Kool Air (Pty) Limited, a manufacturer of industrial fans, has a taxable income of R2 400 000 for its financial year ended 28 February 2021, before taking the following into consideration:

• In December 2018 expenditure of R880 000 was incurred by it in building a laboratory to be used for scientific research. The research commenced on 1 September 2018. On 31 October 2020 the scientific research project, although not completed, was abandoned. Since the use of this laboratory was solely for the purpose of this research and development, it was sold on 31 October 2020. It was sold for R960 000.

• An extension to its factory was erected at a cost of R1 200 000. The extension was brought into use on 15 January 2021. Its erection had commenced on 1 August 2020. Of this R1 200 000 cost, R200 000 was for a new canteen for its employees that was erected within the extension. This extension increased its factory industrial capacity by a considerable extent. BACHELOR OF COMMERCE: ACCOUNTING YEAR 3 – ACADEMIC AND ASSESSMENT CALENDAR (RD) REGENT BUSINESS SCHOOL (RBS) – JULY 2021 14

• A factory building no longer required, that was erected and brought into use by it in May 1994 at a cost of R400 000 and used in the manufacturing process, was demolished on 15 November 2020. An annual building allowance at a rate of 2% had been granted on this factory building. The market value of this factory building on 1 October 2001 was R300 000.

• A new electronically controlled lathe (a machine for shaping wood) was brought into use by it on 1 February 2021. The following amounts were paid by it for this lathe: Paid to supplier - 44 000

Interest from date of order (1 July 2020) to date of payment (31 October 2021) at 9% a year - 5 280

Importation charges - 1 600

Total - 50 880

This lathe is used by it directly in a process of manufacture.

• A second-hand light aircraft was purchased and brought into use by it on 1 May 2020 at a cost of R9 800 000. This second-hand light aircraft is used by it to transport its executives and sales personnel on visits to its customers and prospective customers based in other centres.

You are required to determine the normal tax payable by Kool Air (Pty) Limited for its 2021 year of assessment

Answer rating: 100% (QA)

The amount of a persons or companys gross income that the government considers taxable is known as t... View the full answer