Period: 1 June 2022 - 31 May 2023 Type of tax: Normal tax Treatment: All amounts are exclusive of VAT, unless stated otherwise or if not applicable. NB: None of the notes, as set out in Attachment 1, are included in the amounts below. We will be needing assistance with the following transactions entered by RevMed: 1. Acquired a patent for medicine which can cure HIV on 1 September 2022 for R15 million. 2. RevMed runs a learnership program (NQF level 4) for upcoming scientists. Currently it enrolled two employees on the program: - John M, who has been on the program for 3 years now and completed his learnership on 21 May 2023. John is an individual with a disability, as defined in the Income Tax Act. - Lisa P, entered a 24-month learnership with RevMed on 1 June 2022. Lisa has no disabilities and was still enrolled with the company at year- end. 3. A new and unused machine (Machine A) was purchased for R120 000 and brought into use on 1 September 2022 in a process of manufacture. Machine A was destroyed by a fire on 31 October 2022. RevMed received R140 300 in his bank account from his insurers as compensation for the loss of this machine. The accountant is unsure of the VAT consequences of this transaction and has not taken VAT into account. Machine A was replaced by a second-hand machine, (Machine B) which cost R230 000 . The purchase price of Machine B was paid in full on 20 December 2022. The accountant hasn't taken any VAT effects into account for this transaction as he is of the opinion that there is no VAT consequence since Machine B was purchased from a non-vendor. Machine B was brought into use on 1 January 2023. 4. A factory was built at a cost of R4 000000 . The construction of the building commenced on 1 August 2021 and was completed on 15 November 2022. The factory was brought into use from 1 December 2022. 5. Insurance premiums of R108 000 have been paid. They consist of the following: - Loss of profits insurance - Fire and storm insurance for its factory building and equipment 6. Administrative expenses of R10 000 that were paid include the following: - Legal expenses for the collection of irrecoverable debts R6000 - Speeding fines on the company's delivery vehicle that the directors consider to be a normal business expense 7. Bad debts of R1 750 were written off during the year. Included is an amount of R300 which related to a loan to an employee who has disappeared. 8. Local dividends of R5 000 were earned during the year of assessment. RevMed raised a loan to purchase the shares and interest of R900 was incurred on the loan. 9. RevMed made donations of R450 to homeless children living on the street. 10. RevMed purchased a three-wheeled delivery vehicle (which can only accommodale 1 person, on 1 March 2023 for R280 600 (including VAT) and brought it into use immediately. The accountant has not taken VAT into acoount on this transaction because he is unsure how to treat it. [Interpretation Note 47 allows for a wrile off period of four (4) years on delivery vehicles and five (5) years on passenger vehicles.] On the first of April, Reviled gave exclusive right of use of the above delivery vehicle to one of its drivers. By end of year, he had incurred R500 in fuel cost and he bears the full cost of maintenance for the delivery vehicle. 11. On 1 October 20, RevMed entered into a ten-year lease agreement for an additional factory building to be used for the manufacturing of pharmaceutical products, from Pharma (Pty) Ltd. In terms of this agreement, RevMed was obliged to spend R190 000 to convert the premises into a faclory suitable for the manufacturing of pharmaceufical products. These conversions were compleled on 1 April 2022 at a cost of R240 000 and manufacturing commenced the next day. The lease agreement also provides for: - Rental of R8 000 a month payable from 1 October 2021 (rental increases by 8% per annum on 1 October.) - A lease premium of R96 000, which was paid on 1 October 2021. 12. During March 2022, RevMed purchased a new house at a cost of R200 000 . The house was sold to the factory manager on 1 July 2022 on an interest-free loan acoount for R200 000 (the current market value). The loan account is repayable monthly in arrears over 10 years. Al payments due were made. Reviled does not own any other residential units. 13. During the year, RevMed registered its business logo as a trademark to be included on all future product packaging. The cost of registering the trademark amounted to R38 800 . 14. RevMed's latest project involves a top of the range facial product. As it is RevMed has spent R72 000 on research and development costs during the current year of assessment. The research and development have been approved by the Department of Science and Technology, therefore deductible. 2 Refer to Attachment 2: Calculate the effect of the transactions on the taxable income of Revolutionary Medicines (Pty) Ltd for the year of assessment ended 31 May 2023. Show all calculations and considerations. Provide brief reasons for any nil effects, inclusions or exclusions in your calculations. Also provide reasons for any VAT consequences which you still need to take into account (if applicable). Note to Student: - Clearly indicate if the amount is input tax or output tax. - Clearly indicate (with a brief reason) where there is no VAT or a Rnil VAT effect. - Round all amounts to the nearest Rand. - You can assume that Revolutionary Medicines (Pty) Ltd wishes to minimise their tax liability during the current year of assessment. Period: 1 June 2022 - 31 May 2023 Type of tax: Normal tax Treatment: All amounts are exclusive of VAT, unless stated otherwise or if not applicable. NB: None of the notes, as set out in Attachment 1, are included in the amounts below. We will be needing assistance with the following transactions entered by RevMed: 1. Acquired a patent for medicine which can cure HIV on 1 September 2022 for R15 million. 2. RevMed runs a learnership program (NQF level 4) for upcoming scientists. Currently it enrolled two employees on the program: - John M, who has been on the program for 3 years now and completed his learnership on 21 May 2023. John is an individual with a disability, as defined in the Income Tax Act. - Lisa P, entered a 24-month learnership with RevMed on 1 June 2022. Lisa has no disabilities and was still enrolled with the company at year- end. 3. A new and unused machine (Machine A) was purchased for R120 000 and brought into use on 1 September 2022 in a process of manufacture. Machine A was destroyed by a fire on 31 October 2022. RevMed received R140 300 in his bank account from his insurers as compensation for the loss of this machine. The accountant is unsure of the VAT consequences of this transaction and has not taken VAT into account. Machine A was replaced by a second-hand machine, (Machine B) which cost R230 000 . The purchase price of Machine B was paid in full on 20 December 2022. The accountant hasn't taken any VAT effects into account for this transaction as he is of the opinion that there is no VAT consequence since Machine B was purchased from a non-vendor. Machine B was brought into use on 1 January 2023. 4. A factory was built at a cost of R4 000000 . The construction of the building commenced on 1 August 2021 and was completed on 15 November 2022. The factory was brought into use from 1 December 2022. 5. Insurance premiums of R108 000 have been paid. They consist of the following: - Loss of profits insurance - Fire and storm insurance for its factory building and equipment 6. Administrative expenses of R10 000 that were paid include the following: - Legal expenses for the collection of irrecoverable debts R6000 - Speeding fines on the company's delivery vehicle that the directors consider to be a normal business expense 7. Bad debts of R1 750 were written off during the year. Included is an amount of R300 which related to a loan to an employee who has disappeared. 8. Local dividends of R5 000 were earned during the year of assessment. RevMed raised a loan to purchase the shares and interest of R900 was incurred on the loan. 9. RevMed made donations of R450 to homeless children living on the street. 10. RevMed purchased a three-wheeled delivery vehicle (which can only accommodale 1 person, on 1 March 2023 for R280 600 (including VAT) and brought it into use immediately. The accountant has not taken VAT into acoount on this transaction because he is unsure how to treat it. [Interpretation Note 47 allows for a wrile off period of four (4) years on delivery vehicles and five (5) years on passenger vehicles.] On the first of April, Reviled gave exclusive right of use of the above delivery vehicle to one of its drivers. By end of year, he had incurred R500 in fuel cost and he bears the full cost of maintenance for the delivery vehicle. 11. On 1 October 20, RevMed entered into a ten-year lease agreement for an additional factory building to be used for the manufacturing of pharmaceutical products, from Pharma (Pty) Ltd. In terms of this agreement, RevMed was obliged to spend R190 000 to convert the premises into a faclory suitable for the manufacturing of pharmaceufical products. These conversions were compleled on 1 April 2022 at a cost of R240 000 and manufacturing commenced the next day. The lease agreement also provides for: - Rental of R8 000 a month payable from 1 October 2021 (rental increases by 8% per annum on 1 October.) - A lease premium of R96 000, which was paid on 1 October 2021. 12. During March 2022, RevMed purchased a new house at a cost of R200 000 . The house was sold to the factory manager on 1 July 2022 on an interest-free loan acoount for R200 000 (the current market value). The loan account is repayable monthly in arrears over 10 years. Al payments due were made. Reviled does not own any other residential units. 13. During the year, RevMed registered its business logo as a trademark to be included on all future product packaging. The cost of registering the trademark amounted to R38 800 . 14. RevMed's latest project involves a top of the range facial product. As it is RevMed has spent R72 000 on research and development costs during the current year of assessment. The research and development have been approved by the Department of Science and Technology, therefore deductible. 2 Refer to Attachment 2: Calculate the effect of the transactions on the taxable income of Revolutionary Medicines (Pty) Ltd for the year of assessment ended 31 May 2023. Show all calculations and considerations. Provide brief reasons for any nil effects, inclusions or exclusions in your calculations. Also provide reasons for any VAT consequences which you still need to take into account (if applicable). Note to Student: - Clearly indicate if the amount is input tax or output tax. - Clearly indicate (with a brief reason) where there is no VAT or a Rnil VAT effect. - Round all amounts to the nearest Rand. - You can assume that Revolutionary Medicines (Pty) Ltd wishes to minimise their tax liability during the current year of assessment