Shirley Masete received the following amounts during the 2022 year of assessment: 1. On 1 July...

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Shirley Masete received the following amounts during the 2022 year of assessment: 1. On 1 July 2021, Shirley purchased an annuity for R350 000 to secure her retirement income. In terms of the purchase annuity contract, Shirley was to receive an annuity of R2 500 per month for fifteen years with effect from 1 August 2021. (5) 2. Shirley Masete entered into a lease agreement with Anika Verster on 1 July 2020. Anika Verster was obliged to erect a particular three-bedroom house on the plot that Shirley inherited from her late father for a minimum amount of R2 300 000. The lease period was for a 25-year period. Building commenced on 1 August 2020 and the house was completed at a cost of R2 500 000 on 31 October 2021. It was occupied immediately by Anika Verster. A monthly rental of R3 500 was payable by Anika Verster to Shirley Masete commencing on the date the lease was entered (3) into. (1) 3. Shirley Masete inherited a cash amount of R500 000 from her late father. During September 2021, Monate Ltd provided a year's supply of sweets to Constructo (Pty) Ltd, in return for which the company, being in the construction business, made certain extensions to Monate Ltd's factory to increase its production capacity. The director of Constructo (Pty) Ltd and Shirley Masete have been friends for over 20 years. The direct cost for Constructo (Pty) Ltd to affect these improvements was R120 000. Monate Ltd requested a quotation from another construction company (arm's length transac- tion) which amounted to R180 000. The construction extensions were completed on 31 January 2022. REQUIRED: MARKS a. Discuss, with supporting calculations, which amounts will be included in, or ex- cluded from, Shirley Masete's gross income for the current year of assessment. Provide brief reasons for your answers. 9 b. Briefly discuss whether or not the expenses relating to the extensions to the factory will be included in the gross income of Monate Ltd during its 2022 year of assess- ment. Case law and any VAT implications can be ignored. 6 Shirley Masete received the following amounts during the 2022 year of assessment: 1. On 1 July 2021, Shirley purchased an annuity for R350 000 to secure her retirement income. In terms of the purchase annuity contract, Shirley was to receive an annuity of R2 500 per month for fifteen years with effect from 1 August 2021. (5) 2. Shirley Masete entered into a lease agreement with Anika Verster on 1 July 2020. Anika Verster was obliged to erect a particular three-bedroom house on the plot that Shirley inherited from her late father for a minimum amount of R2 300 000. The lease period was for a 25-year period. Building commenced on 1 August 2020 and the house was completed at a cost of R2 500 000 on 31 October 2021. It was occupied immediately by Anika Verster. A monthly rental of R3 500 was payable by Anika Verster to Shirley Masete commencing on the date the lease was entered (3) into. (1) 3. Shirley Masete inherited a cash amount of R500 000 from her late father. During September 2021, Monate Ltd provided a year's supply of sweets to Constructo (Pty) Ltd, in return for which the company, being in the construction business, made certain extensions to Monate Ltd's factory to increase its production capacity. The director of Constructo (Pty) Ltd and Shirley Masete have been friends for over 20 years. The direct cost for Constructo (Pty) Ltd to affect these improvements was R120 000. Monate Ltd requested a quotation from another construction company (arm's length transac- tion) which amounted to R180 000. The construction extensions were completed on 31 January 2022. REQUIRED: MARKS a. Discuss, with supporting calculations, which amounts will be included in, or ex- cluded from, Shirley Masete's gross income for the current year of assessment. Provide brief reasons for your answers. 9 b. Briefly discuss whether or not the expenses relating to the extensions to the factory will be included in the gross income of Monate Ltd during its 2022 year of assess- ment. Case law and any VAT implications can be ignored. 6