Question $135$ Marks

You are a tax consultant. The following unrelated tax matters are presented to you.

Matter $120$ Marks

Imms Estate Agents CC $($IEA$)$ is a private company which is established and effectively

managed in the Republic of Namibia with a $31$ December year of assessment. IEA

collects rentals on behalf of property owners at a $25\%$ commission of the amount

collected. During its $2023$ year of assessment Imms Estate Agents CC collected N$$5$

$800000$ from tenants occupying Ndoto Courts $($a new client of the entity$).$ The company

kept the commission and paid over the balance to the property owners.

This amount represents $95\%$ of the rent due for the year despite the effects of the

Covid$-19$ pandemic on the tenants$$ income. Ndoto Courts management were impressed

by this landmark as they always struggled to collect rent from tenants in the past. As

such they gave IEA a brand$-$new state$-$of$-$the$-$art computer worth N$$35000$ as a token

of appreciation for the good services rendered. The Accountant of IEA went on

maternity leave at the time of preparing the income tax return. Mr Michael Hidimokanya,

the Managing Director, then consulted you to advise on the income tax implications of

the entire amount received on behalf of Ndoto Courts as well as the computer received.

Write a memorandum to the Managing Director in which you determine and discuss in

detail the amount to be included in the gross income of IEA for the $2023$ year of

assessment. Refer to relevant case law principles. $18$ marks

Presentation marks $(2)$

Matter $215$ Marks

On $25$ December $2022$ Mr Erastus Johannes $($a $25-$year$-$old male$)$ decided to buy a

small house, renovate it and rent it out in order to earn additional income. The purchase

price was R$1500000.$ Although the property is old, it only required limited work before it

could be let. The renovations were started on $1$ January $2023$ and completed on $25$

February $2023.$

The first tenant moved in on $1$ March $2023($paying a monthly rental of R$9000),$ after

Johannes had affected the following renovations: N$

Replacement of damaged carpets with

wooden floors

Installing a security system $35000$

Painting of the exterior and interior walls of the House $20000$

Landscaping the garden $($the house did not

have a garden before, only grass$)15000$

Total cost $70000$

Write an email to Mr Johannes explaining to him with reference to section $17(1)($d$)$ and

case law, whether the renovation expenses he incurred will be deductible for income tax

purposes during his $2023$ year of assessment. $14$ Marks

Presentation marks $(1)$