QUESTION $2(20$ Marks$)$

HAT Trading $($Pty$)$ Ltd presented the following abridged Statement of Profit or Loss and Other

Comprehensive Income for the year of assessment ended $28$ February $2024$:

R

Gross Profit $375650$

Other Income $55250$

Other expenses $(143550)$

Net profit $287350$

Notes:

$1.$ The company earned R$32,500$ in interest from its bank account, generated from its savings or other

interest$-$bearing accounts during the financial period. The balance was recorded as part of other

income reported.

$2.$ Included in other income is the profit realised on the sale of an asset. The sale of equipment on $1$

December $2023$ generated a recorded profit of R$5,200,$ with a capital gain of R$6,500$ realized since

the sale price exceeded the original cost. Per SARS regulations a recoupment of R$8,500$ was

recorded.

$3.$ Depreciation on assets for the year was recorded at R$15,625$ as other expenses in the financial

statements. However, for income tax purposes, the wear and tear allowance, representing the

reduction in asset value, is calculated at R$21,300.$

$4.$ The total salaries and wages for the period amounted to R$30,000,$ covering all compensation paid to

employees. This includes base salaries, hourly wages, as well as any additional earnings such as

overtime, bonuses, or commissions. The accountant reported the expense as part of other expenses.

$5.$ Included in other expenses is a provision of R$18,000$ for doubtful debts, with no such provision made

in the prior year. SARS permits a $25\%$ allowance on the total debtor balance.

$6.$ Research and Development costs of R$12500$ in respect of designing costs, already recorded in the

financial system, relates to a purchase made on $2$ November. The design was registered and brought

into use in the same month. Section $11($gC$)$ allows for a $10\%$ allowance for research and

development costs.

$7.$ The company entered into a twelve$-$month learnership agreement with several employees, starting on

$1$ June $2023.$ Samuel holds an honours degree, Ishmael has completed a master's degree, and both

Amin and Erin graduated from high school in December $2022.$ Samuel and Amin are both classified

as having defined disabilities.

$8.$ Provisional tax payments of R$21,000$ each were made on $31$ August and $26$ February.

It can be assumed that all items included in the gross profit are calculated in accordance with tax

regulations and VAT implications can be ignored. The company is taxed at $27\%$ and does not carry on a

process of manufacturing.

Required:

Calculate the tax liability for the year of assessment ended $28$ February $2024$ of HAT Trading $($Pty$)$ Ltd$.$

Detail all calculations.