Question Three

You have been approached by Marumo a cattle farmer in the Kweneng District of Botswana. He has provided you with the following details from his farming business asking you to prepare his tax returns for the year. Extracts of summary transactions for the year ended 30 June 2022 Record of cattle movements during the year:

	N# of cattle
Opening balance Sales Purchases Natural increase Deaths Personal consumption Donations to relatives Dowry payment Payment of debt	1,950 1 450 560 640 13 8 9 15 7

Sales to public Sales to national meat commission Proceeds from sale of farm machinery Cost of cattle purchased Construction of dipping tank Cost of fence erection Cost of sinking borehole Purchase of slashing disc Wages of workers Cost of feeds Cost of clearing land	690,000 3,150,000 108,750 2,190,000 316,500 145,000 90,000 262,500 337,500 187,500 125,000

Additional Information

1) Marumo uses 125% of the standard value to value his cattle. The standard value is P430 per head.

2) The value of cattle consumed, donated, paid as dowry, and use to settle debt was P1,800 each

3) The farm machinery that was sold had cost P322,500 and tax allowances of P123,750 had been granted.

4) At the beginning of the year the following assets were held including details of their tax written down values.

	Cost	Allowances granted	Written Down Value
Tractors	450,000	225,000	225,000
Trucks	765,000	382,500	382,500
Machinery and equipment	712,500	180,750	531,750

5) Marumo also received P184,500 from his investments during the year.

Required to compute:

Marumos chargeable farming income. (22 marks)

Marumos taxable income and tax payable (3 marks)