PART A $(16$ marks$)$

In March $2024,$ Dave received a retrenchment package from his employer $($Tongat$),$ He then purchased a block of residential flats from his father $($Non$-$VAT Vendor$)$ for a consideration of R$9000000.$ Dave converted the residential units into a guest house, residential accommodation and a bookshop, from which he would operate his business as Dave Ltd$.$

Dave Ltd will pay Dave Father's the amount over a $20-$year period. The open market value was

R$10000000.$

The building was transferred and registered in Dave Ltd$.\text{'}$s name on the $25$th of May $2024,$ on which Dave Ltd settled the full transfer duty and paid his father an amount of R$1900000($a non$-$refundable deposit of R$900000$ and the $1$st instalment on the property which consists of R$150000$ capital and R$850000$ interest$).$

Dave Ltd submitted the following schedule for your advice on whether to register for VAT or not:

Ground floor bookshop estimated turnover R $600000$

First$-$floor guest house tenants will stay for less than $15$ days R $1000000$

Second$-$floor apartment to be rented out for residential purposes R $400000$

Total estimated receipts per annum R $2000000$

REQUIRED:

Marks

$1\mathrm{.}1$

Advise Dave Ltd whether to register for VAT or not

$6$

$1\mathrm{.}2$

Assumed Dave Ltd is a VAT vendor, discuss with reasons the VAT implications with regard to purchase of building if SARS approved the apportionment ratio of $80\%.$

$8$

$1\mathrm{.}3$

Assume Dave Ltd renovated the building before converting it to guest house, bookshop and a residential accommodation. Discuss the renovation costs Vat effects.

$2$