Question $1($Developmental Expenditure by farmer$)[20$ marks$]$

Andrew Hay aged $70$ days, a farmer based in the wine farm region Capetown incurred the following developmental expenditure for a period of $2$ years $(2022$ and $2023$ Year of Assessment$),$

$\backslash$table$[[$Item$,$Year $2022,$Year $2023],[$New dam,R$328000,-],[$Dipping tank$,-,$R$20000],[$Fences$,$R$20000,$R$8000],[$Eradication of noxious plants,R$4000,$R$6000],[$Prevention of soil erosion,R$60000,$R$40000],[$Electricity lines,$-,$R$24000],[$Road Construction,R$20000,$R$120000],[$Total Expenditure,R$432000,$R$218000]]$

The taxable income derived from farming operations before the deduction of any of the development expenditure specified above was as follows for $2022$ and $2023$ year of assessments.

$\backslash$table$[[$Item$,2022,2023],[$Total Gross farming income,R$300000,$R$640000]]$

Required

$($a$)$ Calculate the farmer's taxable income from farming operations in each year of assessment. $[10$ marks$]$

$($b$)$ Calculate the tax liability for $2$ years by using the applicable tax rates and rebates $($see the attached tables$)[10$ marks$]$

Question $2($Average Rating Formula $)[40$ marks$]$

Chicco Twala, who is $80$ years and entitled to individual tax rebate, commenced farming in $2020$ year of assessment. The farmer is engaged in plantation of grapes in Mpumalanga. The results of his operations were as follows:

$\backslash$table$[[$Year$,\backslash$table$[[$Total$],[$taxable$],[$income$]],\backslash$table$[[$Farming$],[$taxable$],[$income$]],\backslash$table$[[$Other$],[$taxable$],[$income$]],\backslash$table$[[$Special$],[$remuneration$],[$under s $5(9)($mine$],[$workers:$]]],[2020,$R$165000,$R$10000,$R$155000,-],[2021,$R$230000,$R$20000,$R$210000,-],[2022,$R$230000,$R$15000,$R$215000,-],[2023,$R$175000,$R$60000,$R$165000,-],[2024,$R$407500,$R$85000,$R$322500,$R$1750]]$

Additional information

For $2024$ year of assessment Chicco Twala made the election to be taxed under the average rating formula in terms of par $19(5).$

Required

Calculate the farmer's normal tax liability for $2024$ year of assessment under the average rating formula. $[40$ marks$]$

Question $3($CALCULATION OF TAXABLE INCOME OF A FARMER$)[40$ marks$]$

Nhlakanipho Buthelezi, aged $39,$ a resident of the republic farms on the KwaZulu Natal South Coast. The farming activities sugar can produce, bananas and livestock. The details of the receipts and expenditure for $2024$ year of assessment are as follows

Receipts and accruals.

$\backslash$table$[[$Produce Sales $($wool and fruit$),$R$456880],[$Livestock Sales,R$3324000],[$Interest received,R$7680],[$Grazing fees,R$84000],[$Fee for letting of machine,R$38400],[$Local SA dividend,R$24000]]$

Expenditure incurred

$\backslash$table$[[$New Irrigation Equipment,R$100000],[$Dams and boreholes,R$49440],[$Establishment of orchards,R$54400],[$New fencing,R$13680],[$Road$-$making,R$61360],[$Soil$-$erosion works,R$30000],[$Fertilizer and manures,R$21000],[$Food for livestock,R$37440],[$General Farming Expenses $($All allowable$),$R$55840],[$Interest Payable,R$25360],[$Livestock purchases,R$136800],[$Repair of damaged fencing,R$15600],[$Seeds$,$R$11920],[$Wages and rations Paid,R$86224],[$Wear and tear and S$12$B Allowable $($all allowable$),$R$59200]]$

Additional information

$(1)$ When Nhlakanipho commenced farming, the executors of the estate of his late Uncle handedover to him $1800$ ewes, $200$ rams and $400$ lambs. The current market value of these animals at the date of his uncle's death was R$2600000,$ and this was the fairmarket price on $25$ August $2023.$ The standard value of the livestock would have been R$51200.$

$(2)$ On the $7^{th}$ of August $2023$ Nhlakanipho also received by way of donation from his uncle $600$ ewes and $100$ rams. At the date of donation, the fair market value of these animals was R$800000.$ The standard value would have been R$16800.$

$(3)$ He has elected the standard values fixed by the regulation.

$(4)$ During the year Nhlakanipho's family consumed produce at an estimated cost of R$14000.$

$(5)24$ ewes and $12$ rams were donated to charitable institutions during the year. These animals were acquired at a cost of R$26800,$ but at the date of the donation the fair market value was R$43200.$

$(6)$ At $28$ February $2024,$ the number of livestock on hand were as follows ;

Ewes.

$1500$ @ R$24$ per ewe

Rams................................. $250$ @ $24$ per ram

Lambs. $,400$ @$8$ per lamb

$(7)$ The estimated cost of production of wool and fruit on hand at $28$ February $2024$ was R$36400.$

Required

Calculate the Nhlakanipho's taxable income for the year of assessment ended $28$

February $2024$

$[40$ marks$]$

$2023$ tax year $(1$ March $2022-28$ February $2023)$

$\backslash$table$[[$Taxable income $($R$),$Rates of tax $($R$)],[1-226000,18\%$ of taxable income$],[226001-353100,40680+26\%$ of taxable income above $226000],[353101-488700,73726+31\%$ of taxable income above $353100],[$