QUESTION $3(15$ Marks$)$

Z$1$ Traders $($Pty$)$ Ltd reported the following results for the year of assessment ended $28$ February $2019$:

Statement of Profit or Loss and Other Comprehensive Income for the year of assessment ended

February:

Income R

Sales $915000$

Recoupment of bad debts $16500$

Doubtful debt allowance $-20185750$

Interest received on current account $8200$

Closing stock $-28$ February $201994550$

$1040000$

Expenses

Purchases $380000$

Opening stock $-1$ March $201882000$

Sundry expenses $-$ tax deductible $155000$

Rent paid $65000$

Employer contributions $6000$

Annuities $116000$

Doubtful debt allowance $-20183750$

Patents $27000$

Restraint of trade payment $55000$

$889750$

Profit $150250$

Notes:

$1.$ Monthly rent of R$5,000$ is paid in advance on the $1$st of each month in respect of a sixty$-$month lease

agreement for office premises commenced on $1$ November $2018.$ The rent for March $2019$ was paid

early, on $27$ February $2019.$ All rental payments have been recorded as expenses in the financial

records.

$2.$ Z$1$ Traders' annual contribution to the provident fund on behalf of its employees totals R$6000.$

$3.$ SARS permits a $25\%$ allowance on the doubtful debt balance, while Z$1$ Traders applies a $12\%$

allowance on the total doubtful debts. The debtors' book at the financial year$-$end includes total

doubtful debts of R$15,000.$ In the previous year, doubtful debts were R$23,000.$

$4.$ In the assessment year, Z$1$ Traders acquired Patent R$1$ for R$1000$ on $30$ September $2018,$ and

Patent R$2$ for R$17,000$ on $15$ December $2018.$

$5.$ A four$-$year restraint agreement came into effect on $1$ March $2018$ when Z$1$ Traders paid R$55,000$ to

its former HR manager as a restraint of trade payment. The employee was taxed on R$15,000$ of this

amount.

$6.$ Z$1$ Traders paid the following annuities during the current year of assessment: Mrs Blue retired at the

age of $65$ and received R$23000.$ Mr Golding received R$75000.$ He was the husband of the Legal

executive who died during a motor vehicle accident during the current year of assessment. Annabel

and Peter, children of Mrs$.$ Blue each received R$9000.$

$7.$ Provisional tax of R$20000$ was paid on $31$ August $2018,$ and R$25000$ on $25$ February $2019.$ The

company is taxed at $27\%$

$8.$ The recoupment of bad debts relates to bad debt written off in the $2017$ assessment period.

Required:

Calculate the tax liability of Z$1$ Traders $($Pty$)$ Ltd for the current year of assessment. Include all

calculations.