On 1 March 2015 Mohammed Ahmed, who is 25 years of age, started a new business,...

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On 1 March 2015 Mohammed Ahmed, who is 25 years of age, started a new business, Candle Light (Pty) Lid, of producing and selling candles. Candie Light (Pty) Ltd was never obligated to register as a VAT vendor and also did not choose to do so. Candie Light (Pty) Ltd qualified as a micro business and was registered as a micro business with effect from 1 March 2018. The following information is relevant to Candie Light (Pty) Ltd's 2018 year of assessment R Doubtful debt allowance deducted in 2018 17 500 Candle Light (Pty) Ltd's assessed loss for 2018 was 12 345 The folowing information is relevant to Candlie Light (Pty) Ltd's 2019 year of assessment R Cash receipts (note 1) Outstanding debtor (note 2) Interest received on bank account 405 000 20 000 35 000 Dividends received on listed shares 10 250 60 000 Rent paid for business premises Proceeds with the sale of mixer (note 3) Expenses incurred with the purchase of new mixer Normal trading expenses incurred 30 000 45 000 115 000 Notes 1. Included in the cash receipts for the year 2019 is R30 000 received from outstanding debtors as on 29 February 2018 and amounts refunded from suppliers on damaged goods purchased of R22 000. On 20 June 2018, R13 000 of the R405 000 received was also refunded to a customer who bought candles that did not want to light. 2. Party Hire (Pty) Ltd still owed Candle Light (Pty) Ltd R20 000 for candles delivered on 20 February 2019. 3. Candle Light (Pty) Ltd needed a larger mixer to mix the wax for the candles and purchased a new mixer candie Light (Pty) Ltd sold the old mixer and received R30 000. The mixer was wholly used for business purposes. Required: Calculate Candle Light (Pty) Ltd's tumover tax liability for the 2019 year of assessment. On 1 March 2015 Mohammed Ahmed, who is 25 years of age, started a new business, Candle Light (Pty) Lid, of producing and selling candles. Candie Light (Pty) Ltd was never obligated to register as a VAT vendor and also did not choose to do so. Candie Light (Pty) Ltd qualified as a micro business and was registered as a micro business with effect from 1 March 2018. The following information is relevant to Candie Light (Pty) Ltd's 2018 year of assessment R Doubtful debt allowance deducted in 2018 17 500 Candle Light (Pty) Ltd's assessed loss for 2018 was 12 345 The folowing information is relevant to Candlie Light (Pty) Ltd's 2019 year of assessment R Cash receipts (note 1) Outstanding debtor (note 2) Interest received on bank account 405 000 20 000 35 000 Dividends received on listed shares 10 250 60 000 Rent paid for business premises Proceeds with the sale of mixer (note 3) Expenses incurred with the purchase of new mixer Normal trading expenses incurred 30 000 45 000 115 000 Notes 1. Included in the cash receipts for the year 2019 is R30 000 received from outstanding debtors as on 29 February 2018 and amounts refunded from suppliers on damaged goods purchased of R22 000. On 20 June 2018, R13 000 of the R405 000 received was also refunded to a customer who bought candles that did not want to light. 2. Party Hire (Pty) Ltd still owed Candle Light (Pty) Ltd R20 000 for candles delivered on 20 February 2019. 3. Candle Light (Pty) Ltd needed a larger mixer to mix the wax for the candles and purchased a new mixer candie Light (Pty) Ltd sold the old mixer and received R30 000. The mixer was wholly used for business purposes. Required: Calculate Candle Light (Pty) Ltd's tumover tax liability for the 2019 year of assessment.

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Reserve for doubtful debts for year 2018 total cas... View the full answer