TAX3701 Assignment 2 (COMPLETE ANSWERS) Semester 1 2026 - DUE 16 April 2026; 100% Correct solutions and explanations.

TAX3701 Assignment 2 (COMPLETE ANSWERS) Semester 1 2026 - DUE 16 April 2026; 100% Correct solutions and explanations. Assignment 2/1 2026 The Taxation of Business Activities Semester 1 Department of Taxation ASSIGNMENT 2 TAX3701 – Assessment 1 Instructions Assessment Title: Written Assessment Total Marks: 40 marks Opening Date: Monday, 30 March 2026 at 08:00 Closing Date: Thursday, 16 April 2026 at 21:00 Important Information: • This assessment contributes 75% of your year mark for the TAX3701 module. • The year mark contributes 20% towards your final module mark. • Strict adherence to the submission deadline is required. o No extensions will be granted under any circumstances. o Scripts received after the deadline will not be marked. Submission Guidelines: • Submit your assessment online via the myModules submission portal. • Emailed submissions will not be accepted or marked. • Your assessment must be submitted as a single PDF document. • Ensure your file is legible, properly formatted, and includes all required answers. Additional Notes: • Read all instructions and questions carefully before attempting the assessment. • Ensure that your work is your own. Plagiarism and academic dishonesty will not be tolerated. • Manage your time effectively to complete and submit the assessment before the deadline. Should you require any clarification on the assessment content, please use the course mailbox to email the TAX3701 lecturers well in advance of the closing date. ASSIGNMENT 2 TAX3701 FIRST SEMESTER 2026 QUESTION 1 (40 marks/72 minutes) Thabo Manufacturing (Pty) Ltd (TM) is a South African company located in Durban, South Africa and manufactures a wide range on concrete products. TM’s year of assessment ends on 31 March 2026, is a registered VAT vendor and not a small business corporation as defined. All amounts stated excludes VAT, unless specifically stated otherwise. SARS has approved TM’s process of manufacturing. The managing director has provided you with the following information for the year of assessment ended on 31 March 2026 to calculate the normal income tax liability for the 2026 year of assessment: QUESTION 2 (continued) 1. Sales amounted to R. Included in this amount is an amount of R22 520 being sales made to a client on 22 November 2025. TM has received a letter from DC Attorneys confirming that the client has been finally liquidated on 15 March 2026. 2. The cost of sales comprised the following: a. Opening stock on 1 April 2025 R3 785 261 (The market value is R3 825 250) b. Purchases of raw material R c. Closing stock on 31 March 2026 R4 252 879 (The market value is R4 213 246) 3. Salaries and wages comprised the following: • Salaries and wages of all staff members – R2 250 150. • Pension fund contributions for all staff members – R525 350. • An annuity of R52 750 paid to the spouse of Mr. P Matabula, who passed away on 24 February 2026. 4. Bad debts and doubtful debts • Refer to note 1 above regarding the client that was finally liquidated on 15 March 2026. • The list of doubtful debts on 31 March 2026 is R250 800. 75% of the list of doubtful debts on 31 March 2026 is in arrears for more than 90 days, but less than 120 days. TM does not apply IFRS 9. The doubtful debt allowance granted by SARS in the 2025 year of assessment amounted to R31 250. QUESTION 2 (continued) 5. Restraint of trade payment TM made a restraint of trade payment of R225 000 on 1 November 2025 to Mr. B. Mkiza, the marketing manager, who has