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$$s tax period $($a two$-$month period$)$ ended $30$ June and all amounts include

VAT, where applicable.

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 $1402500$

Sale of going concern $21725000$

Dividends $392000$

Expenditure

Cool drink purchased $2070000$

Purchase of office furniture $($second$-$hand from a non$-$vendor$)($cash$)120000$

Purchase of double cab bakkie $4280000$

Rent paid for warehouses $276000$

Rent paid for residential accommodation $241500$

Water and electricity $5154050$

Bad debts $$ residential accommodation $69000$

Credit note issued to liquor store $5175$

Bank charges $28750$

Interest paid on current account $18400$

Notes:

$1.$ The indemnity award was received from an insurance claim for trading stock stolen in

transit to a customer.

$2.$ 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.

$3.$ Dividends earned were from South African listed companies.

$4.$ 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.

$5.$ Water and electricity paid constitute the following: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$.(3)$

$3\mathrm{.}2$ 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. $(22$