QUESTION ONE

$[30]$

DTN $($Pty$)$ Ltd $($DTN$)$ is the fourth largest cellular network industry in South Africa, providing call and data services to customers around the country as well other African countries. It has an extensive customer base, which has been created over the past few years. The current financial year ends on $30$ June $2023.$ DTN is a registered VAT vendor and all amounts exclude VAT unless otherwise stated.

The following information relates to DTN$\text{'}$s activities for the current financial year:

Gross income from SA customers amounts to R$3790000($including VAT$),$ while sales from customers outside SA amounted to R$505400($including VAT$).$

DTN$\text{'}$s employees belong to the company's pension fund and medical aid fund. DTN contributes to these funds on behalf of the employees. During the year, contributions on behalf of the employees to the pension fund amounted to R$132000$ and to the medical aid fund R$156000.$ DTN$\text{'}$s total remuneration approved by the Commissioner is R$1422000.$

The financial manager, Miss Rhodes, resigned on $31$ July $2021.$ To prohibit her from trading in direct competition to DTN$,$ the company paid her an amount of R$650000$ as compensation for his restraint of trade for the following $5$ years. The full amount was included in Miss Rhodes' income on his $2022$ income tax return.

Legal fees to the amount of R$98000$ were incurred. This was made up of R$48000$ for the collection of outstanding trade debtors and R$50000$ in respect of employee remuneration claims.

$($Note: employee remuneration is deductible for purposes of this question.$)$

Penalties and interest paid to SARS amounted to R$12500$ in respect of the current year of assessment.

Bad debts written off consist of R$53000$ in respect of a loan to an employee and R$711000$ in respect of trade debtors.

The following prepaid expenditure was incurred:

Rental of the switchboard system for head office for the period $1$ July $2023$ to $31$ January $2024$ was $46000($including VAT$).$

Deposit for the purchase of a motor car that will be delivered on $1$ June $2023$ amounted to $85000.$

Insurance paid for the vehicle above was R$17328($including VAT$)$ for the period $1$ June $2023$ to $31$ May $2024.$

A patent was purchased for R$17900$ on $6$ May $2023$ and a trademark was renewed at a cost of R$19700.$

An employee with a disability as defined and an NQF level $10$ qualification entered into a twoyear learnership agreement with DTN on $1$ April $2021.$ The employee continued with the learnership agreement until $31$ March $2023,$ when he successfully completed it$.$

Provisional tax of R$276000$ was paid for the year.

REQUIRED

$1\mathrm{.}1.$ Calculate the tax liability of DTN $($Pty$)$ Ltd for the year of assessment ended $30$ June $2023.$ Where an amount does not affect the taxable income calculation, provide a brief reason. $(30)$

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