NOTES QUESTION ONE [40] Magna (Pty) Ltd ("Magna" or "the company') operates as a manufacturer of car parts that are supplied to both local and foreign customers. The company is a registered Value Added Tax (VAT) vendor (category B), . The following income and expenditure amounts, inclusive of VAT where applicable, have been extracted for the tax period 1 January 2020 to 29 February 2020: 1. The company is in possession of all export sales documents as required by the South African Revenue Service ("SARS"). 2. The bad debts recovered by Magna during the tax period are broken down as follows: Local debtors R62 100 Export debtors R26 450 R INCOME Local sales 13 823 345 Export sales (note 1) 8 150 780 Bad debts recovered (note 2) 88 550 3. The insurance payout was received from the company's insurer in respect of a delivery truck that was stolen from the company's premises in December 2019. The truck was never recovered and the payment received represents the full settlement amount from the insurer. 4. All purchases are from registered VAT vendors. 5. A new motor car was purchased by the company on 1 February 2020 at a cost R346 150 (including VAT) and use of the vehicle was immediately granted to the company's financial director. All costs in relation to the car are borne by the company Insurance payout (note 3) 346 265 Interest on current bank account 5 980 6. Fuel costs for the period are broken down as follows: EXPENDITURE Delivery trucks R12 945 Purchases of raw materials (note 4) 11 955 630 Motor car (see note 5 above) R1 200 Salaries 3 256 700 Motor vehicle purchased (note 5) 346 150 14 145 Fuel (note 6) Repairs and maintenance (note 7) 7. All repairs and maintenance costs incurred for the period relate to the delivery trucks. 8. The insurance expense includes an amount of R690 relating to the insurance on the new motor car (note 5). 7935 47 610 23 230 9. The bad debt written-off for R23 230 was for an amount owing by a local customer for goods invoiced and delivered in October 2019. Magna has been unable to recover the debt since the debtor was liquidated. 10. Sundry purchases comprise of tea, coffee and sugar purchased for use by staff in the staff , kitchen. 1035 Insurance (note 8) Bad debt written-off (note 9) Bank charges Water and electricity Printing and stationery Sundry purchases - staff kitchen (note 10) 37 950 Required 2415 345 Calculate the VAT payable by, or refundable to Magna (Pty) Ltd for its tax period 1 January 2020 to 29 February 2020. Where there are no VAT consequences, provide a brief reason why. A VAT rate of 15% applied throughout the applicable tax period on standard-rated good and services. Round off to the nearest Rand. 1 2 TAXATION TABLES AND RATES COMPANIES AND CLOSE CORPORATIONS 2019/2020 year of assessment 28% RATES OF TAX FOR INDIVIDUALS 2019 tax year (1 March 2018 - 28 February 2019) & 2020 tax year (1 March 2019-29 February 2020) Taxable income (R) Rates of tax (R) 1 - 195 850 18% of taxable income 195851 - 305 850 35 253 +26% of taxable income above 195 850 305851 - 423 300 63 853 +31% of taxable income above 305 850 423 301-555 600 100 263 + 36% of taxable income above 423 300 555601 - 708 310 147 891 + 39% of taxable income above 555 600 708 311 - 1 500 000 207 448 + 41% of taxable income above 708 310 1 500 001 and above 532 041 +45% of taxable income above 1 500 000 SMALL BUSINESS CORPORATIONS (SBC) ) Financial years ending on any date between 1 April 2019 and 31 March 2020: Taxable income (R) 0-79 000 79 001 - 365 000 365001 - 550 000 550 001 and above Rate of Tax (R) 0% of taxable income 7% of taxable income above 79 000 % 20020 +21% of taxable income above 365 000 58 870+ 28% of the amount above 550 000 Tax Rebates Tax Rebate Financial years ending on any date between 1 April 2018 and 31 March 2019: : Younger than 65 65 and older 75 and older 2019 R14067 R21780 R24 354 2020 R14 220 R22014 R24 615 Taxable income (R) 0-78 150 78 151 - 365 000 365001 - 550 000 550 001 and above Rate of Tax (R) 0% of taxable income 7% of taxable income above 78 150 20080 + 21% of taxable income above 365 000 58930 + 28% of the amount above 550 000 Exempt Income (2019 & 2020 year of assessment) Total interest exemption including foreign interest Below 65 R23 800 65 and over R34 500 TURNOVER TAX FOR MICRO BUSINESSES Medical Scheme Credit (monthly) 2019 & 2020 years of assessment Main member Main member with one dependant Main member with two dependants 2019 R310 R620 R829 2020 R310 R620 R829 Taxable turnover (R) (R 0-335 000 335001 - 500 000 500 001 - 750 000 - 750 001 and above Rate of tax (R) 0% of taxable turnover 0 1% of taxable turnover above 335 000 1 650 + 2% of taxable tumover above 500 000 6 650 + 3% of taxable tumover above 750 000 Each additional de pendant qualifies for a further rebate or credit of R209 (2019: R209) per month. Travel allowance-cost scale - 2019 and 2020 years of assessment VALUE-ADDED TAX (VAT) From 1 April 2018 Prior to 1 April 2018 15% Value of the vehicle including VAT (R) Fixed cost (Rp.a) Fuel cost (c/km) Maintenance cost (c/km) 0-85 000 28 352 95.7 34.4 85 001 - 170 000 50 631 106.8 43.1 170001 - 255 000 72 983 1 16.0 47.5 255001 - 340 000 92 683 124.8 51.9 340001 - 425 000 112 443 133.5 60.9 425001 - 510 000 133 147 153.2 71.6 7 8 153 850 88.9 88.9 510001 - 595 000 153 850 158.4 more than 595 000 158.4 CAPITAL GAINS TAX (CGT) - 2019 & 2020 years of assessment Inclusion rates Individuals, special trusts and individual policyholder funds 40% Other taxpayers 80% R300 000 Exclusions . Individuals (annual non-cumulative): R40 000 Individuals in year of death: Primary residence exclusion on the disposal of a primary residence: R2milion (gain loss) Small business assets (when a person is at least 55 years of age): R1.8 million when a small business with a market value not exceeding R10 million is disposed of NOTES QUESTION ONE [40] Magna (Pty) Ltd ("Magna" or "the company') operates as a manufacturer of car parts that are supplied to both local and foreign customers. The company is a registered Value Added Tax (VAT) vendor (category B), . The following income and expenditure amounts, inclusive of VAT where applicable, have been extracted for the tax period 1 January 2020 to 29 February 2020: 1. The company is in possession of all export sales documents as required by the South African Revenue Service ("SARS"). 2. The bad debts recovered by Magna during the tax period are broken down as follows: Local debtors R62 100 Export debtors R26 450 R INCOME Local sales 13 823 345 Export sales (note 1) 8 150 780 Bad debts recovered (note 2) 88 550 3. The insurance payout was received from the company's insurer in respect of a delivery truck that was stolen from the company's premises in December 2019. The truck was never recovered and the payment received represents the full settlement amount from the insurer. 4. All purchases are from registered VAT vendors. 5. A new motor car was purchased by the company on 1 February 2020 at a cost R346 150 (including VAT) and use of the vehicle was immediately granted to the company's financial director. All costs in relation to the car are borne by the company Insurance payout (note 3) 346 265 Interest on current bank account 5 980 6. Fuel costs for the period are broken down as follows: EXPENDITURE Delivery trucks R12 945 Purchases of raw materials (note 4) 11 955 630 Motor car (see note 5 above) R1 200 Salaries 3 256 700 Motor vehicle purchased (note 5) 346 150 14 145 Fuel (note 6) Repairs and maintenance (note 7) 7. All repairs and maintenance costs incurred for the period relate to the delivery trucks. 8. The insurance expense includes an amount of R690 relating to the insurance on the new motor car (note 5). 7935 47 610 23 230 9. The bad debt written-off for R23 230 was for an amount owing by a local customer for goods invoiced and delivered in October 2019. Magna has been unable to recover the debt since the debtor was liquidated. 10. Sundry purchases comprise of tea, coffee and sugar purchased for use by staff in the staff , kitchen. 1035 Insurance (note 8) Bad debt written-off (note 9) Bank charges Water and electricity Printing and stationery Sundry purchases - staff kitchen (note 10) 37 950 Required 2415 345 Calculate the VAT payable by, or refundable to Magna (Pty) Ltd for its tax period 1 January 2020 to 29 February 2020. Where there are no VAT consequences, provide a brief reason why. A VAT rate of 15% applied throughout the applicable tax period on standard-rated good and services. Round off to the nearest Rand. 1 2 TAXATION TABLES AND RATES COMPANIES AND CLOSE CORPORATIONS 2019/2020 year of assessment 28% RATES OF TAX FOR INDIVIDUALS 2019 tax year (1 March 2018 - 28 February 2019) & 2020 tax year (1 March 2019-29 February 2020) Taxable income (R) Rates of tax (R) 1 - 195 850 18% of taxable income 195851 - 305 850 35 253 +26% of taxable income above 195 850 305851 - 423 300 63 853 +31% of taxable income above 305 850 423 301-555 600 100 263 + 36% of taxable income above 423 300 555601 - 708 310 147 891 + 39% of taxable income above 555 600 708 311 - 1 500 000 207 448 + 41% of taxable income above 708 310 1 500 001 and above 532 041 +45% of taxable income above 1 500 000 SMALL BUSINESS CORPORATIONS (SBC) ) Financial years ending on any date between 1 April 2019 and 31 March 2020: Taxable income (R) 0-79 000 79 001 - 365 000 365001 - 550 000 550 001 and above Rate of Tax (R) 0% of taxable income 7% of taxable income above 79 000 % 20020 +21% of taxable income above 365 000 58 870+ 28% of the amount above 550 000 Tax Rebates Tax Rebate Financial years ending on any date between 1 April 2018 and 31 March 2019: : Younger than 65 65 and older 75 and older 2019 R14067 R21780 R24 354 2020 R14 220 R22014 R24 615 Taxable income (R) 0-78 150 78 151 - 365 000 365001 - 550 000 550 001 and above Rate of Tax (R) 0% of taxable income 7% of taxable income above 78 150 20080 + 21% of taxable income above 365 000 58930 + 28% of the amount above 550 000 Exempt Income (2019 & 2020 year of assessment) Total interest exemption including foreign interest Below 65 R23 800 65 and over R34 500 TURNOVER TAX FOR MICRO BUSINESSES Medical Scheme Credit (monthly) 2019 & 2020 years of assessment Main member Main member with one dependant Main member with two dependants 2019 R310 R620 R829 2020 R310 R620 R829 Taxable turnover (R) (R 0-335 000 335001 - 500 000 500 001 - 750 000 - 750 001 and above Rate of tax (R) 0% of taxable turnover 0 1% of taxable turnover above 335 000 1 650 + 2% of taxable tumover above 500 000 6 650 + 3% of taxable tumover above 750 000 Each additional de pendant qualifies for a further rebate or credit of R209 (2019: R209) per month. Travel allowance-cost scale - 2019 and 2020 years of assessment VALUE-ADDED TAX (VAT) From 1 April 2018 Prior to 1 April 2018 15% Value of the vehicle including VAT (R) Fixed cost (Rp.a) Fuel cost (c/km) Maintenance cost (c/km) 0-85 000 28 352 95.7 34.4 85 001 - 170 000 50 631 106.8 43.1 170001 - 255 000 72 983 1 16.0 47.5 255001 - 340 000 92 683 124.8 51.9 340001 - 425 000 112 443 133.5 60.9 425001 - 510 000 133 147 153.2 71.6 7 8 153 850 88.9 88.9 510001 - 595 000 153 850 158.4 more than 595 000 158.4 CAPITAL GAINS TAX (CGT) - 2019 & 2020 years of assessment Inclusion rates Individuals, special trusts and individual policyholder funds 40% Other taxpayers 80% R300 000 Exclusions . Individuals (annual non-cumulative): R40 000 Individuals in year of death: Primary residence exclusion on the disposal of a primary residence: R2milion (gain loss) Small business assets (when a person is at least 55 years of age): R1.8 million when a small business with a market value not exceeding R10 million is disposed of