Business Consultants is a start-up tax consulting company situated in a small town in the Eastern Cape province, South Africa. During the 2023 financial year, Business Consultants received the following queries from its clients and requested your assistance in addressing them:

Query 1: Donau Limited - Donau Limited is a Small Business Corporation operating in the information, communication and technology industry. The company has a 31 March financial year end. On 1 October 2022, Donau Limited disposed of its old office furniture for a total premium amount of R150 000 when its openmarket value based on current market prices was determined as R110 000 on the date of disposal.

The premium amount was charged for the gloss coating that was added to the furniture in replacement of the worn-out varnish coating. The proceeds from the disposal were received on 1 October 2022.

Query 2: Dorego Designs Limited - Dorego Designs Limited ("DD") is a renowned company that specialises in designing wedding gowns made from luxurious imported fabrics. During DDs financial year ended 30 April 2023, a special order was placed by the princess of the Zulu tribe where DD was required to design a unique wedding dress made up of a very expensive silk fabric. The wedding dress was completed at a total cost of R189 000 and was sold to the princess for R240 000. Given the little value placed on money by the Zulu tribe, the princess offered to settle the purchase price through transferring 30 cows valued at R240 000 in total.

Query 3: Leratos Caf - Leratos Caf is a home to all coffee lovers in Potchefstroom, South Africa. The company has a 31 December financial year end. During the 2023 financial year, Leratos Caf entered into a cancellable contract with Kgorong Holdings, a company that provides financial literacy coaching around the Gauteng province of South Africa. In terms of the contract, Leratos Caf is required to deliver coffee as part of the Kgorong Holdings coaching packages for the period 1 January 2024 to 31 August 2024. Kgorong made a payment of R45 000 in full settlement of the delivery to be made for the duration of the contract.

Query 4: Sparkle Cleaning Projects - Sparkle Cleaning Projects (Sparkle) launched Yakhona, a new cleaning product specifically produced to get rid of the toughest of stains on household furniture and appliances. The company has a 30 April financial year end. On 1 February 2023, a customer sued Sparkle for a skin allergic reaction that she claims was caused by the use of Yakhona. After multiple court appearances, the case was still unsettled at the end of the financial year. The next court date was determined as 22 May 2023.

Query 5: Boomerang Ltd - Boomerang Ltd is a company with a 28 February financial year end. During the 2023 financial year, the following distributions were made to the holders of shares in the company:

Shareholder Shareholding Payment date Amount Notes

Shareholder	Shareholding	Payment date	Amount	Notes
Mr Johnsons	52%	?	?	1
Milano Plc	48%	15 December 2022	R150 033	2

Notes: 1. Mr Johnsons distribution was in the form of a minibus transfer. The minibus was acquired on 1 January 2021 for R320 000. The minibus was delivered to Mr Johnsons residence on 15 November 2022. The market value of the minibus on 30 September 2022 and 15 November 2022 was R250 000 and R230 000, respectively.

2. Milano Plc is a company that has its place of effective management outside South Africa, and its distribution was paid on 31 November 2022. Milano Plc submitted a declaration and a written undertaking on 30 December 2022, in support of a dividends tax withholding rate of 5% in South Africa, as the dividend is said to be taxable at a rate of 15% in its country of residence.

Additional information: The dividends were declared on 30 September 2022. All distributions were made in cash except for the distribution referred to in note 1 above. (a) In respect of query 1 to 4, discuss whether the amounts should be recognised as gross income or deducted in terms of s11(a) read with s23(g) for the 2023 year of assessment. Support your discussion with at least one court case and related principle. Present your discussion in the following format:

Query #	Court case and related principle	Application	Conclusion

(b) In respect of query 5, discuss, supported with calculations, the dividends tax consequences of the distributions made by Boomerang (Pty) Ltd to its shareholders. Indicate the date on which dividends tax must be paid over to SARS where applicable. APPENDIX A Turnover Tax Rates for the year of assessment ending on or before 28 February 2023 Taxable Turnover Tax Liability On the first R335 000 0% R335 001 to R500 000 1% of the amount above R335 000 R500 001 to R750 000 R1 650 + 2% of the amount above R500 000 R750 001 and above R6 650 + 3% of the amount above R750 000 Small Business Corporations Rates for the year of assessment ending on or before 31 March 2023 Taxable Turnover Tax Liability Not exceeding R91 250 0% Exceeding R91 250 but not exceeding R365 000 7% of the amount above R91 250 Exceeding R365 000 but not exceeding R550 000 R19 163 + 21% of the amount above R365 000 Exceeding R550 00 R58 013 + 27% of the amount above R550 000