Memo from Thabo Molefe

From: Thabo Molefe

To: Tax Manager

Subject: VAT

Explain the nature and scope of value$-$added tax $($VAT$).[3$ Marks$]$

$($ii$)$ List the three types of VAT supply. $[2$ Marks$]$

$($b$)$ The following are the transactions of Morwa Communications $($Pty$)$ Ltd for the tax period ended

$31$ August $2022.$ All figures are stated excluding value$-$added tax $($VAT$).$

P

Income

Sales in Botswana $3,752,986$

Sales exported $145,892$

Profit on sale of saloon car $19,925$

Sale of scrap $23,093$

Interest received $6,794$

Credit notes re purchases returned to suppliers $106,382$

$4,055,072$

Expenses

Purchases $2,078,293$

Credit notes re price adjustments on goods exported $34,702$

Salaries and wages $852,097$

Staff refreshments $894$

Commercial rentals $37,834$

Entertainment $1,782$

Electricity and water $10,743$

Purchase of testing machines $153,928$

Loss on sale of truck $25,395$

Medical aid payments $17,520$

Q P $-$ A S R $-001|$ R e v $001$ E f f D a t e : $09-0$

$8-2023$

Page $7$ of $10$

Residential rentals $20,750$

Pension contributions $22,674$

$3,256,612$

The profit$/($loss$)$ on the sale of the saloon car and the truck are made up as follows:

Car Truck

P P

Cost price $185,350428,670$

Depreciation $(160,275)(345,275)$

$25,07583,395$

Sale proceeds $45,00058,000$

Profit$/($loss$)$ on sale $19,925(25,395)$

REQUIRED:

Calculate the value$-$added tax $($VAT$)$ payable by or refundable to Samco Davis Communications $($Pty$)$

Ltd for the tax period ended $31$ August $2022.$

Note: Indicate any items on which output tax is not payable or input tax is not claimable by the use of

zero $(0).(15$ Marks$)$