S,331 05 46 24,58 30,14
8,328 28 S,331 14 47 23,79 29,27
8,327 76 S,330 91 4S 23,00 28,41
S,327 14 S,33064 49 22 ,23 27,55
S,326 44 S,330 33 50 21 ,47 26,71
S.325 67 S,329 99 51 20,72 25,S8
8,324 so S,329 61 52 19.9S 25,06
S,323 SI S,329 1S 53 19,26 24,25
S.322 71 S,328 69 54 18,56 23,44
S.321 46 8,3 2S 15 55 17,86 22,65
S,320 07 S,327 53 56 17,18 21 ,86
S.31S49 8,326 84 57 16.52 21 ,08
8,316 73 S.326 08 5S 15,86 20,31
S,314 SO 8.325 22 59 15,23 19,54
S,312 65 S,324 27 60 14,61 IS,7S
S,31029 S,323 20 61 14.01 18.04
S,307 70 S,322 03 62 13.42 17,30
S,304 89 S.320 71 63 12,86 16,58
S.301 SO S,319 26 64 12,31 15,8S
S,29S 41 S,31764 65 11 ,77 15,18
8,294 71 8,315 S4 66 11 ,26 14,51
S,290 61 8,313 S3 67 10,76 13.85
8,286 13 S,311 61 6S 10,2S 13,20
8,2S1 17 S,309 12 69 9.Sl 12,57
S.275 64 8,306 33 70 9.37 11,96
8.269 59 S,306 26 71 8.94 11.37
S,262 74 8.299 SI 72 S,54 10.SO
8,:'!55 16 S,295 95 73 S,15 10,24
8,246 77 S,291 71 74 7,77 9,70
8,237 37 8,286 97 75 7,41 9.18
S,226 94 S.281 70 76 7,07 S.68
S,215 38 S,275 83 77 6,73 S,21
S.202 57 8,269 30 78 6,41 7,75
S,18S 36 8,262 10 79 6.10 7,31
S,172 62 8,25400 so 5,82 6,S9
S,155 36 S,245 09 81 5,55 6,50
8,136 47 8,235 17 S2 5,31 6,13
S,115 58 8,224 26 83 5.09 5,78
8,092 74 S,211 99 84 4.89 5,45
S,067 81 S,198 66 85 4,72 5,14
8,040 30 8,183 86 86 4.57 4.85
8,010 67 8.167 62 87 4,45 4,58
7,97S 44 8,149 83 88 4.36 4.33
7,943 44 8,130 12 89 4,32 4,11
7,905 47 8,108 81 90 4,30 3,92
7,863 80 8,085 27
Present value ofRl
per annlllll for life
Male
Female
7,819 24
8,059 56
7.77109
S,031 19
7,71843
8,000 26
7,662 36
7,966 17
7.602 01
7,929 50
7.537 13
7,889 67
7,467 48
7,S46 46
7.393 S7
7,799 65
7.31631
7,74S 34
7,232 34
7,693 55
7,144 14
7,633 63
7.051 78
7.56S 96
6.952 25
7,499 27
6,850 04
7,423 21
6.742 06
7,341 35
6,630 10
7.254 57
6.512 32
7.160 20
6,393 01
7,06046
6,26S 22
6,955 37
6,137 S9
6,841 61
6,007 26
6,723 93
5,871 65
6.598 93
5,734 03
6,466 35
5,591 82
6,32S IS
5,451 65
6,1S4 66
5.307 75
6,036 07
5,167 44
5.SS2 78
5,024 37
5,722 22
4,87S 76
5,557 43
4.73490
5,3SS 93
4,593 54
5.21727
4,44663
5,046 79
4,303 09
4,870 92
4.15S 98
4.693 S9
4.02440
4,516 47
3.S90 51
4,343 99
3,76S 02
4, 173 15
3,652 76
4,004 S2
3.545 46
3.839 88
3,452 32
3,679 21
3.36S 64
3,523 71
3.30066
3,374 26
3,249 07
3,231 75
3.225 97
3,102 96
3.214 38
2,989 12
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A.l\\1'UITI" TABLE (TABLE B)
Present nlue of Rl per aunum capitalised at 12 per cent o\\·er fixed periods
rears .-imoum rears Amoum lears Amo1111t rears Amount Years Amo1111t
O,S92 9
2 1,690 0
3 2.401 S
4 3,037 4
5 3,604 S
6 4.1114
7 4,563 8
s 4,967 6
9 5,32S 2
10 5,650 2
21 7,562 0
.,.2_2.,
7,644 6
7,718 4
24 7,7S4 3
25 7.843 1
26 7,895 7
27 7,942 6
28 7.984 4
29 S,021 S
30 8,055 2
41 S,253 4
42 S,261 9
43 S,260 S
~ S.276 4
45 S,2S2 5
46 S,2SS 0
47 S,292 8
48 S,297 2
49 S,301 0
50 8,304 5
61 S,325 0
62 S,325 9
63 S,326 7
64 S.327 4
65 S,32S 1
66 S,328 6
67 S,329 1
68 S,239 6
69 S,330 0
70 S,330 3
SI S,332 5
S2 S,332 6
S3 8,332 6
S4 8,332 7
85 S,332 S
S6 8,332 S
87 S,332 9
ss S,333 0
S9 S,333 0
90 8,333 0
11 5,937 7
12 6,1944
13 6,423 6
14 6,628 2
15 6,8109
.3~,1_-,
S,0S5 0
S.111 6
33 S,135 4
34 8,156 6
35 8,175 5
51 S,307 6
52 8,3104
53 8,312 S
54 S,315 0
55 S,317 0
71 8,330 7
72 S,331 0
73 8,331 2
74 S,331 4
75 S.331 6
91 S,333 I
92 S.333 1
93 8,333 1
94 8,333 I
95 S,333 1
16 6.9740
17 7,119 6
18 7.249 7
19 7.365 S
20 7,469 4
36 8,192 4
37 S,:!07 5
38 8,221 0
39 S,233 0
40 S,243 8
56 8.318 7
57 8,320 3
58 S.321 7
59 S,322 9
60 8,324 0
76 8,331 S
77 S,332 0
7S S,332 1
79 S.332 3
so S,332 4
96 8,333 2
97 8,333 2
9S 8,333 2
99 8,333 2
100 S,333 2
END OF ASSESSMENT 6 - SECOND OPPORTUNITY
EXAMINATION
12