Memo from Thabo Molefe

From: Thabo Molefe

To: Tax Manager

Subject: Allowable deductions

Please take note of the following items of expenditure and losses.

a$)$ In addition to serving as the company's managing director, Mr$.$ Balashiki owns $30\%$ of Maun $($Pty$)$ Ltd$.$ The remaining $70\%$ of the shares are owned by Mr$.$ Balashiki's cousins and their families. Mr$.$ Balashiki has been found to have stolen P$300,000$ from corporate finances. It was established that Mr$.$ Balashiki was utterly bankrupt at the time this loss was uncovered. Maun $($Pty$)$ Ltd was forced to write off the loss of P$300,000$ as a bad debt as a result.

b$)$ In accordance with the shop hours regulations, Pilane $($Pty$)$ Ltd was fined P$5,000$ for operating beyond the allowed trade hours. According to the corporation, without late trading, its operations would not be profitable, and it would have to shut down.

c$)$ As compensation for the widow and dependents of a worker who passed away after an accident on a construction site brought on by the collapse of a reinforced concrete canopy because of poor construction, Kasane Construction $($Pty$)$ Ltd expended expenses of P$500,000.$

d$)$ Twelve flats in a building that Mr$.$ Disang owns are rented out to people. Tenants of the apartments are living there under annual leases that are renewable. Three tenants abandoned the units during the current tax year. New tenants were discovered, and Mr$.$ Disang suffered agent expenses of P$9,000$ and legal fees of P$3,000$ for drafting the three new leases.

e$)$ A further expense of P$30,000$ was spent after paying for merchandise that was previously sourced in South Africa. The devaluation of the Botswana Pula versus the South African Rand led to an increase in the price of P$30,000.$

f$)$ A full$-$page advertisement in a tourism promotion booklet intended to entice international visitors to Botswana will cost a commercial bank P$5,000$ to run.

You are required to:

Explain the income tax treatment of the above transactions. $[15$ Marks$]$

Explain the essential features of the self$-$assessment tax $($SAT$).[5$ Marks