Question 1 (40 Marks) Val Kilmer, resident of the Republic, sells and repairs watches from a shop he 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 Var 's receipts and accruals and expendibure for his 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. He makes solely taxable supplies. Additional information: 1. The indemnity award of R51 750 was received by Val Kimer from his insurer for two expensive watches that were stolen from his shop. 2. Bad debts of R13 225 written off by Val KImer, 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 Val Kilmer: Val Kilmer purchases second-hand watches from both vendors (for example, auctioneers) and from nonvendors (for example, privale individuals and deceased estates). He displays and sells secondhand watches in his shop. 7. Two overseas air fickets costing R5 800 purchased by Val Kimer were given to an employee and his wife as part of the employee's salary package. 8. Assume a 15% vat rate. YOU ARE REQUIRED TO determine the value-added tax due to, or from, SARS for Val Kimer's two-month tax period that ended on 30 September 2022. Question 2 (30 Marks) Wendy House (Pty) Ltd manufactures and sells wooden houses and is not a small business corporation as defined. The following is a draft statement of comprehensive income for its year of assessment ending 31 March 2022. All amounts exclude VAT, unless stated otherwise: Notes: 1) Purchases amounted to R1 973 000; opening stock and closing stock were R202 500 and R296 000 respectively. The market value of the stock has never been below its cost. 2) Local" interest of R150 000 accrued during the 2022 year of assessment. 3) The company sold an office bulding on 30 December 2021 for R5 500000 . This office bulding was acquired in 2006 for R2 800000 . In addition to the acquisition cost, a transfer cost of R125 000 was paid to the lawwer, a valuafion cost of R55 000 was paid to value the building and improvements of R780 000 was made to the building. 4) In the early hours of the morning of 1 April 2021 a fire destroyed Machine A. The following amounts were received from the insurer: Loss of profits due to the fire = R28 000 Loss of stock destroyed during the fire = R17 000 . 5) Depreciation was calculated as follows on the following assets: - Delivery vehicle on hand as at 1 April 2021 = R85 000 (Purchased on 5 June 2020) . Delivery vehicle purchased and brought into use on 1 November 2021= R120 000 . 6) The company had an assessed loss of R260 000 from the previous year of assessment and due to this assessed loss SARS had still owed them a refund of R25 000 due to the provisional payment that had been made. You are required to calculate the total tax due to SARS for the year of assessment ending 31 March 2022. (Assume a tax rate of 28% ) Question 3 (10 Marks) Danny and Manny are in a partnership and their main business is the construction of houses. They share equally in the profits and lasses of the partnership. The clients of the business are responsible for the purchase of building material. On a smal scale they also offer clients a service of drafting plans for houses. They decided to register their business as a micro business for turnover tax purposes in the 2022 year of assessment. The following amounts relate to various amounts received by the micro business for that year: Notes: The refund received by the business relates to faulty equipment that was retumed to the supplier. The construction services figure includes an amount of R15 000 received from a client for a contract concluded in the previous year of assessment. The R15 000 had accrued to the business in the previous year of assessment and was subject to normal tax. - The construction figure also includes an amount of R50 000 from the carrying on of business activities in Lesotho. Required: Caloulate the turnover tax payable for the 2022 year of assessment. Question 4 (20 Marks) Walk for Life (Pty) Lid is a South African resident. It is a manufacturing business that manufactures shoes. The different types of shoes manufactured include running and walking shoes, as well as high heels and flip-flops. The compary's financial year ends on 31 March. Walk for Life (Pty) Ltd is a registered VAT vendor and the company does not use the IFRS 9 acoounting standard for financial reporting purposes. The following information is avalable to calculate the normal tax liabilty of Walk for Life (Pty) Lid for the year of assessment ended on 31 March 2023 (all amounts exclude VAT unless otherwise staled): Notes: 1. A dividend of R28 000 acorued to Walk for Life (Pty) Lid on 15 August 2022 from a wholly owned South African subeidiary company. 2. The cost price of the opening stock was R310000 and the market value was R285000 as on 1 Apri 2022. The cost price of the closing stock was R365 000 and the market value was R425 000 on 31 March 2023. 3. The list of doubtful debts as at 31 March 2023 amounted to R69 000 . The doubtful debt allowance allowed by the Commissioner for the 2022 year of assessment, amounted to R18 750 . 4. Salaries paid during the current year of assessment amounted to R750 000 and the compary also contribuled R56 000 towards the provident fund on behalf of the company's employees. 5. Legal costs of R23 000 incurred were paid on behalf of one of the company's directors and formed part of his salary as a fringe benefit. 6. Walk for Life (Pty) Lid incurred an expense of R41 300 in acquiring a design on its children's shoes that fights up when walking with them. 7. An amount of R25 000 was incurred on painting the entire exterior of the manufacturing building. The building was badly damaged due to excessive rainwater filtering through the cracks. 8. The company paid an amount of R36 500 in respect of electricity for the period 1 March 2022 to 31 October 2022. NB: This calculation should make provision for the prepaid expense incurred. 9. R160 000 was paid to the former financial manager on 1 March 2023 for agreeing not to start a similar business in the Republic within a period of five years. Only R120 000 consfluted income in the former employee's hands. You are required to: Calculate Walk for Life (Pty) Ltef's taxable income for the 2023 year of assessment. Question 1 (40 Marks) Val Kilmer, resident of the Republic, sells and repairs watches from a shop he 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 Var 's receipts and accruals and expendibure for his 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. He makes solely taxable supplies. Additional information: 1. The indemnity award of R51 750 was received by Val Kimer from his insurer for two expensive watches that were stolen from his shop. 2. Bad debts of R13 225 written off by Val KImer, 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 Val Kilmer: Val Kilmer purchases second-hand watches from both vendors (for example, auctioneers) and from nonvendors (for example, privale individuals and deceased estates). He displays and sells secondhand watches in his shop. 7. Two overseas air fickets costing R5 800 purchased by Val Kimer were given to an employee and his wife as part of the employee's salary package. 8. Assume a 15% vat rate. YOU ARE REQUIRED TO determine the value-added tax due to, or from, SARS for Val Kimer's two-month tax period that ended on 30 September 2022. Question 2 (30 Marks) Wendy House (Pty) Ltd manufactures and sells wooden houses and is not a small business corporation as defined. The following is a draft statement of comprehensive income for its year of assessment ending 31 March 2022. All amounts exclude VAT, unless stated otherwise: Notes: 1) Purchases amounted to R1 973 000; opening stock and closing stock were R202 500 and R296 000 respectively. The market value of the stock has never been below its cost. 2) Local" interest of R150 000 accrued during the 2022 year of assessment. 3) The company sold an office bulding on 30 December 2021 for R5 500000 . This office bulding was acquired in 2006 for R2 800000 . In addition to the acquisition cost, a transfer cost of R125 000 was paid to the lawwer, a valuafion cost of R55 000 was paid to value the building and improvements of R780 000 was made to the building. 4) In the early hours of the morning of 1 April 2021 a fire destroyed Machine A. The following amounts were received from the insurer: Loss of profits due to the fire = R28 000 Loss of stock destroyed during the fire = R17 000 . 5) Depreciation was calculated as follows on the following assets: - Delivery vehicle on hand as at 1 April 2021 = R85 000 (Purchased on 5 June 2020) . Delivery vehicle purchased and brought into use on 1 November 2021= R120 000 . 6) The company had an assessed loss of R260 000 from the previous year of assessment and due to this assessed loss SARS had still owed them a refund of R25 000 due to the provisional payment that had been made. You are required to calculate the total tax due to SARS for the year of assessment ending 31 March 2022. (Assume a tax rate of 28% ) Question 3 (10 Marks) Danny and Manny are in a partnership and their main business is the construction of houses. They share equally in the profits and lasses of the partnership. The clients of the business are responsible for the purchase of building material. On a smal scale they also offer clients a service of drafting plans for houses. They decided to register their business as a micro business for turnover tax purposes in the 2022 year of assessment. The following amounts relate to various amounts received by the micro business for that year: Notes: The refund received by the business relates to faulty equipment that was retumed to the supplier. The construction services figure includes an amount of R15 000 received from a client for a contract concluded in the previous year of assessment. The R15 000 had accrued to the business in the previous year of assessment and was subject to normal tax. - The construction figure also includes an amount of R50 000 from the carrying on of business activities in Lesotho. Required: Caloulate the turnover tax payable for the 2022 year of assessment. Question 4 (20 Marks) Walk for Life (Pty) Lid is a South African resident. It is a manufacturing business that manufactures shoes. The different types of shoes manufactured include running and walking shoes, as well as high heels and flip-flops. The compary's financial year ends on 31 March. Walk for Life (Pty) Ltd is a registered VAT vendor and the company does not use the IFRS 9 acoounting standard for financial reporting purposes. The following information is avalable to calculate the normal tax liabilty of Walk for Life (Pty) Lid for the year of assessment ended on 31 March 2023 (all amounts exclude VAT unless otherwise staled): Notes: 1. A dividend of R28 000 acorued to Walk for Life (Pty) Lid on 15 August 2022 from a wholly owned South African subeidiary company. 2. The cost price of the opening stock was R310000 and the market value was R285000 as on 1 Apri 2022. The cost price of the closing stock was R365 000 and the market value was R425 000 on 31 March 2023. 3. The list of doubtful debts as at 31 March 2023 amounted to R69 000 . The doubtful debt allowance allowed by the Commissioner for the 2022 year of assessment, amounted to R18 750 . 4. Salaries paid during the current year of assessment amounted to R750 000 and the compary also contribuled R56 000 towards the provident fund on behalf of the company's employees. 5. Legal costs of R23 000 incurred were paid on behalf of one of the company's directors and formed part of his salary as a fringe benefit. 6. Walk for Life (Pty) Lid incurred an expense of R41 300 in acquiring a design on its children's shoes that fights up when walking with them. 7. An amount of R25 000 was incurred on painting the entire exterior of the manufacturing building. The building was badly damaged due to excessive rainwater filtering through the cracks. 8. The company paid an amount of R36 500 in respect of electricity for the period 1 March 2022 to 31 October 2022. NB: This calculation should make provision for the prepaid expense incurred. 9. R160 000 was paid to the former financial manager on 1 March 2023 for agreeing not to start a similar business in the Republic within a period of five years. Only R120 000 consfluted income in the former employee's hands. You are required to: Calculate Walk for Life (Pty) Ltef's taxable income for the 2023 year of assessment