a) In respect of Part A: Scenario 1: Based on the facts provided, indicate with reference to critical terms if POEM Ltd will be a resident of South Africa or not. You must assume that no Double Taxation Agreement (DTA) is applicable. Scenario 2: Allocate the correct phrase to the applicable transaction for The Munro Boutique Hotel (Pty) Ltd. Show the effect on the taxable income of the transactions. No further section numbers or reasoning is required. You may ignore any VAT implications. Structure your answer as per the following headings and example: Transaction Description Reason Amount g.) Repair costs Flemming v KBI (20 000)

b) In respect of Part B: Calculate the dividends tax applicable to each of the respective shareholders of PW Limited in respect of transaction 1.1 and 1.2. Motivate your answer with brief reasons only where there is no dividends tax payable. In respect of transaction 1.2, clearly indicate who is liable for the dividends tax and the date on which the dividend is deemed to be paid by PW Limited.

QUESTION 3 Part A Scenario 1: POEM Ltd is a Botswana incorporated multinational company with branches operating in Africa, Europe and America. The head office of POEM Ltd is based in South Africa and the quarterly board meetings are generally held in Johannesburg. During the 2020 year of assessment one third of POEM Ltd.'s quarterly meetings was held in London to coincide with its secondary listing on the London Stock Exchange and the related interactions with financial advisors and media. Scenario 2: The following scenarios relate to The Munro Boutique Hotel (Pty) Ltd (hereafter referred to as The Munro) for the year of assessment ending 29 February 2020. Phrases Scenario a) The Munro rents out residential accommodation to individual families. The Munro received, in terms of the lease contract, rent in advance for two years amounting to R1 000 000. 1. CIR v People Stores ( Walvis Bay) (Pty) Ltd 2. Principle of earlier of receipt or accrual b) The Munro booked out a luxury suite on 26 February 2020. The booking was made to a very valuable client and for this reason The Munro agreed that payment for this suite will only be made on 30 June 2020. The rate for the suite on 26 February 2020 was R18 000 while on 30 June 2020 the rate for the suite will be R20 000. 3. SARS v Brummeria Renaissance (Pty) Ltd & others 4. Port Elizabeth Electric Tramway Co Ltd v CIR 5. Closing stock will take this into account c) On 1 May 2019 The Munro needed to service all the air conditioners in the hotel. A client overheard the maintenance manager while he was inquiring quotations over the phone. The client offered The Munro his services to service the air conditioners, but for no consideration, as the client wanted payment in the form of a weekend in the hotel in return for the services delivered. The value for the services rendered by the client amounted to R12 000. An all-inclusive weekend package in The Munro amounted to R12 800. The lowest other quotation that The Munro was able to receive for servicing the air conditioners was R14 000. 6. Eveready (Pty) Ltd v CSARS d) One of the hotel guests slipped and fell on a wet floor. The guest sued The Munro for his medical fees amounting to R40 000. The Munro incurred legal expenditure of R25 000 disputing this claim but with no success due to the fact that there was no sign to indicate "wet floor". e) During the year The Munro needed to replace duvet covers to the value of R150 000 due to theft of these covers by hotel guests. The duvet covers were bought during the previous year of assessment. Linen forms part of consumables. f) The Munro received for free, from a new supplier of duvet covers, 15 sets of Egyptian cotton king size duvet covers as a promotion of the quality of the bedding. The invoice value for this bedding amounted to R100 000 and the cost price to the new supplier amounted to R75 000. These duvet covers did not form part of the lost trading stock. Part B PW Ltd has 80 000 issued shares and the shares are held as follows: Shareholder % Shareholding Porsche (Australian resident company) 15% Discover Medical Scheme 5% Audi Limited (a resident company) 75% Mr Tiguan (Botswana resident) 5% The following events took place: 1.1 On 29 February 2020 PW Ltd declared and paid total cash dividends amounting to R5 000 000 to all its shareholders. 1.2 Additional to the cash dividend in 1.1 above, on 29 February 2020 PW Ltd declared that it would transfer 5 of its vehicles with a cost of R150 000 each to Mr Tiguan by virtue of him holding shares in the company. The vehicles (which had market value of R200 000 per vehicle on 29 February 2020) were transferred on 15 March 2020 when the market value was R240 000 per vehicle. South Africa has entered into the following double taxation agreements: With Australia in terms of which dividends paid to an Australian resident is taxed according to the tax treaty at a rate of 5% where a shareholder holds at least 10% of the shareholding. With Botswana in terms of which dividends paid to a Botswana resident is taxed according to the tax treaty at a rate of 15% where a shareholder holds less than 25% of the shareholding The shareholders that are not resident in South Africa do not have a permanent establishment in South Africa. All shareholders have submitted the required declarations and written undertakings in time with the exception of Audi Limited which has not submitted any declaration to date. No portion of the above transfers was a reduction of contributed tax capital. QUESTION 3 Part A Scenario 1: POEM Ltd is a Botswana incorporated multinational company with branches operating in Africa, Europe and America. The head office of POEM Ltd is based in South Africa and the quarterly board meetings are generally held in Johannesburg. During the 2020 year of assessment one third of POEM Ltd.'s quarterly meetings was held in London to coincide with its secondary listing on the London Stock Exchange and the related interactions with financial advisors and media. Scenario 2: The following scenarios relate to The Munro Boutique Hotel (Pty) Ltd (hereafter referred to as The Munro) for the year of assessment ending 29 February 2020. Phrases Scenario a) The Munro rents out residential accommodation to individual families. The Munro received, in terms of the lease contract, rent in advance for two years amounting to R1 000 000. 1. CIR v People Stores ( Walvis Bay) (Pty) Ltd 2. Principle of earlier of receipt or accrual b) The Munro booked out a luxury suite on 26 February 2020. The booking was made to a very valuable client and for this reason The Munro agreed that payment for this suite will only be made on 30 June 2020. The rate for the suite on 26 February 2020 was R18 000 while on 30 June 2020 the rate for the suite will be R20 000. 3. SARS v Brummeria Renaissance (Pty) Ltd & others 4. Port Elizabeth Electric Tramway Co Ltd v CIR 5. Closing stock will take this into account c) On 1 May 2019 The Munro needed to service all the air conditioners in the hotel. A client overheard the maintenance manager while he was inquiring quotations over the phone. The client offered The Munro his services to service the air conditioners, but for no consideration, as the client wanted payment in the form of a weekend in the hotel in return for the services delivered. The value for the services rendered by the client amounted to R12 000. An all-inclusive weekend package in The Munro amounted to R12 800. The lowest other quotation that The Munro was able to receive for servicing the air conditioners was R14 000. 6. Eveready (Pty) Ltd v CSARS d) One of the hotel guests slipped and fell on a wet floor. The guest sued The Munro for his medical fees amounting to R40 000. The Munro incurred legal expenditure of R25 000 disputing this claim but with no success due to the fact that there was no sign to indicate "wet floor". e) During the year The Munro needed to replace duvet covers to the value of R150 000 due to theft of these covers by hotel guests. The duvet covers were bought during the previous year of assessment. Linen forms part of consumables. f) The Munro received for free, from a new supplier of duvet covers, 15 sets of Egyptian cotton king size duvet covers as a promotion of the quality of the bedding. The invoice value for this bedding amounted to R100 000 and the cost price to the new supplier amounted to R75 000. These duvet covers did not form part of the lost trading stock. Part B PW Ltd has 80 000 issued shares and the shares are held as follows: Shareholder % Shareholding Porsche (Australian resident company) 15% Discover Medical Scheme 5% Audi Limited (a resident company) 75% Mr Tiguan (Botswana resident) 5% The following events took place: 1.1 On 29 February 2020 PW Ltd declared and paid total cash dividends amounting to R5 000 000 to all its shareholders. 1.2 Additional to the cash dividend in 1.1 above, on 29 February 2020 PW Ltd declared that it would transfer 5 of its vehicles with a cost of R150 000 each to Mr Tiguan by virtue of him holding shares in the company. The vehicles (which had market value of R200 000 per vehicle on 29 February 2020) were transferred on 15 March 2020 when the market value was R240 000 per vehicle. South Africa has entered into the following double taxation agreements: With Australia in terms of which dividends paid to an Australian resident is taxed according to the tax treaty at a rate of 5% where a shareholder holds at least 10% of the shareholding. With Botswana in terms of which dividends paid to a Botswana resident is taxed according to the tax treaty at a rate of 15% where a shareholder holds less than 25% of the shareholding The shareholders that are not resident in South Africa do not have a permanent establishment in South Africa. All shareholders have submitted the required declarations and written undertakings in time with the exception of Audi Limited which has not submitted any declaration to date. No portion of the above transfers was a reduction of contributed tax capital