QUESTION 4 (CEV 4: 2012 adjusted STEINWAY LIMITED (Steinway) is a company with a financial year end of 30 June Steinway grand pianos. manufactures musical instruments and specialises in the production of The factory and head office of Steinway are located in Johannesburg Steinway makes 100% taxable supplies. For purposes of this question all amounts include VAT (where applicable). You may assume that Steinway is a Category C vendor and is in possession of all the valid VAT invoices (where applicable) in respect of goods and services necessary received and supplied. Unless otherwise specified or not applicable, all transactions have been entered into with registered VAT vendors. April is generally not a month with high sales volumes, but it is the best time to purchase all the resources necessary at very good prices The special black and white wood used to make the keys of each piano was imported from Zimbabwe. Steinway paid the supplier R1 320 000 for this specialised wood and R60 000 was paid as customs duty. The South African Customs determined the value of the wood to be R1 250 000. The wood used to make the remainder of each piano was imported from Botswana at a customs value of R5 000 000 " The brass pedals and leg pieces were purchased from a company in the Limpopo Province at a cost of R76 000. These items were sent to the factory at a cost of R13 000 via rail transport. Because the procurement manager of Steinway has to choose only the finest quality pedals and leg pieces, he visited the supplier himself. The manager also traveled to Limpopo by train and the cost of his train ticket was R2 300 An auditor was brought in from Europe to audit the financial statements here in South Africa. The company plans to export some of their pianos and different legislation requirements therefore have to be met. The audit fee invoiced by the auditor was R448 000. The open market value of the audit service is R380 000 Other expenses which appeared on the April 2012 bank statement were: o Interest of R20 000 and bank fees of R6 000 o Electricity account of R267 000 o Diesel for the delivery truck of R38 000. One grand piano was sold to a European resident. The selling price of R600 000 was paid immediately and the piano was shipped to Europe by Steinway . Steinway also delivers a separate service to its clients by tuning the new pianos at the clients' premises. An employee of Steinway was sent to Europe to tune the grand piano (see above). Payment of R23 000 was received for the supply of the service. Steinway incurred R8 000 for the employee's plane ticket to Europe Two of the smaller model pianos were sold to a wine estate in Stellenbosch at a price of R250 000 each purchased a piano over the phone for his holiday home in National Park Steinway invoiced an amount of $100 000, On the date An American film star of the invoice the rand equivalent was R780 000 REQUIRED PART A Explain briefly what it means to be a Category C vendor and when SARS will register an enterprise as a Category C vendor PART B Calculate the amount of VAT payable/receivable to SARS in respect of April 2013. Show all nil effects and give brief reasons only for nil effects. Also state, where applicable, what form as well as by when the form should be submitted and payment made to SARS QUESTION 4 (CEV 4: 2012 adjusted STEINWAY LIMITED (Steinway) is a company with a financial year end of 30 June Steinway grand pianos. manufactures musical instruments and specialises in the production of The factory and head office of Steinway are located in Johannesburg Steinway makes 100% taxable supplies. For purposes of this question all amounts include VAT (where applicable). You may assume that Steinway is a Category C vendor and is in possession of all the valid VAT invoices (where applicable) in respect of goods and services necessary received and supplied. Unless otherwise specified or not applicable, all transactions have been entered into with registered VAT vendors. April is generally not a month with high sales volumes, but it is the best time to purchase all the resources necessary at very good prices The special black and white wood used to make the keys of each piano was imported from Zimbabwe. Steinway paid the supplier R1 320 000 for this specialised wood and R60 000 was paid as customs duty. The South African Customs determined the value of the wood to be R1 250 000. The wood used to make the remainder of each piano was imported from Botswana at a customs value of R5 000 000 " The brass pedals and leg pieces were purchased from a company in the Limpopo Province at a cost of R76 000. These items were sent to the factory at a cost of R13 000 via rail transport. Because the procurement manager of Steinway has to choose only the finest quality pedals and leg pieces, he visited the supplier himself. The manager also traveled to Limpopo by train and the cost of his train ticket was R2 300 An auditor was brought in from Europe to audit the financial statements here in South Africa. The company plans to export some of their pianos and different legislation requirements therefore have to be met. The audit fee invoiced by the auditor was R448 000. The open market value of the audit service is R380 000 Other expenses which appeared on the April 2012 bank statement were: o Interest of R20 000 and bank fees of R6 000 o Electricity account of R267 000 o Diesel for the delivery truck of R38 000. One grand piano was sold to a European resident. The selling price of R600 000 was paid immediately and the piano was shipped to Europe by Steinway . Steinway also delivers a separate service to its clients by tuning the new pianos at the clients' premises. An employee of Steinway was sent to Europe to tune the grand piano (see above). Payment of R23 000 was received for the supply of the service. Steinway incurred R8 000 for the employee's plane ticket to Europe Two of the smaller model pianos were sold to a wine estate in Stellenbosch at a price of R250 000 each purchased a piano over the phone for his holiday home in National Park Steinway invoiced an amount of $100 000, On the date An American film star of the invoice the rand equivalent was R780 000 REQUIRED PART A Explain briefly what it means to be a Category C vendor and when SARS will register an enterprise as a Category C vendor PART B Calculate the amount of VAT payable/receivable to SARS in respect of April 2013. Show all nil effects and give brief reasons only for nil effects. Also state, where applicable, what form as well as by when the form should be submitted and payment made to SARS