4 TAX3701 May / June 2019 QUESTION 1 (continued) PART B (7 marks, 13 minutes) |-Solar (Pty) Ltd ("-Solar") manufactures solar panels that are mainly used to heat geysers This is a process of manufacture approved by SARS The company is not a small business corporation as defined in the Income Tax Act and its financial year ends on the last day of February -Solar is a registered VAT vendor making only taxable supplies You are the tax auditor of -Solar and your assistant manager calculated the taxable income correctly as R1 700 000 for the year ending 28 February 2019, before taking the following into account 1-Solar purchased a new machine (Machine SOL) for R430 000 (excluding VAT) on 1 December 2018 The machine is used in the manufacturing process Machine SOL was purchased to replace Machine PAN Machine PAN was completely destroyed during a fire at the factory on 15 November 2018 Machine PAN was purchased second-hand from a non-vendor for R342 000 on 20 April 2015 -Solar received R130 000 from its insurance company for Machine PAN on 30 November 2018 REQUIRED MARKS 7 Calculate -Solar (Pty) Ltd's taxable income for the 2019 year of assessment The company elects that the provisions of paragraph 66 of the Eighth Schedule to the Income Tax Act should apply Start your calculation with the taxable income of R1 700 000 Ignore any capital gains tax implications (TURN OVER] 4 TAX3701 May / June 2019 QUESTION 1 (continued) PART B (7 marks, 13 minutes) |-Solar (Pty) Ltd ("-Solar") manufactures solar panels that are mainly used to heat geysers This is a process of manufacture approved by SARS The company is not a small business corporation as defined in the Income Tax Act and its financial year ends on the last day of February -Solar is a registered VAT vendor making only taxable supplies You are the tax auditor of -Solar and your assistant manager calculated the taxable income correctly as R1 700 000 for the year ending 28 February 2019, before taking the following into account 1-Solar purchased a new machine (Machine SOL) for R430 000 (excluding VAT) on 1 December 2018 The machine is used in the manufacturing process Machine SOL was purchased to replace Machine PAN Machine PAN was completely destroyed during a fire at the factory on 15 November 2018 Machine PAN was purchased second-hand from a non-vendor for R342 000 on 20 April 2015 -Solar received R130 000 from its insurance company for Machine PAN on 30 November 2018 REQUIRED MARKS 7 Calculate -Solar (Pty) Ltd's taxable income for the 2019 year of assessment The company elects that the provisions of paragraph 66 of the Eighth Schedule to the Income Tax Act should apply Start your calculation with the taxable income of R1 700 000 Ignore any capital gains tax implications (TURN OVER]