Question $1(30$ Marks$)$

Simonsberg $($Pty$)$ Ltd is a company located in Cape Town that manufactures ladies and kiddies clothing.

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

stated$)$:

Income Notes R

Sales $12500000$

Interest received $91000$

Expenses and costs

Learnership agreement $1?$

Purchases of raw materials during the year $3600000$

Inventory $2?$

Salaries and wages $32960000$

Bad debts $4105000$

Legal expenses $5150000$

Annuity paid to former employee $640000$

Broad$-$based employee share plans $7?$

Restraint of trade $8170000$

Machinery $($including Vat$)9575000$

Commercial building $103000000$ Notes:

$1.$ The company entered into registered learnership agreements $($that fulfil all the section $12$H criteria$)$ with John and

Kate. John was employed on $1$ March $2023$ as a $$learner$$ on a full$-$time basis, with a level $5$ NQF qualification. This

qualification will be required to be completed at the end of two years.

Kate $($a disabled person$)$ was registered as a $$learner$$ on a part$-$time basis on $1$ March $2023,$ with a level $8$ NQF

qualification. In terms of the registered learnership agreement, the learnership will be completed at the end of $12$ months.

This was duly achieved.

$2.$ The cost price of the opening stock was R$960000$ and the market value was R$1020000$ as on $1$ March $2023.$

The cost price of the closing stock was R$860000$ and the market value was R$880000$ on $29$ February

$2024.$

$3.$ Salaries paid during the current year of assessment amounted to R$2800000$ and the balance was the company$$s

contribution towards a provident fund on behalf of its employees.Notes:

$4.$ The following bad debts were written off during the current year of assessment:

$-$ Trade debtors $(75\%$ of the total bad debts amount$)$

$-$ Loan to a supplier $(25\%$ of the total bad debts amount$)$

$5.$ Legal expenses were incurred as follows:

$-$ Drafting of a restraint of trade agreement amounting to R$15000$ for an employee who had resigned to start his own

business.

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

$6.$ The company paid an annuity of R$40000$ to an ex$-$employee who retired at $65$ years of age during the current year of

assessment.

$7.$ On $3$ January $2024,$ the company granted $2500$ shares to $80$ of its permanent staff at no consideration. The market

value per share was R$6$ on the date that the shares were offered and they carry no restrictions. The plan in terrms of

which the shares were issued by the company qualifies as a broad$-$based employee share plan in terms of section $8$B$.$

$8.$ The full payment was made to the former operations manager on $1$ December $2023$ for agreeing not to start a business

in South Africa within a period of five years.

$9.$ On $2$ April $2022,$ a new manufacturing machine was acquired which was brought into use on $1$ June $2022.$ The

company elects the Section $12$C write$-$off allowance.

$10.$ The company constructed a mini commercial building on $15$ July $2023.$ The building was completed and immediately

brought into use on $1$ January $2024.$

Required:

Calculate in detail Simonsberg $($Pty$)$ Ltd$.$s taxable income for the year ended $29$ February $2024.$

Show all workings and full explanations where applicable