Question $3(25$ Marks$)$

Part A

AI Tech Ltd$,$ a resident company that was formed in $2012,$ has a $31$ March financial year$-$end. The company distributed the

following amounts$/$assets to its sole shareholder, Mr$.$ Buffet, on $1$ December $2022$:

$-$ An in specie distribution of a building with a market value of R$1900000($the building was acquired on $15$ May

$2016$ for R$1450000-$ the building did not qualify for any capital allowances$)$

$-$ A cash distribution of R$3000000$

$-$ An in specie distribution of trading stock with a market value of R$900000($trading stock was acquired on $1$ April

$2022$ at a cost price of R$600000)$ and

$-$ The applicable company tax rate and dividend tax rate is $28\%$ and $20\%$ respectively.

Required:

$3\mathrm{.}1$ Calculate the normal tax consequences arising from the above distributions for AI Tech Ltd$$s $2023$ year of

assessment.

$(9$ marks$)$

$3\mathrm{.}2$ Calculate the amount of dividends tax that AI Tech Ltd$.$ is liable for. $(6$ marks$)$

Part B

Vape Ltd is a small business corporation. It manufactures and supplies garden tools. The following is a summary of income

and expenditure for the year ended $28$ February $2023$:

R

Gross income $4800000$

Interest income $700000$

Purchase of machinery for manufacturing $($immediately brought into use$)$ on $1$ July $20221500000$

Office equipment purchased and brought into use on $1$ March $20221200000$

Required:

$3\mathrm{.}3$ Calculate the tax due by Vape Ltd for the year ended $28$ February $2023.$ The taxpayer prefers the most

preferential wear and tear allowance.