Question 1 (25 Marks) Stallion Stampers, is owned by Mr Clock, a resident of the Republic. The business manufactures sells and repairs watches from a shop that Mr Clock leases in a local shopping centre. He is a sole proprietor and is registered for value-added tax on the invoice basis. An analysis of Stallion Stampers receipts and accruals and expenditure for the two-month tax period ending 30 September 2022 is set out below. Unless otherwise stated, all amounts are inclusive of value-added tax when applicable. The business makes solely taxable supplies. Receipts and accruals Sales of watches 207 000 Repairs of watches 29 900 Interest 5 175 Indemnity award (note 1) 51 750 Expenditure Bad debts (note 2) 13 225 Bank charges 920 Depreciation (note 3) 19 145 Insurance premiums (note 4) 3 450 Fuel 1 495 Printing and stationery 1 564 Purchases (note 5) 160 245 Salaries 41 400 Rentals (note 6) 13 294 Additional information (Notes): 1. The indemnity award of R51 750 was received by Stallion Stampers from his insurer for two expensive watches that were stolen from his shop in June 2022. 2. Bad debts of R13 225 written off by Stallion Stampers, comprising the following: R10 350 owing by one of his long-standing customers, from a credit sale. This customer has since emigrated and he has been unable to trace her. R2 875 was lent by him to an employee, who left town without repaying the loan. 3. Depreciation (for the two-month tax period) is charged for the following assets owned by Stallion Stampers: Manufacturing equipment that was purchased by him in a previous tax period for R276 000 (R240 000 plus value-added tax of R36 000) 8 000 A computer that was purchased by him on 1 August 2022 for R14 375 (R12 500 plus valueadded tax of R1 875) 695 A motor car that was purchased by him on 1 September 2022 for R632 500 (R550 000 plus valueadded tax of R82 500). He has the sole use of it. (He maintains accurate records of his travelling and can prove that his business travelling is 40% of his total travelling.) 10 450 19 145 4. Stallion Stampers insurance premiums of R3 450 were incurred for the following assets that belong to him: Manufacturing equipment 460 Office computer 230 Motor car 1 035 Trading stock 1 725 3 450 5. Stallion Stampers purchases of R160 245 are made up as follows: Purchases of raw materials from vendors 126 500 Second-hand watches purchased (and paid for) from non-vendors 16 675 Second-hand watches purchased from vendors 17 250 160 425 Stallion Stampers purchases second-hand watches from both vendors (for example, auctioneers) and from nonvendors (for example, private individuals and deceased estates). He displays and sells second-hand watches in his shop 6. Stallion Stampers rentals of R13 294 are for the following items: Shop premises 10 925 Cash register 1 495 Tea urn (located in the shop for his employees and himself to make tea) 874 13 294 YOU ARE REQUIRED TO determine the value-added tax due to, or from, SARS for Stallion Stampers two-month tax period that ended on 30 September 2022. Question 2 (5 Marks) A trusts receipts and accruals comprise rentals of R100 000 and royalties of R50 000. Its deductions and allowances amount to R165 000, of which R160 000 relates to its rentals and R5 000 to its royalties. The beneficiary has a vested right to the rentals but not to the royalties. No royalty income was distributed to the beneficiary. Determine the taxable income of the beneficiary for the 2022 year of assessment and the total amount that should be carried forward to the trust.