QUESTION THREE

$[25]$

Fresh Drinks $($Pty$)$ Ltd$,$ a vendor registered for VAT on the invoice basis, derives its income from distributing and selling cold drinks to Supermarkets. The company rents several warehouses all over South Africa. Fresh Drinks $($Pty$)$ Ltd also receives rental income from residential accommodation provided to tenants in a block of flats. The following information is in respect of Fresh Drinks $($Pty$)$ Ltd$\text{'}$s tax period $($a two$-$month period$)$ ended $30$ June and all amounts include VAT, where applicable.

$\backslash$table$[[$Income$,$Note,Amount $($R$)],[$Income from selling cool drink in South Africa,,$3450000],[$Income from selling cool drink in Botswana $($direct exports,,$1150000],[$Income from tenants for residential accommodation,,$600000],[$Indemnity award received,$1,402500],[$Sale of going concern,$2,1725000],[$Dividends$,3,92000],[$Expenditure$,,],[$Cool drink purchased,,$2070000],[$Purchase of office furniture $($second$-$hand from a non$-$vendor$)($cash$),,120000],[$Purchase of double cab bakkie,$4,280000],[$Rent paid for warehouses,,$276000],[$Rent paid for residential accommodation,$5,241500],[$Water and electricity,,$154050],[$Bad debts $-$ residential accommodation,,$69000],[$Credit note issued to liquor store,,$28750],[$Bank charges,,$18400],[$Interest paid on current account,,$]]$

Notes:

The indemnity award was received from an insurance claim for trading stock stolen in transit to a customer.

Fresh Drinks $($Pty$)$ Ltd sold a factory as a going concern to a registered vendor. All legal requirements were met for the sale to be the sale of a going concern.

Dividends earned were from South African listed companies.

The sales representative uses this vehicle for both business and private use since $1$ June and he bears the full cost of repairs and maintenance.

Water and electricity paid constitute the following:

$3$

$\backslash$table$[[$Warehouses $-,$R$32200],[$Offices $-,$R$21850],[$Residential accommodation,$-$ R$100000],[$Total $-,$R$154050]]$

Required:

$3\mathrm{.}1$ Calculate the input tax ratio for Fresh Drinks $($Pty$)$ Ltd$.$

$3\mathrm{.}2$ Based on the information above, calculate the net VAT payable for the two$-$month period ending $30$ June $2023.$ Assume an input tax ratio of $80\%$ where applicable.