Question1 (20Marks)

YouarethefinancialmanagerofEmperors(Pty)Ltd,apropertycompanyearningitsincomefrombothcommercialrentals (officeblocksandfactories)andresidentialrentals(townhouses).ThecompanyhasaDecemberyear-end.Your responsibilitiesincludethecompletionofitstwo-monthly VATreturn.AsEmperors(Pty)Ltdmakesbothtaxableand exemptsuppliesforVATpurposes,ithasappliedtheturnover-basedmethodofapportionmenttoarriveatanacceptable inputtaxratioofTheaccountingsystemoperatedbyEmperors(Pty)Ltdhasprovidedthefollowing analysisofitsincome and expenditure foritstwo-month taxperiod ending31 January. Allamounts areinclusive of VAT,whereapplicable.

IncomeRCommercialrentals849300Residentialrentals159600Interestleviedonoverduerentals7410Insurancesettlement (note1)136800ExpenditurePurchaseofnewfactorybuilding,tobelet(paidincash769000Purchaseoftworesidentialflats,tobelet(paidincash)468500Bankcharges1254Auditfees14250Salariesandwages66120Bakkie(note2)150600Depreciation (note 2)5105Maintenance(note3)16416Insurancepremiums(note4)15048Interestincurredon mortgage bonds85500Officeequipment rentals(note5)5244Employeesexpenses(note6)741Baddebts (note7)16188Travellingexpenses(note8)2508

Notes

1. TheinsurancesettlementofR136800wasforasingle-cablight-deliveryvehicle(bakkie)thatwasstolenfrom Emperors(Pty)Ltdspremisesinthepreviousmonth.Thisbakkiewasusedforboththeresidentialandcommercial properties.Atthetimeitwasstolen,thebookvalueofthissingle-cabbakkiewasR160200.InJanuary,onreceiptof the insurancesettlement,anewsingle-cab bakkiewas purchased byEmperors(Pty)Ltd(seenote2).

2. Anewsingle-cabbakkiewaspurchasedinJanuaryatacostofR150600(includingVATofR18495)toreplacethe single-cabbakkiethatwasstolen(seenote1above).Depreciationwasprovidedforonthebakkiepurchasedby Emperors(Pty)Ltd.Thisbakkie isusedtotransportitsmaintenance teamsbetween its variousbuildings.

3. MaintenancecostsofR16416includepaint,paintbrushesandotherhardwareitemspurchasedtoeffectrepairwork toallitsbuildings.

4. Insurancepremiums,intermsofanall-comprehensivebusinessinsurancepolicy,totheamountofR15048were incurredinrespectofalltheassetsofthecompany.

5. OfficeequipmentrentalsofR5244wereincurredonthefollowingassets:

Facsimilemachine2736Printer1482Coffeemachine1026Total5244

6. EmployeesexpensesofR741wereincurredinrespectofteaandcoffeeprovidedtoemployeeswhiletheywere workingintheiroffices.

7. BaddebtsofR16188aremadeupofdebtswrittenoffforcommercial-rentaldebtorsofR9804andforresidential-rentaldebtorsofR6384.

8. Relates to hotels accommodation and meals paid for

Youarerequired to:

CalculatethenetamountofVATrefundablebyorpayabletoSARSinrespectofEmperors(Pty)Ltdstwo-monthtaxperiod ended 31January,assumingallthenecessarydocumentationhas beenobtainedbythe company.ShouldnoVAT beraised orclaimed, provide briefreasons.

NB:Roundupallfigures tothe nearestrand.

Question2 (10Marks)

ExclusiveGifts(Pty)Ltd(ExclusiveGifts)isaSouthAfricanretailer.ItimportstradingstockfromsuppliersinLondon.This tradingstockisthensoldinSouthAfrica.ExclusiveGiftshasa31Marchfinancialyear-end.ExclusiveGiftsordered tradingstockfromasupplierinLondon.Thecostpriceofthetradingstockwas16650(inclusiveofshippingcostsof1 650).Thetradingstockwasshippedfree-on-boardon12January2022.ItarrivedinSouthAfricaon23January2022.In termsofanagreementwiththesupplier,theaccounthadtobesettledinfullon10April2022.Allthetradingstockwasstill onhandon31March2022.Tohedgeitselfagainstcurrencyfluctuations,ExclusiveGiftsenteredintoaforwardexchange contract(FEC)withabank.IntermsofthisFEC,ExclusiveGiftsagreedtopurchase16650fromthebankon10April 2022ataforwardrateof1:R19,30.(On 31March2022,themarket-related forwardrateforasimilarFECfor theremainder oftheperiodwas1:R19,37.)Therelevantratesofexchangeareasfollows:

DateR1January2022118.3012January2022118.6523January2022118.7831March2022119.1510April2022119.03

YOUAREREQUIREDTOcalculatetheeffectoftheabovetransactionsonExclusiveGiftstaxableincomeforitsyearof assessment ending 31 March 2022. Round off to the nearest rand. Ignore VAT.