Sandile Olympics $($Pty$)$ Ltd $($SO$)$ is a resident company that manufactures sporting equipment for the local market in Pretoria, South Africa. The company$$s manufacturing process has been approved by SARS as a qualifying process of manufacture. The company is not a small business corporation as defined in section $12$E of the Income Tax Act $($Act No$.58$ of $1962).$ The company is registered as a Category A VAT vendor, making $90\%$ taxable supplies.

The company$$s financial year ends on the last day of June and always utilises any possible election$($s$)$ that would legally minimise its overall tax liability during any given year of assessment.

The accountant of SO provided you with the following information for the $2023$ year of assessment:

$1.$ The sales amounted to R$6548900$ for the year of assessment.

$2.$ Cost of sales consisted of the following:

Opening stock $($cost price$)1579550$

Add: Purchases $($cost price$)855855$

Less: Closing stock $($cost price$)(574845)$

$1860560$

The market value for the opening stock was R$1565500$ on $1$ July $2020$ and the market value for the closing stock was R$650200$ on $30$ June $2021.$

$3.$ On $24$ April $2021$ SO purchased raw material at a cost of R$1500000$ for its IPL cricket bat range from a local supplier in Pretoria. This raw material was not yet delivered as at $30$ June $2021$ due to the supplier experiencing stock shortages. The raw material was not included in the closing stock above.

$4.$ Gross local dividends of R$178600$ accrued from a South African company during the $2021$ year of assessment.

$5.$ SO paid an amount of R$2500000$ towards salaries. The company does not apply IFRS $9$ for financial reporting purposes and the debtors' clerk indicated that the list of doubtful debts for the

$2021$ year$-$end amounted to R$678000.$ Eighty$-$five per cent $(85\%)$ of this list of doubtful debts as at year$-$end are in arrears for more than $100$ days, but less than $120$ days. Fifteen percent $(15\%)$ of the list was in arrears for $40$ days. The list of doubtful debts for the $2020$ year$-$end amounted to R$1358,000.$ The entire $2020$ list of doubtful debts had been in arrears for more than $120$ days for the $2020$ year$-$end date.

$6.$ You received the following information in respect of the assets held by the company:

$$ During its $2020$ year of assessment, the company acquired the first floor of a new $($very popular$)$ modern ten$-$story building at a cost of R$1600000($the cost of the land was trivial$)$ and immediately brought it into use as its new office space. On $1$ April $2021$ the company received an offer from a serious buyer that is not a connected person to the company $($Mr$.$ Nathan Daniels$)$ to purchase the first floor of this building. Although the office space was not for sale, the offer was so good, that the company could not refuse and subsequently sold the first floor of this building to Mr$.$ Daniels for an amount of R$2500000$ on $30$ April $2021.$

$$ On $1$ October $2020$ SO purchased a laptop computer for the company$$s financial manager at a cost of R$5870.$ An additional R$500$ was incurred for the installation of the necessary software.

Binding General Ruling: No$.7$ allows for the following write off periods for assets $($where applicable$)$:

o Laptops $3$ years

o Software $2$ years

$$ In the early hours of the morning on $1$ June $2021$ a fire destroyed the company$$s rugby ball manufacturing machine. The following amounts were received from the insurer.

o Loss of profits due to the fire $158000$

o Loss of machine $160000$

The manufacturing machine was originally purchased new on $1$ December $2018$ at a cost of R$246800.$ The machine needed to be replaced and SO purchased a second$-$hand manufacturing machine for R$125000$ on $15$ May $2021$ to replace the one that was destroyed in the fire. The new machine was brought into use on $1$ December $2018$ and the replacement machine on $15$ May $2021.$

REQUIRED:

Calculate the normal taxable income of Sandile Olympics $($Pty$)$ Ltd for the $2021$ year of assessment.

Discuss the ethical implications of these transactions.

Note: You must assume that the $2024$ tax legislation will apply.