QUESTION THREE

Interdict (Pty) Ltd is a category G vendor i.e. the company has a one month VAT period. Interdict is a retailer of industrial Machinery. The following information is given for March 2019.

1. Ten machines were purchased at a cost of R2 850 000 (incl. VAT); all machines have the same cost of R285 000 each (incl. VAT).
2. The standard mark up on cost (including VAT) is 50% i.e. cost plus VAT is then increased by 50% to derive selling price.
3. Five machines were sold for cash.
4. One machine was sold in terms of an instalment credit agreement. The contract provides for

60 monthly payments of R8 900 (at the end of the month), beginning at the end of March.

5. One machine was leased in terms of a finance lease at a monthly rental of R8 000 (payable at the end of the month).
6. An old machine which was held as opening stock and was reflected at R240 000 in the stock account of the ledger, was sold to Don Reece, at cost inclusive of VAT. Don who is a 20% shareholder of Interdict is not a vendor. The market value of this machine was R175 000 at date of sale.
7. On 25 March a second-hand machine was purchased from a non-vendor for R180 000. Its market value was R205 200. Interdict paid R100 000 immediately to secure the purchase and will pay a balance at the end of April.
8. The second-hand machine in point 7 above was immediately sold to a vendor who was a connected person in relation to Interdict, for R200 000.
9. On 1 March 2019, a fire in the warehouse totally destroyed 2 machines purchased in January for R319 200 (VAT incl) each. Interdicts insurer paid out R280 000 for each machine as compensation on the 25 March 2019.
10. The fire also totally destroyed a truck which had been bought second hand from a non-vendor the previous year. The insurer paid out compensation of R80 000 in respect of this truck.
11. During March, Interdict purchased two new water bottles for the cold water dispensing machine in the staff canteen. These bottles cost R1 800 (VAT incl) each and were paid for, in March.

Required:

Calculate the VAT effect in respect of the above transactions for the month of March 2019. Prepare you answer in Columnar format i.e. Have two columns, one for inputs and one for outputs.

Appendix:

TAXATION TABLES AND RATES

INCOME TAX SMALL BUSINESS CORPORATIONS 2019le Income (R) Rate of Tax (R)

0 78 150 0% of taxable income

78 151 365 000 7% of taxable income above 78 150

365 001 550 000 20 080 + 21% of taxable income above 365 000

550 001 and above 58 930 + 28% of taxable income above 550 000

INCOME TAX SMALL BUSINESS CORPORATIONS 2018le Income (R) Rate of Tax (R)

0 75 750 0% of taxable income

75 751 365 000 7% of taxable income above 75 750

365 001 550 000 20 248 + 21% of taxable income above 365 000

550 001 and above 59 098 + 28% of taxable income above 550 000

TURNOVER TAX FOR MICRO BUSINESSES 2018/20192018te of tax (R)

0 335 000 0% of taxable turnover

335 001 500 000 1% of taxable turnover above 335 000

500 001 750 000 1 650 + 2% of taxable turnover above 500 000

750 001 and above 6 650 + 3% of taxable turnover above 750 000

INCOME TAX: INDIVIDUALS AND TRUSTS

TAX TABLES (Individuals)

For the year ended 28 February 2019

0 195 850 18% of income

195 851 305 850 35 253 + 26% of income above 195 850

305 851 423 300 63 853 + 31% of income above 305 850

423 301 555 600 100 263 + 36% of income above 423 300

555 601 708 310 147 891 + 39% of income above 555 600

708 311 1 500 000 207 448 + 41% of income above 708 310

1 500 001 and above 532 041 + 45% of taxable income above 1 500 000

For the year ended 28 February 2018

0 189 880 18% of income

189 881 296 540 34 178 + 26% of income above 189 880

296 541 410 460 59 314 + 31% of income above 296 540

410 461 555 600 93 135 + 36% of income above 410 460

555 601 708 310 149 619 + 39% of income above 555 600

708 311 1 500 000 209 032 + 41% of income above 708 310

1 500 001 and above 533 625 + 45% of taxable income above 1 500 000

REBATES Primary 65 and over	2019 R14 067 5 675	2018 R13 635 5 400
Secondary Rebate (Persons of 65 and older) Third Rebate (>75 years)	R 7 713 R 2 574	R 7 479 R 2 493
EXEMPT INCOME Limited to
Total interest exemption
including foreign interest
Below 65	R23 800	R23 800
65 and over	R34 500	R34 500

CAPITAL GAINS TAX (CGT) 2019 Year of Assessment

Inclusion rates

Individuals, special trusts and individual policyholder funds 33.3%

Other taxpayers 66.6%

Exclusions

Individuals (annual non-cumulative): R40 000

Individuals in year of death: R300 000

Primary residence exclusion on the disposal of a primary residence: R2million gain/loss

Small business assets (when a person is over age 55): R1.8 million