9 of 10 QUESTION 4 (16 marks, 29 minutes) Tenyeko Lesufi (Tenyeko), a South African resident,...

 

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9 of 10 QUESTION 4 (16 marks, 29 minutes) Tenyeko Lesufi ("Tenyeko"), a South African resident, intends to start a company named TL Limited that deals with the manufacture and distribution of building material at affordable prices to the public. SARS approved the company's processes of manufacture. Tenyeko is of the view that TL Limited will commence with its trading activities on 1 March 2022. Tenyeko anticipates the following income and expenses for the first 12-months of trading: Tenyeko does not have start-up capital, but Urban Bank (a local bank) has shown interest in finan- cing her company through a long-term loan to be issued at a market-related interest rate of 8.5% per annum (representing the yield to maturity as defined). Based on the initial meeting held with Urban Bank, the loan will be granted on 1 April 2022, will carry deferred interest and will be repayable in full at R1 million only at the end of the tenth year. No repayments of either capital or interest will be made during the 10-year loan agreement period. 1. 2. 3. 4. Revenue from building material sales is estimated at R1 400 000. Of this amount, 40% will be attri- butable to credit sales. Rental expenditure amounting to R80 000 will be incurred for a warehouse building lease. Acquisition of a small new and unused manual manufacturing machine at a cost of R210 000 on 1 April 2022. Tenyeko plans to sell the manual manufacturing machine for R190 000 on 28 February 2023 in anticipation of the acquisition of a more sophisticated second-hand electronic machine. REQUIRED: With reference to points 1 to 4, discuss, supported with calculations, the turnover tax payable by or refundable to TL Limited for its 2023 year of assessment assuming that TL Limited will be registered as a micro business from 1 March 2022. Note: References to legislation are not required. (a) (b) (c) With reference to point 4, discuss, supported with calculations, the effect of the ma- nufacturing machine on the taxable income of TL Limited for its 2023 year of assess- ment assuming that TL Limited will be registered as a: (i) Small Business Corporation; and (ii) Neither a Small Business Corporation nor a Micro Business. Note: Tax implications relating to the disposal of the manufacturing machine are not required. Reference to legislation not required. Ignore VAT. With reference to point 1, calculate the normal tax implications arising from the loan from Urban Bank for TL Limited's 2023 year of assessment. You may assume that TL Limited is neither a Small Business Corporation nor a Micro Business. Note: Reference to legislation not required. TOTAL MARKS 8 4 4 16 9 of 10 QUESTION 4 (16 marks, 29 minutes) Tenyeko Lesufi ("Tenyeko"), a South African resident, intends to start a company named TL Limited that deals with the manufacture and distribution of building material at affordable prices to the public. SARS approved the company's processes of manufacture. Tenyeko is of the view that TL Limited will commence with its trading activities on 1 March 2022. Tenyeko anticipates the following income and expenses for the first 12-months of trading: Tenyeko does not have start-up capital, but Urban Bank (a local bank) has shown interest in finan- cing her company through a long-term loan to be issued at a market-related interest rate of 8.5% per annum (representing the yield to maturity as defined). Based on the initial meeting held with Urban Bank, the loan will be granted on 1 April 2022, will carry deferred interest and will be repayable in full at R1 million only at the end of the tenth year. No repayments of either capital or interest will be made during the 10-year loan agreement period. 1. 2. 3. 4. Revenue from building material sales is estimated at R1 400 000. Of this amount, 40% will be attri- butable to credit sales. Rental expenditure amounting to R80 000 will be incurred for a warehouse building lease. Acquisition of a small new and unused manual manufacturing machine at a cost of R210 000 on 1 April 2022. Tenyeko plans to sell the manual manufacturing machine for R190 000 on 28 February 2023 in anticipation of the acquisition of a more sophisticated second-hand electronic machine. REQUIRED: With reference to points 1 to 4, discuss, supported with calculations, the turnover tax payable by or refundable to TL Limited for its 2023 year of assessment assuming that TL Limited will be registered as a micro business from 1 March 2022. Note: References to legislation are not required. (a) (b) (c) With reference to point 4, discuss, supported with calculations, the effect of the ma- nufacturing machine on the taxable income of TL Limited for its 2023 year of assess- ment assuming that TL Limited will be registered as a: (i) Small Business Corporation; and (ii) Neither a Small Business Corporation nor a Micro Business. Note: Tax implications relating to the disposal of the manufacturing machine are not required. Reference to legislation not required. Ignore VAT. With reference to point 1, calculate the normal tax implications arising from the loan from Urban Bank for TL Limited's 2023 year of assessment. You may assume that TL Limited is neither a Small Business Corporation nor a Micro Business. Note: Reference to legislation not required. TOTAL MARKS 8 4 4 16

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a To calculate the turnover tax payable or refundable for TL Limited as a micro business for the 202... View the full answer