ABC (Pty) Ltd is a South African company that manufactures various parts for the motor industry locally and for the export market. It is regarded by SARS as a process of manufacture. The company’s year of assessment ends on 29 February 2021 and is a registered vendor for VAT purposes and not a small business corporation as defined in the Income Tax Act. The following assets transactions occurred during previous years of assessment and the current year of assessment

The company purchased a manufacturing building at a total of R7 467 455 (including VAT) on 15 March 2014 and brought into use on the same date. ABC (Pty) Ltd sold the manufacturing building for R13 510 200 (including VAT) on 14 November 2020.

Machine, ZC, a second-hand metal press, was purchased for R469 920 (excluding VAT) from another vendor on 1 March 2016 and brought into use on the same date. Machine ZC was sold for R735 077 (including VAT) on 1 February 2021 at an auction for second-hand machines. ABC (Pty) Ltd has an assessed capital loss brought forward from 2020 year of assessment of R109 470 and a taxable income of R1 212 934 for the 2021 year of assessment before the tax implications of the asset transactions above had been taken into account.

REQUIRED

Calculate the normal tax payable by ABC (Pty) Ltd for the year of assessment ended on 28 February 2021. Please start your calculation with the taxable income of R1 212 934.

Answer rating: 100% (QA)

A depreciation wear and tear allowance may be deducted on movable assets used for the purpose of trade There are no statutory provisions relating to rates of wear and tear but the SARS has published a ... View the full answer