From: Czeely@letsatsi.co.za Sent: 26 February 2023 To: Taxmanager@letstatsi.co.za Subject: Special inclusions Dear Tax Manager I trust this email finds you well and a warm welcome once more to Letsatsi Ltd. I have a few questions regarding the following scenario and trust you will be able to assist me. Mrs. Sindiziwe Mkhize, CEO of Letsatsi Ltd, owns a plot of land in the Thabazimbi area. She entered into a lease agreement with Mrs. Amber Drew that included the following conditions: 1. Mrs. Drew was to pay Mrs. Mkhize a premium of R60 000 on the signing of the agreement. This was conducted on 1 April 2022 and payment was made on the same date. 2. The lease was for a period of 20 years. 3. A monthly rental of R5 000 was payable to Mrs. Mkhize. 4. Mrs. Drew was obliged to erect a five-bedroom house on the site. A minimum of R2 000 000 was to be spent by Mrs. Drew on erecting this house. The house was completed at a cost of R2 200 000 on 1 February 2023. Mrs. Drew and her family immediately occupied the house. I am uncertain of how these transactions should be treated for income tax purposes and need your advice on the best way forward. I trust you find it in order. Please do not hesitate to contact me should you have any questions. Regards, Catherine Zeely

Write an email to Mrs. Catherine Zeely and discuss whether the amounts referred to in the email will be included in Mrs. Sindiziwe Mkhizes gross income for the year of assessment ending 28 February 2023.