TAX3704 Assignment 2
(COMPLETE ANSWERS)
Semester 2 2024 - DUE 17
September 2024
CONTACT:
, TAX3704 Assignment 2 (COMPLETE ANSWERS)
Semester 2 2024 - DUE 17 September 2024
Question 1: (35 marks) Background information Your best
friend Ntato Hill called you and asked for assistance
regarding an audit SARS is conducting on her husband,
Jack’s business. The following information may or may not
be relevant. • Jack Hill is 70 years old and runs a business
(as sole proprietor) that manufactures spare parts for
industrial machinery. He was in a serious motor vehicle
accident in April 2022 and was discharged from the
hospital only in March 2023. After his accident, Jack’s wife
appointed an accountant to take over Jack’s financial
responsibilities and an engineer to assist in the factory. •
The newly appointed accountant prepared the financial
statements for the 2022 financial year and submitted a
return on behalf of Jack before the deadline of 21 January
2023. • The return submitted by the accountant states
that the business made a loss of R200 000. In the past 25
years, the business always made taxable profits. The
SARS risk engine flagged Jack as a risk case, and the
audit commenced after Jack had been given the required
notice. Observation You decide to make notes relating to
the risks associated with the audit Risks There is a
possibility that the newly appointed accountant did not
disclose all the income earned by the business. SARS may
issue an estimated assessment. Jack may be unable to
pay his outstanding tax debt. REQUIRED MARKS (a)
Explain to Jack what statutory powers are granted to a
senior SARS official under a request for relevant material.
Refer to applicable tax legislation. 10
(COMPLETE ANSWERS)
Semester 2 2024 - DUE 17
September 2024
CONTACT:
, TAX3704 Assignment 2 (COMPLETE ANSWERS)
Semester 2 2024 - DUE 17 September 2024
Question 1: (35 marks) Background information Your best
friend Ntato Hill called you and asked for assistance
regarding an audit SARS is conducting on her husband,
Jack’s business. The following information may or may not
be relevant. • Jack Hill is 70 years old and runs a business
(as sole proprietor) that manufactures spare parts for
industrial machinery. He was in a serious motor vehicle
accident in April 2022 and was discharged from the
hospital only in March 2023. After his accident, Jack’s wife
appointed an accountant to take over Jack’s financial
responsibilities and an engineer to assist in the factory. •
The newly appointed accountant prepared the financial
statements for the 2022 financial year and submitted a
return on behalf of Jack before the deadline of 21 January
2023. • The return submitted by the accountant states
that the business made a loss of R200 000. In the past 25
years, the business always made taxable profits. The
SARS risk engine flagged Jack as a risk case, and the
audit commenced after Jack had been given the required
notice. Observation You decide to make notes relating to
the risks associated with the audit Risks There is a
possibility that the newly appointed accountant did not
disclose all the income earned by the business. SARS may
issue an estimated assessment. Jack may be unable to
pay his outstanding tax debt. REQUIRED MARKS (a)
Explain to Jack what statutory powers are granted to a
senior SARS official under a request for relevant material.
Refer to applicable tax legislation. 10
