You are employed as a manager in the Taxation section in an accounting firm. Your responsibilities include answering certain tax queries.

The following unrelated queries require your response:

Siya Zulu

Siya Zulu has been achieving a reasonable return from the letting of a block of $15$ flats that he purchased in $1986.$ He does not have a history of property dealing.

Siya Zulu is aware that he can make a substantial profit by selling the flats individually. He has made application for a sectional$-$title register to be opened.

To make the flats more attractive to would$-$be purchasers he is considering improving them.

Required:

Discuss, giving reasons, whether the proceeds from the sale of the flats are of a revenue nature. Discuss the position when the flats are sold individually without improvements being made, and

the position when they are first improved, and then sold. $(7)$

John Wallis

John Wallis who is ordinarily resident in Durban purchased a flat in Cape Town. It is occupied rent free by his minor daughter who is a full$-$time student at a university in Cape Town.

During the university vacations his minor daughter returns home $($to Durban$).$She then lets the flat to her two friends who reside in Cape Town.

For the $2020$ year of assessment she earned R$10000$ from the letting of this flat.

Required

Discuss whether these rentals of R$10000$ should be included in gross income and, if so$,$ then

state in whose gross income. $(6)$

Bronze Limited

Bronze Limited is not a resident of South Africa. It owns two rent$-$producing properties, one situated in South Africa and one situated outside South Africa.

$$ It earned net rentals from the property situated in South Africa in its $2020$ year of assessment $($ended on $28$ February $2020)$ of R$200000.$

$$ It earned net rentals from the property situated outside South Africa in its $2020$ year of assessment the equivalent of R$270000.$

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The net rentals as determined above are after the deduction of deductible directors$$ fees paid to the directors for the running of Bronze Limited. Of these directors$$ fees, R$20000$ was paid to Kate Middle who is a resident of the republic. Kate Middle attends to Bronze Limited$$s South African transactions.

Required

Discuss what the South African normal tax consequences to both Bronze Limited and Kate

Middle are of the above amounts that they earned. $(7)$