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Section A - ALL 15 questions are compulsory and MUST be attempted Please use the grid provided on page two of the Candidate Answer Booklet to record your answers to each multiple choice question. Do not write out the answers to the MCQs on the lined pages of the answer booklet. Each question is worth 2 marks. 1 Anthony was born in the United Kingdom. He resigned from his job in the United Kingdom to come to South Africa for a 14-month contract appointment with a South African company. Anthony and his family moved to South Africa for the duration of the contract arriving in October 2013 for Anthony to begin working on 1 November 2013. Anthony and his family returned to the United Kingdom on 15 January 2015. During their stay in South Africa, Anthony rented accommodation and a car. What is Anthony's South African residence status for income tax purposes for the 2015 year of assessment? Anthony is ordinarily resident as his job and family are in South Africa Anthony is resident as he has spent more than 330 days in South Africa Anthony is not a resident because he has not spent sufficient time in South Africa Anthony is resident as he spent more than 91 days in South Africa 2 Jonathan runs a landscaping business and has not yet registered as a value added tax (VAT) vendor. His annual turnover from services rendered is R950,000. In addition to this turnover, during the 2015 year of assessment, Jonathan sold some of his landscaping equipment for R60,000 and acquired some new equipment from a VAT vendor for a cost of R86,000. In relation to Jonathan's VAT obligations, which of the following statements is/are true? (1) Jonathan must register for VAT as his turnover from taxable supplies exceeds R1 million. 2) Jonathan does not have to register for VAT as his turnover from his regular and continuous supplies are only R950,000 (3) Jonathan may voluntarily register for VAT (4) Jonathan conducts an enterprise and may, therefore, claim a credit for input VAT whether he registers for VAT or not 1 2 and 3 3 and 4 2 and 4 3 Damien's taxable income has been determined as R377,450. Damien made annual contributions to a medical aid scheme for himself and his wife (as a dependant) of R27,600. Damien incurred additional medical expenses of R45,000 following a car accident during the year. Neither Damien nor his wife are disabled or older than 65 years. What is Damien's additional medical expenses tax rebate? R1 1,073 R8,079 R18,014 R4,9054 James is a doctor. His income from his medical practice alone means he pays tax at the highest marginal rate. James started a gardening business three years ago. His gardening business has made losses in the previous three years of assessment although James anticipates that it will eventually become profitable. James will realise a loss from his gardening activities in the current year of assessment. In relation to James's losses from this gardening business, which of the following statements is true? A The current year loss from the gardening business must be ring fenced and cannot be set off against James's medical practice income B The current year loss from the gardening business may be ring fenced but can be utilised against his medical practice income if James can prove to the South African Revenue Service (SARS) that there is a reasonable expectation of profit C All losses from the gardening business should be ring fenced so that these losses may never be set off against James's medical practice income D Ring fencing does not apply to any of the losses from the gardening business and SARS is obliged to set them off against James's medical practice income Which of the following taxpayers will be required to make provisional tax payments? An individual aged 67 with taxable rental income from property of R1 15,000 An individual aged 63 with taxable foreign dividends of R20,000 An individual aged 68 with taxable income from a business of R1 15,000 An individual aged 60 with taxable remuneration from employment of R250,000 Joe entered into the following transactions during the year of assessment 2015: - Joe donated an asset with a market value of R35,000 and a base cost of R37,000 to a public benefit organisation - Joe sold his personal motor car which had a base cost of R89,000 for proceeds of R55,000 Joe sold his yacht of 11 metres to a fellow yacht club member for R1,500,000. Joe had purchased the yacht for R2,000,000 and used it for recreational purposes only What is the amount of Joe's allowable capital losses for the purposes of capital gains tax in respect of the above transactions? Note: You should ignore the annual exclusion. R534,000 R536,000 R500,000 RO 7 Mining pic is a company incorporated and tax resident in the United Kingdom. However, the location of the majority of its mining operations are situated in South Africa. The company wished to further expand its mining operations in South Africa and therefore decided on 1 July 2014 to relocate the executive directors to South Africa. All future board meetings will take place in Johannesburg, South Africa. The executive directors are responsible for the strategy and operations on a daily basis. The company has a December year end. In relation to the residency of Mining pic, which of the following statements is true? Mining pic became resident in South Africa from 1 July 2014 Mining pic only became resident in South Africa at the start of its new year of assessment (i.e. 1 January 2015) As Mining pic is incorporated in the United Kingdom, it can only be tax resident in the United Kingdom Mining pic became resident in South Africa from 1 January 20148 World Curios (Pty) Lid is a company which exports locally made souvenirs to the European market. It is not yet registered for value added tax (VAT). World Curios (Pty) Lid's annual financial results (expected to remain stable for the next few years) can be summarised as follows: RM Turnover (all exports) 970,000 Costs Labour (350,000) Material and other costs (all from VAT vendors) (150,000) Would it be advantageous for World Curios (Pty) Led to register for VAT? A No, as output VAT of 14% of turnover will be payable and VAT inputs will only be reclaimable on the material and other costs Yes, as World Curios (Pty) Ltd has breached the threshold for compulsory registration No, as the goods exported are exempt supplies and thus no input VAT will be recoverable Yes, as the goods exported are zero rated supplies and VAT inputs on the material and other costs can be reclaimed 9 XYZ Ltd is a South African resident company. XYZ Lid has an assessed trading loss brought forward of R500,000 and an assessed capital loss brought forward of R340,000. For the 2015 year of assessment, the company made a taxable profit of R600,000 and had capital gains of R450,000 and capital losses of R200,000. XYZ Ltd is not a small or micro business corporation. What is the normal tax liability of XYZ Ltd? A R11,217 R214,620 R74,620 R28,000 10 Which of the following categories of person must ALWAYS register as a tax practitioner? (1) Any person who provides advice with respect to the application of a tax Act or who assists in the completion of a tax return of another person (2) Any person working for a tax practitioner who provides advice with respect to the application of a tax Act or assists in the completion of a return of another person for consideration 3) A chief financial officer who provides tax advice to his employing company in the course of his overall duties (4) Any person registered with a recognised controlling body A 1, 2 and 3 B 2, 3, and 4 C 1 only 4 only11 Odds and Ends (Pty) Lid is a registered micro business. During the year ended 31 March 2015, the company had turnover of R850,000 and also sold certain chargeable assets realising proceeds of R160,000. What is Odds and Ends (Pty) Ltd's income tax liability for the year ended 31 March 2015? A R26,300 B R21,500 C R27,894 R267,837 12 Delilah disposed of her primary residence in February 2015 for R1,900,000. She had originally purchased the property for R100,000 in November 2002, but following the discovery of rich mineral deposits in the area, a mining company had purchased her property. Delilah had always used 10% of her property for business purposes. What is Delilah's capital gain before the annual exclusion? A RO as the proceeds for the disposal are less than R2 million RO as the capital gain is less than R2 million C R180,000 as 10% of the property was used for business purposes and the primary residence exclusion of R2 million applies to the remainder of the capital gain D R1,800,000 as the property was not used exclusively as a primary residence 13 A Ltd is a registered value added tax (VAT) vendor which files VAT returns every two months via e-filing. The two-month period ended 31 January 2015 reflected a net payment of VAT due to the South African Revenue Service (SARS) of R450,000. Note: 25 January 2015 is a Sunday 31 January 2015 is a Saturday III 25 February 2015 is a Wednesday 28 February 2015 is a Saturday What is the latest date by which A Ltd must have filed its VAT return and made payment of the R450,000 VAT due to avoid any penalties or interest charges? 27 February (being the last business day of February) 30 January (being the last business day of January) 25 February (being the 25th day of the month following the end of the period) 28 February (being the last day of February) 14 During the year ended 31 March 2015, ABC (Pty) Lid, a registered value added tax (VAT) vendor, acquired a conference table and chairs for a cost of R6,900 (inclusive of VAT). ABC (Pty) Ltd is classified as a small business corporation. What is the amount of capital allowances which ABC (Pty) Ltd may claim in respect of acquisition of furniture in the year ended 31 March 2015? A R3,026 R6,053 C R6,900 R3,45015 Anthony made two contributions during the year of assessment 2015 to public benefit organisations as follows: R2,000 to a charity for the elderly which provided him with entry into a lucky prize draw in return for the donation. No donation certificate was received. - R1,500 to an animal rescue organisation. A donation certificate was received for this contribution. Anthony has taxable income of R250,000 before any deduction for donations. What deduction can Anthony claim for the two contributions to public benefit organisations in the year of assessment 2015? A R3,500 B R2,000 R1,500 D RO (30 marks)On 1 April 2011, Tumnus Pty Ltd (registered for GST purposes) bought a car and immediately provided the car to Jane (an employee) for her private use. Throughout the 2011/12 FBT year, the log book maintained for the car shows the following details: Cost of the car $18,000 (GST inclusive) Repairs $3,300 (GST inclusive) Insurance $2,200 (GST inclusive) Fuel $ 990 (GST inclusive) Distance travelled 20,000 km (for the entire 2011/12 FB'T year) Business use 70% Jane contributed $1,000 towards the cost of the car. Question 12 [6 marks] Using the 2011/12 rates, calculate the FBT liability for Tumnus Pty Ltd for the 2011/12 FBT year, assuming Tumnus Pty Ltd would like to minimise its FBT liability. If there is more than one method of calculating the FBT liability, conclude which method should be used. Show full workings to support your conclusion