Keletso has a farm in the northern district of Botswana where she specializes in rearing cattle and small livestock, goats and sheep. She has asked you to help in filling in her tax return and has given you the following information relating to her financial transactions. Details of income and expenditure for the year ended 30 June 2022 Purchase of cattle P730,000 Proceeds from the sale of farm machinery P36,250 Construction of additional dipping tank P105,500 Cost of fence erection P45,000 Cost of sinking additional boreholes P30,000 Purchase of farm tractor P87,500 Farmworkers’ wages P112,500 Cost of stock feed P62,500 Cost of fireguard clearance P45,000 Proceeds from cattle sales P1,280,000 Other information Movement of cattle stock during the year Cattle herd at beginning of year 1,200 head Purchases made during the year 300 head Increase from birth during the year 700 head Deaths 20 head Number of cattle sold 1,255 head Private consumption 5 head Payment of debt 13head Donations made to relatives 4 head Payment of dowry 5 head Further Details 1. The following values were applicable during the year: Standard value of cattle is P430 each; Market value is P1,800 each 2. Information about the values of Keletso’s capital assets on 30 June 2021 is given below. Cost (Pula) Allowances (Pula) Tax Written Down Value (TWDV) (Pula) Tractors and trucks 405,000 105,000 300,000 Farm machinery 237,500 60,250 177,250 3. The farm machinery that was disposed of had cost P41,250 when bought. Capital allowances for the Cost of farm machinery disposed of was P215,000 and capital allowances of P82,500 had been charged. 4. Koketso had other sources of income totaling P61,500 during the year. 

Required 

a) Compute Koketso’s chargeable farming income. (17 marks) 

b) Compute the taxable income and tax payable (3 marks)

Answer rating: 100% (QA)

ANSWER a Chargeable farming income P1280... View the full answer