TY is resident in Country X. TYs statement of profit or loss for year ended 30 September 2013 was as follows: R Revenue 950,000 Cost of sales (550 000) Gross profit 400,000 Administrative expenses (132,000) Taxes paid to other public bodies (1,900) Entertaining expenses (1,200) Depreciation of plant and equipment (47,500) Distribution costs (42,000) 175 400 Finance cost (3 500) Profit before tax 171,900 TY has accumulated tax losses of R125,000 brought forward from 2011/12. TY owns plant and equipment purchased on 1 October 2010 at a cost of R385,000 and plant purchased on 1 October 2012 at a cost of R90,000. TY charges depreciation at 10% per year on a straight line basis on all non-current assets. Required: Calculate the tax payable by TY for the year ended 30 September 2013.

PLEASE NOTE

Corporate Profits Unless otherwise specified, only the following rules for taxation of corporate profits will be relevant, other taxes can be ignored: Accounting rules on recognition and measurement are followed for tax purposes. All expenses other than depreciation, amortisation, entertaining, taxes paid to other public bodies and donations to political parties are tax deductible. Tax depreciation is deductible as follows: o 50% of additions to property, plant and equipment in the accounting period in which they are recorded; o 25% per year of the written-down value (i.e. cost minus previous allowances) in subsequent accounting periods except that in which o the asset is disposed of; o No tax depreciation is allowed on land; The corporate tax on profits is at a rate of 28%. No indexation is allowable on the sale of land. Tax losses can be carried forward to offset against future taxable profits from the same business. Value Added Tax Country X has a VAT system which allows entities to reclaim input tax paid. In country X the VAT rates are: o Zero rated 0% o Standard rated 15% o Exempt goods 0%