Harry Hocks (aged 67) and Shirley Hocks (aged 53) are both regarded to be residents of the Republic. They are married in community of property and have two daughters - Alexa (aged 22) and Siri (aged 15). None of Harry's or Shirley's assets are excluded from their joint estate. Harry retired from his employment with BizFurn (Pty) Ltd two years ago. However, he found that he experienced a great deal of boredom at home and commenced business as a sole proprietor from 1 March 2022. He now runs a thriving business selling handmade bespoke wooden furniture. Their accountant has compiled the following table with regard to the Hocks' family receipts and accruals for the 2024 year of assessment. Harry Shirley Alexa Siri Note Annuity from foreign pension fund R300 000 1. Annuity from South African pension fund R336 000 2. Gross sales from business R625 000 3. Gross salary R135 000 4. Foreign dividends R12 960 5. Interest income R41 690 R8 250 6. Rental income R120 000 R120 000 7. Notes: 1. Many years ago, prior to his marriage and prior to his employment with BizFurn (Pty) Ltd, Harry worked for a non-resident company for a period of five years. In terms of his service contract, Harry worked in the United States of America for four years and in South Africa for one year. Harry was a member of a foreign pension fund during his entire period of employment with the foreign company. 2. This annuity is from a South African pension fund. All Harry's contributions to the fund were previously allowed as a deduction. 3. The accountant has correctly computed this amount in respect of the gross sales from Harry's business. 4. Shirley is employed as a bank-teller. She has no involvement in Harry's business. 5. Harry holds a number of shares in foreign companies listed on the New York Stock Exchange. He does not hold at least 10% of the equity shares or voting rights in any of these companies. 6 6. The interest income earned by Harry and Shirley for the year of assessment is in respect of their current and savings accounts held with South African banks. 7. During the prior year of assessment, on the advice of their financial planner, Harry and Shirley donated their holiday apartment in Umhlanga (valued at R2 000 000) to their daughters, in equal shares. The apartment is currently leased to a tenant. Total net rentals for the 2024 year of assessment amounted to R240 000. Part B (8 marks, 16 minutes) BizFurn (Pty) Ltd ("the company" or "BizFurn") is a wholesaler of office furniture. The company is a resident of the Republic and has a financial year ending on the last day of February. The accountant is unsure of the normal tax consequences for the year of assessment ended 29 February 2024, arising from the following information: New credit sales policy: In an attempt to increase sales, during the 2024 year of assessment, it was decided to introduce a payment policy that allowed approved customers to make a purchase and take delivery of the furniture, but pay for the purchase over six months, interest free. As an incentive for credit customers to settle their accounts early, the company offers a 10% settlement discount if the full amount due is settled within three months of purchase. Total sales under the 'six months to pay' credit policy amounted to R325 200 for the 2024 year of assessment. This included an amount of R12 500 claimed as settlement discounts by customers who settled their debts within the three-month period, during the 2024 year of assessment. It also includes outstanding debtors as at 29 February 2024 of R125 600 (all items in respect of these sales have been delivered to customers prior to the end of the year of assessment), of which debts totalling R76 100 are still within the three-month settlement discount period. The balance of debtors is already outside the three-month settlement discount period. Required: Question 3 Marks PART A Calculate Harry Hocks' "income" (as defined in section 1 of the Income Tax Act) for the 2024 year of assessment. Round off to the nearest Rand. Refer to the tax legislation in your answer. 6 PART B Based on the information given regarding the new credit sales policy, discuss what amount should be included in BizFurn's gross income for the 2024 year of assessment. Refer to the tax legislation and relevant case law in your answer. 8 Ignore Value-Added Tax (VAT) for all parts of this question.