Question $1[30]$

Majuba $($Pty$)$ Ltd is a South African resident. It is a small business corporation that manufactures shoes. The company$$s

financial year ends on $28$ February. Majuba $($Pty$)$ Ltd is a registered vat vendor and the company does not apply IFRS $9$ for

financial reporting purposes.

The following information is available for the year ended $29$ February $2024($all amounts exclude VAT unless otherwise

stated$)$:

Income Notes R

Sales $5050000$

Dividend income $180000$

Expenses and costs

Purchase of raw material on $1$ July $20232000000$

Inventory $2?$

Bad debts $60000$

Doubtful debts $3?$

Salaries and wages $4880000$

Legal expenses $5177000$

Patent acquired $650000$

Repairs and maintenance $42000$

Electricity $749000$

Restraint of trade $8160000$

Computer costs $($including VAT$)980500$

Machinery costs $10?$ see note $10$

Notes:

$1.$ The company received a dividend from a local investment company on

$31$ December $2023.$

$2.$ The cost price of the opening stock was R$560000$ and the market value was R$420000$ as on $1$ March $2023.$ The cost

price of the closing stock was R$480000$ and the market value was R$535000$ on $29$ February $2024.$

$3.$ The list of doubtful debts as at $29$ February $2024$ amounted to R$120000$ and $70\%$ of the total amount have been in

arrears for more than $120$ days. The balance of the debtors have not been in arrears for more than $60$ days. The

doubtful$-$debt allowance by the Commissioner for the $2023$ year of assessment, amounted to R$42000.$

$4.$ Salaries paid during the current year of assessment amounted to R$790000$ and the company also contributed

R$90000$ towards the provident fund on behalf of the company$$s employees.

$5.$ Legal expenses were incurred as follows:

$-$ Drafting of lease contracts for the company amounting to R$65000.$

$-$ The balance of the expenses relate to collection of outstanding trade debtors.

$6.$ Majuba $($Pty$)$ Ltd incurred an expense of R$50000$ in acquiring a design on its trading merchandise.

$7.$ The company paid the entire amount of electricity for the period $1$ February $2024$ to $31$ August $2024.$

$8.$ The full payment was made to the former operations manager on $2$ January $2024$ for agreeing not to start a business

in South Africa within a period of four years.

$9.$ Due to the expansion of the business, the company purchased four computers during October $2023$ for immediate use

by the finance department. The taxpayer elects the $50$:$30$:$20$ write$-$off that pertains to other assets in terms of section

$12$E$.$

$10.$ On $1$ February $2023,$ Majuba $($Pty$)$ Ltd acquired a new manufacturing machine from the United States which was

brought into use on $3$ May $2023.$ The cost of the machine was US$$45000.$ The company settled the purchase price in

full on $1$ June $2023.$ No other costs were incurred on the machine and no forward exchange contract was entered into.

The spot rates are as follows:

$1$ February $2023$ $$1=$ R$17\mathrm{.}00$

$28$ February $2023$ $$1=$ R$17\mathrm{.}50$

$3$ May $2023$ $$1=$ R$17\mathrm{.}80$

$1$ June $2023$ $$1=$ R$18\mathrm{.}00$

Required:

Calculate in detail Majuba $($Pty$)$ Ltd$.$s tax liability for the year ended $29$ February $2024.$

Show all workings and full explanations where applicable.