Nova Solutions (Pty) Ltd is a company involved in the production and distribution of precision engineering components and machinery, approved by the Commissioner as an official manufacturing process. The company operates from a state-of-the-art facility located in the industrial hub of East London and has a 31 March year-end. The CEO and founder of Nova Solutions is John Anderson.
For the year of assessment ending on 31 March 2024, Nova Solutions’ taxable income before considering the following transactions, was R11 260 000 (assuming this value is accurate).

John seeks assistance with the following transactions:
• All opening stock has correctly been accounted for in determining the taxable income amount of R11 260 000. Closing stock has not yet been taken into account. According to the accounting records, the closing stock as at 31 March 2024 had an original cost price of R4 200 000. It was however proved to the Commissioner that the stock was only worth R4 000 000 at year-end.

• On 01 April 2023, Nova Solutions (Pty) Ltd purchased new manufacturing machinery with a cost of R1 495 000 and the machinery was brought into use on the same date. Moving costs of R68 000 were incurred to move the machinery from the landing bay into the factory building on 1 August 2023.

• On 30 September 2023, a second-hand machine was purchased at a cost of R530 000. The installation cost of this machine amounted to R33 000. Nova Solutions (Pty) Ltd spent a further R22 000 on the installation of a mechanism in the machine that dramatically increased the number of components that can be manufactured per hour.

• On 15 November 2022, Nova Solutions (Pty) Ltd purchased the second floor of a newly constructed administration building for R6 500 000 from a property developer. Since then, Nova Solutions (Pty) Ltd has utilised this office space for its administrative staff. However, due to the flexibility of remote work and the availability of on-site facilities, Nova Solutions (Pty) Ltd made the decision to dispose of the second-floor space. Subsequently, on 10 September 2023, the office space was successfully sold for R7 000 000

• On 30 September 2023, Nova Solutions (Pty) Ltd declared and paid an interim cash dividend of R300 000. On the same date, Nova Solutions (Pty) Ltd received a dividend of R26 000 from Atlas Corp, a South African company listed on the JSE.
• The company generates a significant amount of waste materials during their manufacturing processes, and they therefore decided to purchase a recycling asset. A recycling machine was purchased on 01 October 2023 for an amount of R120 000. The purpose of this machine is to reduce the environmental impact and potentially recover valuable resources from the waste stream.

• According to the accounting standards followed by Nova Solutions (Pty) Ltd, an amount of R84 340 relating to sales from the previous year was deemed uncollectible during the current financial year.

• On 02 March 2024, one of Nova Solutions (Pty) Ltd’s delivery vehicles was stolen. The vehicle was acquired for R430 000 on 01 April 2023 and brought into use on the same day. The insurance company compensated Nova Solutions (Pty) Ltd with an amount of R150 000. Interpretation Note No.47 allows for a 5-year write-off period for delivery vehicles. Nova Solutions (Pty) Ltd decided not to replace the stolen delivery vehicle.

• Nova Solutions (Pty) Ltd became aware of the research and development incentive by the South African government. The main aim of this incentive is to encourage South African companies to invest in scientific or technological research and development. In terms of Section 11D of the Income Tax Act, the following may be claimed in respect of research and development:
o A deduction equal to 150% of expenditure incurred directly for Research & Development.
o An accelerated depreciation deduction (that is, 50:30:20) for capital expenditure incurred on machinery or plant used for Research & Development.
The company began cutting-edge technological research and development activities that was approved by the Department of Science and Technology. The following amounts were expended during the year ended 31 March 2024:
o Research salaries amounted to R60 000
o Raw materials consumed amounted to R35 000.
o The company purchased a new and unused machine for its research department amounting to R350 000 on 1 December 2023, which was brought into use immediately.

Required:

Calculate Nova Solutions (Pty) Ltd’s taxable income for the year of assessment ended 31 March 2024. Begin your calculation with the taxable income of R11 260 000.
Show all calculations and considerations.
Show amounts with nil effects.
Round all amounts to the nearest Rand.
Nova Solutions (Pty) Ltd aims to make any elections that minimize its tax liability for the current assessment year. Ignore Capital Gains Tax.