Advanced Questions On SA Tax 2nd Edition Annette Becker, Riley Carpenter, Riyaan Mabutha, Lee-Ann Steenkamp, Marié Ungerer - Solutions

(23 Marks)For the purposes of this question, assume that amounts are exclusive of VAT where appropriate. Note however that the term ‘open market value’ always includes VAT. Assume further that
(12 Marks)1. John sells his 1998 Toyota by placing a classified ad in the local paper. His profit on the sale amounts to R10 000.Is John conducting an enterprise?2. On 1 January 2016 Mary commences a
(22 Marks)PART A (15 Marks)Indumach (Pty) Ltd is a category ‘C’ vendor, i.e. it has a one-month VAT period. Indumach is a retailer of industrial machinery and makes only taxable supplies. The
(17 Marks)Toy World Ltd carries on business as a manufacturer of toys from its main branch in the Republic.The company also operates a depot in Harare, Zimbabwe, where sales are made to customers
(Solution at end of chapter) (27 Marks)‘Kinshaw Trading (Pty) Ltd’ (Kinshaw) is in the business of manufacturing fireworks. They sell to both the local market as well as the international market.
(31 Marks)Sarojini Naidoo, 39 years old, is married out of community of property to Aryan Naidoo. Sarojini is fresh produce manager at Foodworld Limited. In addition, to supplement their income,
(28 Marks)Mrs Lerato Mini, aged 60 (a South African resident and married out of community of property), is busy preparing her income tax return for the year of assessment ended 28 February 2017.On 31
(17 Marks)Daniel van Huys, a 42-year-old South African resident, is employed by Cartwright Wheels and Tyres as a sales representative. He has come to you with his shoebox of receipts, invoices etc.
(20 Marks)T.J. Mouton (TJ) is employed by ‘Zenith Holdings Limited’ (Zenith). During his 2017 year of assessment Zenith made contributions to a medical fund in respect of TJ as follows:March to
(20 Marks)Mrs Jones is 34 years old and works for Happy Homes (Pty) Ltd as an estate agent in the Cape Town Atlantic Seaboard area. She receives a basic salary of R3 000 per month. The majority of
(Solution at end of chapter) (30 Marks)Ron and Shirley Baxter (née Taylor) were married on 30 June 2016, out of community of property, at the ages of 45 and 42 years respectively.Ron’s previous
(28 Marks)‘He Man Ltd’ (He Man), a registered VAT vendor, is a local manufacturer of action figurines. Dexter, the financial accountant, is confused as to how to calculate taxable income, as he
(Solution at end of chapter) (16 Marks)Elwood is engaged in the manufacture of high quality furniture using exotic hard woods. This process is carried on in a factory in Cape Town.The following
(12 Marks)Balfour Cellars CC is a small business enterprise, which is wholly owned by Horatio, a South African resident. Balfour Cellars CC is involved in the wine-making industry, which is
(28 Marks)Avalon Adhesives (Pty) Ltd, a South African resident company with a financial year ending in February, manufactures a range of adhesives for sale to a variety of local customers.The company
(Solution at end of chapter) (24 Marks)‘Asquith (Pty) Ltd’ (Asquith), a registered VAT vendor, purchased a second-hand machine for R1.4 million (excluding VAT) on 1 April 2016 and brought it into
(20 Marks)Carrymore (Pty) Ltd carries on business as a retailer of household goods. The company operates solely in Cape Town. Carrymore sells most of its goods on credit.The following information is
(15 Marks)PART A (4 Marks)In June 2015 Joan Amm decided that she was going to operate a business (of selling cakes) through a new company. The company, Cookie Cakes (Pty) Ltd, was registered in
(9 Marks)Framers (Pty) Ltd, a registered VAT vendor, is a company engaged in the business of picture framing.Its annual turnover for its financial year ended 31 December 2017 amounted to R3 500
(Solution at end of chapter) (13 Marks)Ziton Motors Ltd carries on business as a second-hand car dealer and also repairs and services motor vehicles.During the previous year of assessment, the
(17 Marks)‘Lawn Ltd’ (Lawn) is a local manufacturer of lawnmowers. Lawn is renowned for developing good quality Lawnmowers that can be adjusted to suit various grass types and terrains. The
(26 Marks)Listed below are eight case studies. The expenses which have been incurred by the taxpayer may or may not be tax deductible.1. Messrs Smith and Jones, the managing director and production
(38 Marks)Listed below are ten different sets of circumstances in which the taxpayer concerned would like to claim a tax deduction for certain expenses incurred.1. Big race jockey Wizard Whipp was
(Solution at end of chapter) (25 Marks)The following question consists of case studies relating to expenditure incurred by the taxpayer.YOU ARE REQUIRED TO: In respect of each scenario to state, with
(10 Marks)For purposes of this question, ignore VAT.Nashleen Dilrajh, a SA resident, 66 years old, is a purchasing manager for YDE clothing stores. She is in charge of all inventory purchases for the
(Solution at end of chapter) (23 Marks)The following five case studies relate to exempt income:1. Marco Lothario is employed by Cape Shipping Ltd as a member of their crew. Cape Shipping Ltd’s
(29 Marks)PART A (7 Marks)Andrew Stein, a SA resident, runs a new and second-hand furniture shop. During the current year of assessment, he sold a dining-room suite to a customer for R15 000. It was
(30 Marks)PART A (4 Marks)1. Jason Limited is a company involved in the manufacture of wooden fencing. On 1 February 2017 it completed a wooden fence for erection around a cricket field at a cost to
(24 Marks)You have been approached by Mrs Good for tax advice regarding the sale of fixed property that she owns.In 1991 Mrs Good inherited a large sum of money from her late father. She used the
(Solution at end of chapter) (35 Marks)PART A (7 Marks)Manley Blaine, a South African resident, owns a block of flats situated in Wynberg, Cape Town.He inherited the block of flats in terms of his
(18 Marks)Westin Front (Pty) Ltd employs various artisans and professional employees who enter into registered learnership agreements. Westin Front trains these artisans and professionals while
(46 Marks)On 31 January 2017 Janine Youngman, 56 years old, resigned as an employee of Sport-Gear Limited.She had been employed as a buyer for the company’s teenage range of goods since 2010. Upon
(27 Marks)Jack Armstrong, John Bell and Jill Carter were all employed by a large company, Big (Pty) Ltd, in the IT division. In December 2015 the company approached them with an outsourcing proposal.
(45 Marks)‘Sharevest Ltd’ (Sharevest) is a South African resident company with a number of local and foreign share investments. The company also earns fee income from portfolio management advice.
(45 Marks)John Fox was ordinarily resident in South Africa. He died suddenly on 31 October 2016 at the age of 62.He was survived by his wife, Emma, to whom he was married out of community of property
(45 Marks)PART A Byron James, aged 55, is married, out of community of property, to Judith, aged 48. They have three children: Belinda is 24 years old, Michael is 18 and Paul is 13. With the
(19 Marks)‘Aloevale (Pty) Limited’ (Aloevale), a resident of South Africa, carries on business as a wholesale distributor of Aloe products. Its operations extend throughout the Republic and
(51 Marks)Zachary Wilmot, aged 50, is married out of community of property to Zelda and has two children, Petrus, aged 14, and Philemon, aged 27. All of these persons are South African residents as
(49 Marks)Global Baby Ltd is a South African resident company with a March year-end. The company manufactures and imports various baby products for local sale or export. The company is a valueadded
(32 Marks)‘The Travel Company Ltd’ (Travelco) is a company organising tours both locally and offshore. It has a March financial and tax year-end. The following information is relevant for its
(49 Marks)Mario Antonetti, aged 60, was employed as the financial manager of ‘Oaktree Interiors (Pty) Ltd’(Oaktree) until his retirement on 31 October 2016. Mario is married out of community of
(55 Marks)PART A (13 Marks)‘Sopwith (Pty) Ltd’ (Sopwith) provides the following information relevant to its year of assessment ended 30 June 2017:Note R Other trading income 1 500 000 Interest
(Solution at end of chapter) (46 Marks)Peter Bessick, aged 58, is a qualified actuary. He is a South African resident, married out of community of property to Natalie, also a South African resident.
(Solution at end of chapter) (28 Marks)Jack Twosun died on 31 May 2016. He was 56 years of age and had been fairly active up until his death. He was always considered to be a South African
(25 Marks)Marie, Claire and Joy, aged 45, 42 and 50 respectively, are partners in an architectural practice, trading as ‘MCJ Architectural Services’ (MCJ). They share profits and losses in the
(27 Marks)Mrs Jasmine Abrahams, a South African resident, is employed by a large company in Cape Town as a bookkeeper. Mrs Abrahams is also an equal partner, with her sister Rose Alam, in a business
(Solution at end of chapter) (60 Marks)‘Spectrum Interferometers (Pty) Ltd’ (Spectrum) is a resident company that manufactures interferometers, being instruments that rely upon the interference
(102 Marks)Sellit (Pty) Ltd and Buyit (Pty) Ltd are both 100% subsidiaries of Hold Ltd. All companies have February year-ends. All companies are South African residents.Sellit has the following
(9 Marks)You are a postgraduate student at a South African university. Mr Dunno, a friend of one of your family members, approached you for advice regarding his second provisional tax estimate in
(15 Marks)Mr Bentley is a 63-year-old South African provisional taxpayer. He owns an antique car dealership, which he runs as a sole proprietor. Because of his attendance at overseas motor shows, Mr
(10 Marks)The Tax Administration Act (TAA) came into force on 1 October 2012 and introduced, among others,‘jeopardy assessments’ – a new concept in our law.YOU ARE REQUIRED TO:1. Explain what
(14 Marks)You have two friends, Andy and Juan, who are insurance brokers. Their brokerage is in a company, ATP (Pty) Ltd, in which they hold all the shares. A friend of theirs, David, is a
(25 Marks)The Hold Group comprises ‘Holding Ltd’ (Hold) and its single trading subsidiary ‘Sub (Pty) Ltd’(Sub), in which it holds 100% of the equity shares. Hold wishes to issue equity to a
(23 Marks)Ms Matsuhisa, aged 45, immigrated from Japan in 1990 and acts as a personal lifestyle coach for high-profile individuals. Her former tax consultant, Mr Thrift, carried out an
(16 Marks)A South African company owes €1 million to an offshore trust, which is its sole shareholder. In order to prevent the inclusion of foreign exchange gains in the taxable income of the
(40 Marks)Due to the current harsh economic climate, your client, Sumbia (Pty) Ltd, is experiencing a severe cash flow crisis. In order to relieve its cash flow problems, Sumbia has decided to sell
(9 Marks)Mrs Smithers has recently received her 2016 assessment, which has a date of notice of 10 February 2017, a due date of 31 March 2017 and a second date of 30 April 2017. When she examined her
(24 Marks)Below are a number of statements relating to anti-avoidance rules and the 2017 year of assessment.YOU ARE REQUIRED TO: Indicate whether you consider that the statement made is TRUE or
(21 Marks)Mr Milka, a dairy farmer, has a large assessed loss of R1 million. His good friend, Mr Creema, is also a dairy farmer but, unlike Mr Milka, runs a profitable farm and does not have an
(Solution at end of chapter) (11 Marks)In 2013 Mrs South, a South African resident, aged 50, formed a trust in Johannesburg. The beneficiaries of the trust are Mrs South and her two children, Adrian,
(Solution at end of chapter) (20 Marks)Below are a number of statements relating to the Tax Administration Act (TAA) and the 2017 year of assessment.YOU ARE REQUIRED TO: Indicate whether you consider
(Solution at end of chapter) (11 Marks)The general anti-avoidance rules (GAAR) in the Income Tax Act are contained in s80A to s80L.Whenever an impermissible avoidance arrangement exists, the
(Solution at end of chapter) (25 Marks)YOU ARE REQUIRED TO: Indicate whether you consider that the statement made is TRUE or FALSE. Provide brief reasons for your answer.Below are a number of
(20 Marks)‘Ballquip (Pty) Ltd’ (Ballquip) is a shop located in Sandton, Johannesburg that sells soccer equipment and clothing to members of the public. Ballquip was incorporated in 2013 by three
(25 Marks)‘Pectoral Ltd’ (Pecks) is a company which sells gym equipment to various gyms and private individuals in Cape Town. It is a registered VAT vendor. Francis Pecks, the proud CEO, started
(20 Marks)PART A (7 Marks)Hurricanes Ltd delivers goods (not fixed property) to Tornadoes Ltd (a registered VAT vendor who makes wholly taxable supplies) on 20 March 2017. The selling price of the
(23 Marks)For purposes of this question, assume that all amounts are exclusive of VAT unless otherwise stated.Note that the term ‘open market value’ includes VAT where appropriate. Also assume
(20 Marks)The ‘AB Bank Ltd’ (the bank), a registered VAT vendor with a financial year ending on 30 April, purchased a mainframe computer for R1.5 million (excluding VAT) on 1 September 2016. The
(30 Marks)Goo Goo Dolls (GGD) is a resident company registered for VAT. The company is a retailer of toys and dolls. GGD has a February year-end. The company was formed on 1 March 2016.During the
(18 Marks)Wild Five is a game lodge situated in the lower Sabi. The company offers exclusive getaways(considered ‘commercial accommodation’) aimed at local and foreign visitors. Wild Five is VAT
(52 Marks)PART A (45 Marks)Nitrate (Pty) Ltd, Gastin (Pty) Ltd and Elecfin (Pty) Ltd are a group of companies supplying gas equipment and electrical goods. Nitrate is the holding company and Gastin
(Solution at end of chapter) (16 Marks)Bigsky (Pty) Ltd provides the following information in respect of the period 1 January 2017 to 28 February 2017. (Note that Bigsky accounts for VAT on a
(Solution at end of chapter) (39 Marks)YOU ARE REQUIRED TO: Calculate the VAT and income tax effects of the information in each of the undermentioned cases. (Ignore CGT.)Unless otherwise specified,
(Solution at end of chapter) (39 Marks)The balance sheet of ‘Annie Ltd’ (Annie) (note 1) at 31 December 2016 was as follows:Note R Land and buildings, at cost 2 000 000 Patent, at cost 1 900 000
(Solution at end of chapter) (28 Marks)Intebe CC, a vendor for VAT purposes on the invoice basis, has the following assets in its balance sheet at 30 June 2017:Note R Land and buildings 1 405 000
(17 Marks)Fred and Fran Grant are both residents in South Africa. They have two children, who are at present also resident in South Africa but are considering emigrating. Fran’s aunt, June Welloff,
(48 Marks)Nitha Naidoo was 47 years of age and married out of community of property, when she died on 17 November 2016 in a motor vehicle accident. Nitha was survived by her husband Saresh, 43 years
(33 Marks)Jarrod Oxford, a South African resident, who is now 68 years of age, has many different kinds of investments and assets. He is in the process of revising his will and it is of utmost
(36 Marks)Mr Bandile Dlamini died on 1 July 2015. Besides other assets, he owned a property (not his primary residence) in Ballito, Kwazulu Natal and R1 million cash. In terms of his will his wife,
(Solution at end of chapter) (20 Marks)John and Kate Flee have decided to take advantage of the relaxation in exchange control regulations.John and Kate are both resident in South Africa and married
(53 Marks)Alex Berry, aged 56, is concerned about his family should something happen to him, as he is the only breadwinner. He has been advised that forming a trust is a good estate planning tool.
(Solution at end of chapter) (31 Marks)You have been approached by a South African client (married out of community of property) for advice based on the following facts:a. He has recently sold R10
(Solution at end of chapter) (44 Marks)Jack Black has approached you for the purpose of discussing estate planning. Jack runs a business, in a private company, which has become very profitable over
(Solution at end of chapter) (32 Marks)Thato Hlomuka, a South African resident, who is 65 years old, has the following assets and liabilities:a. A house in Hermanus The house is used for holidays and
(Solution at end of chapter) (28 Marks)Below are a number of statements relating to trusts, donations tax and capital gains tax.YOU ARE REQUIRED TO: Indicate whether you consider that the statement
(40 Marks)Jessica Talanus, aged 61, has various assets and sources of income. On 31 October 2016, while shopping in the local supermarket, she had a heart attack and died.The executor named in her
(10 Marks)The Bradson Trust has two South African beneficiaries, Bradley, aged 20 and Jason, aged 16. Each beneficiary has a vested right to 50% of the trust income. The trust owns a commercial
(15 Marks)The Lawrence Harvey Trust was formed in South Africa in 1999.The trust is discretionary as regards to both income and capital.The trust was set up by means of an interest-free loan from the
(Solution at end of chapter) (54 Marks)Rob Marley, aged 58, died on 31 March 2016. He had always been involved in the hospitality industry and had accumulated certain assets during his lifetime. He
(35 Marks)Jan Lotter, an unmarried South African resident, is a beneficiary of a discretionary trust in the Netherlands, which is not a ‘resident’ as defined. There are two trustees who are
(50 Marks)The Gazpacho Trust was established in 2000 by Bob Florence, aged 59. The trustees of the trust are Bob and three other independent persons. The beneficiaries are Bob’s wife Annie, aged 58
(39 Marks)In 1999 Jolene and Ramsey Lesiem, who are both under 65, formed a trust called the Lesiem Trust.Jolene and Ramsey are both South African residents who are married out of community of
(23 Marks)Jari Cain, a reasonably wealthy individual, died on 1 January 2017, at the age of 57. He was ordinarily resident in South Africa.Assets held at date of death Market value Base cost R R
(12 Marks)YOU ARE REQUIRED TO: Discuss the income tax implications for the deceased, the estate and the heir in each case. State who will be taxed on the amounts in the following situations:1. A bad
(33 Marks)Haroon Desai, a resident of South Africa, aged 64 years, retired on 31 December 2016. Unfortunately, after suffering a bout of pneumonia, he subsequently died on 1 February 2017. He would
(45 Marks)Mr Orwell was the managing director of a large company (Peninsula Brokers (Pty) Ltd). He died on 31 May 2016 aged 58 years.He derived income from various sources and his income and
(Solution at end of chapter) (36 Marks)Lenny Armstrong, a South African resident, formed a trust in the Republic. The trustees of the trust are Lenny, his accountant and the lawyer who drew up the
(18 Marks)On 1 March 2012 Bill and Mary Brown (South African residents and married out of community of property) formed a trust in the United Kingdom (UK). On 1 March 2012 Bill donated ₤200 000 to
(Solution at end of chapter) (16 Marks)The Good Family Trust was formed by Mrs Ann Good on 1 March 2016. The beneficiaries of the trust are:– Mrs Ann Good– Mr Arnold Good (Ann’s husband)–
(Solution at end of chapter) (32 Marks)Below are a number of statements relating to the taxation of trusts.YOU ARE REQUIRED TO: Indicate whether you consider that the statement made is TRUE or FALSE.

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Advanced Questions On SA Tax 2nd Edition Annette Becker, Riley Carpenter, Riyaan Mabutha, Lee-Ann Steenkamp, Marié Ungerer - Solutions

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