QUESTION $4(20$ Marks$)$

Stirling Limited is a registered VAT vendor and South African resident company. The company$$s

assessment year ends on the last day of February and the company is not registered as a manufacturing

company. For the $2019$ year of assessment the company is subject to $28\%$ taxation. The bookkeeper

prepared financial records reporting a total operating profit of R$1250000$ before considering the following

transactions:

$1.$ Annuities were paid to the following individuals during the assessment year:

Peter Retired employee R$50000$

Anne Disgruntled employee R$10000$

Cynthia Wife of deceased CEO R$80000$

Stephen Son of Peter R$5000$

Mary Ill health retirement R$45000$

$2.$ Stirling Limited secured an insurance policy for its financial director, covering death and illness, with

monthly premiums of R$1,095$ starting from $1$ January $2012.$ On $1$ June $2012,$ an addendum was

added to the agreement, and the company opted to apply Section $11($w$)($ii$).$ The policy is purely riskbased,

offering no cash or surrender value prior to maturity or the financial director's death. Stirling

Limited is both the policy owner and beneficiary.

$3.$ Stirling Limited, with a February year$-$end, entered into a restraint of trade agreement following the

termination of its Marketing Director's employment. The company made a payment of R$100,000$ on $1$

March, initiating a restraint period of twenty$-$four months. The payment is taxable to the employee.

$4.$ Stirling Limited issued $50$ equity shares to each of its $20$ employees as part of a broad$-$based

employee share plan. Employees are required to pay R$10$ per share, while the market value of each

share was R$85$ at the time of issuance.

$5.$ On $1$ January $2016,$ Stirling Limited entered into two three$-$year learnership agreements with

employees. One employee, Amber, holds an NQF $6$ qualification, and the other $,$ Ella, holds an NQF

$8$ qualification. Ella has a defined disability, and both successfully completed their learnerships on $31$

December $2018.$

$6.$ The following donations were made during the current year of assessment:

On $1$ September $2018$ a payment of R$3000$ was made to a registered PBO and the appropriate

receipt was filed.

On $17$ December $2018$ a payment of R$9000$ was made to a registered PBO and the appropriate

receipt was emailed.

On $1$ February $2019,$ R$2000$ was paid to a registered PBO but the receipt was lost.

Taxable income reported by the company includes Month ended $31$ August $2018$: R$7500016$

December $2018$: R$62000$ month ended $31$ January $2019,$ R$115000.$

$7.$ The local municipality bills trading companies annually for rates and taxes. A total of R$50000$ was

paid in respect of services to be delivered for the period ending $31$ August $2019.$

$8.$ During the audit of the tax records for the year of assessment ending $28$ February $2018$ the assessed

loss of R$55000$ was confirmed.

$9.$ The following expenses were incurred during the current year of assessment in respect of the assets

held and operated by the company. The office building was originally constructed for R$3750000$

during $2015.$

Storm damages repairs to office building: Roof R$35000$

Repainting of offices as a result of storm damages R$15000$

Replacement of tiles with vinyl $.$ The quotation obtained to replace the broken tiles

amounted to R$13000.$ R$17000$

Required:

Calculate the total tax payable for the $2019$ year of assessment. Include all calculations.