QUESTION $10\mathrm{.}10$

$(40$ Marks$)$

Replay $($Pty$)$ Ltd $(\text{'}$the company'$)$ had a new and unused manufacturing machine stolen from its factory. The machine was purchased at a cost of R$5000000($excluding VAT$)$ on $20$ November $2023.$ The machine was stolen in February $2025.$ The company was insured for full replacement cost and the insurers paid out an amount of R$6270000$ in April $2025.$ All of the insurance proceeds were used in acquiring, and immediately bringing into use, a new and used replacement machine costing R$6500000($excluding VAT$)$ in June $2025.$ The machine was brought into the manufacturing process immediately. The company has a $31$ December year$-$end and is a registered VAT vendor as defined.

YOU ARE REQUIRED TO:

$1.$ Calculate the tax effects for the $2025$ year of assessment if the company does not elect para $65.$

$2.$ Calculate the tax effects for the $2025$ year of assessment if the company does elect para $65.$

$3.$ Using the information above, except that the company buys two new and unused smaller replacement machines, namely:

Machine A: Cost: R$3000000($excluding VAT$)$

Machine B: Cost: R$3500000($excluding VAT$)$

Calculate the tax effects for the $2025$ year of assessment if the company does elect para $65.$

$4.$ As in $(3)$ above, only Machine A is a used machine and Machine B is a new machine.

$5.$ Outline the differences between para $65$ and $66.$