Exhibit $2$

Memo from Thabo Molefe

From: Thabo Molefe

To: Tax Manager

Subject: Farming

Mr$.$ T$.$ Kgosi, a Botswanan citizen, works as a senior officer for a financial institution in Gaborone. According to a documented employment contract, the following was his compensation package for the tax year $20212022$:

Salary $300,000$

Car allowance $30,000$

Benefits in kind:

Provided housing $($municipal valuation P$400000)$; employer pays P$108000$ in rent. Mr$.$ Kgosi received household furnishings and equipment at a cost of P$80,000.$ Mr$.$ Kgosi uses a corporate automobile which cost P$290,000$ and was responsible for purchasing the petrol.

Contributions and expenses paid by the employer for medical fund $14,400$

Holiday travel $($Europe P$30000$ & Far East P$15000)45,000$

School fees $60,000$

PAYE deductions of P$94000$ were made by the employer for the above remuneration.

During the current tax year, Mr$.$ Kgosi also operated as a cattle farmer with an average of $1200$ head of cattle, achieving the following results:

Net profit on farming after adjusting for standard values of livestock

and income tax allowances in previous years $40,000$

Capital expenditure this year:

Fencing $50,000$

Dam construction $100,000$

$150,000$

Mr$.$Kgosi derived rental income from a residential property during the year as follows:

Gross rent receivable $60,000$

Expenses:

interest on Bond $52,000$

Municipal rates $7,000$

Repairs and maintanance $5,000$

Boundary wall constructed on tenant's request $10,000$

Total expenses $74,000$

Loss for the year $(14,000)$

You are required to:

a$)$ Take advantage of any election$($s$)$ that may be available to Mr$.$ Kgosi to determine his taxable income and the amount of tax due for the $2021/22$ tax year. $[15$ Marks$]$

b$)$ Explain the tax treatment of the rental income and the effect, if any, on the tax payable $($as calculated in $($a$)$ above$)$ for the $2021/2022$ tax year. $[5$ Marks$]$