T
,AX2601 Assignment 1 (DETAILED ANSWERS) Seme
ster 1 2025 - DISTINCTION GUARANTEED
- DISTINCTI
Multiple choice,assured excellence
Answers, guidelines, workings and references ,. Mr Xhumalo
lives in Gqeberha, South Africa. He manufactures and sells
various grass baskets and placemats from a street stall. Due to
the high demand for his products, he concluded a sales
agreement with a well-known houseware retailer in South
Africa. In terms of the agreement, the retailer will purchase R25
000 worth of products from Mr Xhumalo on 15 February 2025
on credit. The goods must be manufactured and delivered by 15
March 2025, with payment scheduled for 31 March 2025. The
agreement clearly states that Mr Xhumalo will only become
entitled to payment once he has delivered the goods. Mr
Xhumalo’s accountant is uncertain in which year of assessment
the R25 000 must be declared for tax purposes and contacted
you for advice. REQUIRED MARKS Discuss whether the R25 000
of the sale will constitute gross income in the hands of Mr
Xhumalo for the 2025 year of assessment. Note: • You can
support the main issue in the question with relevant case law
from the module's prescribed case law. 12 QUESTION 2 (12
marks, 14 minutes) Hlumelela (Pty) Ltd is not a small business
corporation as defined in the Income Tax Act. The company’s
year of assessment ends on 31 March, and its records reflect
, the following: Year of assessment Taxable income Date of
assessment 2025 R1 784 432 (Estimated – not yet assessed)
2024 R1 354 980 15 September 2024 2023 R1 200 000 4 April
2023 REQUIRED MARKS (a) Calculate the first and second
provisional tax payments for Hlumelela (Pty) Ltd for its 2025
year of assessment to ensure that the company does not incur
any underestimation penalties. Note: • Provide a reason for all
the amounts used, explaining whether they may be used as the
basic amount, and specify any adjustments made (if any)
calculating the basic amount. • Clearly indicate on which date
the payments must be made. 9 (b) Calculate the basic amount
for the first provisional tax payment for the 2025 year of
assessment, on the assumption that the 2024 assessment was
issued on 20 September 2024. Note: • Provide a reason for your
answer. 3 TAX2601/2025/S1/ Assessment 1 Page 4 of 6
QUESTION 3 (36 marks, 42 minutes) Yelanga (Pty) Ltd (Yelanga)
is a company that trades as a manufacturer of solar panels in
South Africa and is not a small business corporation as defined
in the Income Tax Act. The company imports most of the
components for its manufacturing process from China. The
company commenced trading in 2021 and has a 28 February
financial year-end. The accountant of Yelanga is uncertain about
the correct income tax treatment of certain transactions and
requested your assistance with the transactions listed in notes 1
– 7 below. The taxable income of Yelanga for the 2025 year of
,AX2601 Assignment 1 (DETAILED ANSWERS) Seme
ster 1 2025 - DISTINCTION GUARANTEED
- DISTINCTI
Multiple choice,assured excellence
Answers, guidelines, workings and references ,. Mr Xhumalo
lives in Gqeberha, South Africa. He manufactures and sells
various grass baskets and placemats from a street stall. Due to
the high demand for his products, he concluded a sales
agreement with a well-known houseware retailer in South
Africa. In terms of the agreement, the retailer will purchase R25
000 worth of products from Mr Xhumalo on 15 February 2025
on credit. The goods must be manufactured and delivered by 15
March 2025, with payment scheduled for 31 March 2025. The
agreement clearly states that Mr Xhumalo will only become
entitled to payment once he has delivered the goods. Mr
Xhumalo’s accountant is uncertain in which year of assessment
the R25 000 must be declared for tax purposes and contacted
you for advice. REQUIRED MARKS Discuss whether the R25 000
of the sale will constitute gross income in the hands of Mr
Xhumalo for the 2025 year of assessment. Note: • You can
support the main issue in the question with relevant case law
from the module's prescribed case law. 12 QUESTION 2 (12
marks, 14 minutes) Hlumelela (Pty) Ltd is not a small business
corporation as defined in the Income Tax Act. The company’s
year of assessment ends on 31 March, and its records reflect
, the following: Year of assessment Taxable income Date of
assessment 2025 R1 784 432 (Estimated – not yet assessed)
2024 R1 354 980 15 September 2024 2023 R1 200 000 4 April
2023 REQUIRED MARKS (a) Calculate the first and second
provisional tax payments for Hlumelela (Pty) Ltd for its 2025
year of assessment to ensure that the company does not incur
any underestimation penalties. Note: • Provide a reason for all
the amounts used, explaining whether they may be used as the
basic amount, and specify any adjustments made (if any)
calculating the basic amount. • Clearly indicate on which date
the payments must be made. 9 (b) Calculate the basic amount
for the first provisional tax payment for the 2025 year of
assessment, on the assumption that the 2024 assessment was
issued on 20 September 2024. Note: • Provide a reason for your
answer. 3 TAX2601/2025/S1/ Assessment 1 Page 4 of 6
QUESTION 3 (36 marks, 42 minutes) Yelanga (Pty) Ltd (Yelanga)
is a company that trades as a manufacturer of solar panels in
South Africa and is not a small business corporation as defined
in the Income Tax Act. The company imports most of the
components for its manufacturing process from China. The
company commenced trading in 2021 and has a 28 February
financial year-end. The accountant of Yelanga is uncertain about
the correct income tax treatment of certain transactions and
requested your assistance with the transactions listed in notes 1
– 7 below. The taxable income of Yelanga for the 2025 year of
