QUESTION 2 [26 MARKS] Virginia Groom is a resident of the Republic. She is a 33 year old divorcee and carries on business as a wedding consultant. She trades as a sole proprietor and is registered on the invoice basis as aa category B VAT vendor, making more than 95% taxable supplies. She trades from leased premises. She did not have any transactions with connected parties during this tax-period. Details of Virginia Grooms receipts and accruals and expenditure for her two-month tax period ended 31 August 2020 follow: (unless otherwise stated, all the amounts mentioned are inclusive of value-added tax, if applicable) Receipts and accruals Notes R Consulting fees charged 257 600 Sales of wedding accessories 71 760 Rentals received from the letting of her wedding equipment 23 920 Interest earned on her bank account 4 140 Indemnity award received 1 41 400 Newspaper award received 2 23 000 Expenditure Bad debts 3 10 580 Depreciation on wedding equipment 4 1 380 Depreciation on a computer 5 345 Depreciation on a motor car 6 6 000 Insurance premiums on her wedding equipment 3 163 Insurance premiums on her computer 345 Insurance premiums on her motor car 299 Petrol 1 610 Printing and stationery 2 990 Purchase of new accessories from vendors 7 50 600 Purchase of second-hand accessories from vendors 7 7 475 Purchase of second-hand accessories from nonvendors in South Africa 7 6 670 Rentals paid for her business premises 6 900 Rentals paid for a coffee machine (located in her business premises for use by her clients) 1 035 Salaries paid 33 120 Notes: 1 The indemnity payment of R41 400 was awarded to Virginia Groom for the loss of some wedding equipment which she rented to a couple for their wedding. They never returned it and have since emigrated to the United Kingdom. 2. Virginia Groom was voted Businesswoman of the Year by a local newspaper. She was awarded prizes valued at R23 000 for this achievement. 3. The bad debts written off for accounting purposes by Virginia of R10 580 comprise of the following: R8 280 owing by a client. Her marriage had lasted only 10 days. Her husband ran off with her bridesmaid. She is unemployed and there is no chance that this debt will be repaid. R2 300 was lent by Virginia Groom to a part-time employee who has since left town without repaying the loan. 4. Wedding equipment on which the depreciation is being determined was purchased by Virginia Groom from a vendor in a previous tax period for R207 000. The relevant amount of input tax was deducted by her in the previous tax period. 5. The new computer was purchased by Virginia from a vendor on 1 July 2020 for R16 650. 6. Virginia purchased the motor car from a vendor on 1 July 2020 for R379 500. It was not subject to a maintenance plan. She has the sole use of this motor car. (She maintains accurate records of her business travel, and can prove that her business travel is 25% of her total travel.) 7. Virginia purchases wedding accessories from both vendors and non-vendors (for example, private individuals and deceased estates). The wedding accessories purchased form non-vendors are paid for in cash in full. She displays these wedding accessories at her business premises. 8. In July 2019 Virginia bought accessories for R19 320 (including VAT) from a local supplier. She enjoyed an input deduction in the tax period 1 July 2019 to 31 August 2019. She then encountered problems with these accessories and paid the supplier only R14 490 (including VAT) on 31 August 2019. She refused to settle the balance of this account until the problems were resolved. At 31 August 2020, the problems had still not been resolved and R4 830 (inclusive of VAT) was still outstanding despite numerous letters of demand having been received by her from her supplier. YOU ARE REQUIRED TO determine the net amount of value-added tax due to or refundable by the Commisioner to Virginia Groom for her two-month tax period ended 31 August 2020. Support both nil effects and where no VAT consequences arise, with a brief reason. Give a brief comment to support your workings when necessary. SOURCE: Adapted from Graded Questions on Income Tax in South Afri