PASSMATE TUTORIALS
DISCLAIMER: THIS IS NOT AN OFFICIAL GUIDE FROM UNISA. THE FRAMEWORK IS
NOT PREPARED NOR APPROVED BY UNISA, RATHER REPRESENTS A POSSIBLE
SOLUTION TO THE TASK CONSISTENT WITH THEORY. THIS ASSIGNMENT IS
INTENDED TO ASSIST STUDENTS IN GETTING STARTED WITH THEIR ASSIGNMENT,
AND IN NO CASE THIS DOCUMENT SHOULD BE USED FOR CHEATING. WE BELIEVE
THIS WILL BE A GOOD STARTING POINT AS IT WAS PREPARED BY OUR TEAM OF
PROFESSIONAL PRIVATE TUTORS WHO ARE EXPERTS IN THE FIELD, AND IT WAS
PREPARED USING VARIOUS SOURCES. ANY SIMILARITY WITH ANY EXISTING
THEORY OR DISCUSSION BY OTHER AUTHORS IS EXCUSED. THE AUTHORS
HOWEVER DO NOT CLAIM MONOPOLY TO KNOWLEDGE HENCE MODIFICATION OF
THE ANSWERS CONTAINED IN THIS FRAMEWORK MAY NOT BE PROHIBITED AS IT
CONTRIBUTES TO EXPANSION OF KNOWLEDGE. FOR ANY FURTHER GUIDELINE
ABOUT THE INFORMATION CONTAINED HERE AND THE MODULE IN GENERAL,
CONTACT PASSMATE TUTORIALS.
WE ASSIST WITH OTHER MODULES INCLUDING:
ECSs, FACs, MACs, MNGs, INTs, TRLs, HMEMS, PRMs, PROs, MNBs, DSC, QMI, MNMs,
MNO, MNPs, FIN, PUBs, MNMs, RESEARCH among others.
WE OFFER CLASSES, ASSIGNMENT GUIDELINES, EXAMINATION PREPARATION,
RESEARCH AND RESEARCH PROPOSALS, DISSERTATION EDITING etc.
OTHER THAN UNISA, WE ALSO ASSIST STUDENTS AT VARIOUS INSTITUTIONS
INCLUDING MANCOSA, REGENT, REGEYNESES, BOSTON, STADIO, OLG, UJ, UP etc
For any enquiries the following numbers can be used for calling, SMS, WhatsApp and
telegram
CONTACT PASSMATE TUTORIALS @061 262 1185/068 053 8213/0717 513 144
CONTACT PASSMATE TUTORIALS @061 262 1185/068 053 8213/0717 513 144
, PASSMATE TUTORIALS
QUESTION 1: KG Manufacturing (Pty) Ltd
Calculation of normal taxable income and normal income tax liability for the year
ended 28 February 2026
1. Sales
Sales of R15 875 278 constitute gross income because they arise from KGM's ordinary
manufacturing trade.
The R22 500 relating to the client liquidated on 21 February 2026 does not have to be
excluded from sales or gross income merely because the debtor was liquidated. The
amount was already included in KGM's gross income when the sale occurred.
However, because the debt became irrecoverable during the year, KGM qualifies for
a deduction for the bad debt under section 11(i), assuming the amount had previously
been included in income. Accordingly, the full sales figure of R15 875 278 is retained
in gross income, with R22 500 separately deducted as a bad debt.
2. Trading stock and cost of sales
Under section 22, opening trading stock is taken into account at its tax value, while
closing trading stock is generally based on cost, subject to a reduction where there
has been a qualifying diminution in value. SARS's current guidance confirms that
where market value exceeds cost, no diminution is available and cost remains the
relevant amount.
The opening stock's market value of R2 552 351 is therefore irrelevant because the
stated opening stock amount of R2 571 279 is the appropriate amount.
The closing stock's market value of R2 631 250 exceeds its cost of R2 625 871.
Therefore, there is no downward adjustment and the closing stock is taken at R2 625
871.
Cost of sales = 𝑅2 571 279 + 𝑅7 500 126 − 𝑅2 625 871
= 𝑅7 445 534
CONTACT PASSMATE TUTORIALS @061 262 1185/068 053 8213/0717 513 144
, PASSMATE TUTORIALS
The cost-of-sales calculation is therefore R7 445 534, not R7 426 606.
3. Other income
Interest from South African banks
The interest of R6 258 is taxable in KGM's hands. The annual interest exemption under
section 10(1)(i) applies to natural persons, not to a company such as KGM. SARS
confirms that the individual interest exemption is framed specifically for natural
persons.
Therefore:
𝑅6 258 taxable
Foreign dividend
The foreign dividend of R63 690 must initially be included in gross income. KGM holds
only 6% of the equity shares in the foreign company, so it does not qualify for the full
participation exemption, which requires at least 10% of the equity shares and voting
rights under section 10B(2)(a).
However, KGM qualifies for the partial exemption under section 10B(3). For a
company, the exempt portion is 7/27 of the foreign dividend.
7
𝑅63 690 × = 𝑅16 512.22
27
Thus:
𝑅63 690 − 𝑅16 512.22 = 𝑅47 177.78
is included in taxable income.
CONTACT PASSMATE TUTORIALS @061 262 1185/068 053 8213/0717 513 144
DISCLAIMER: THIS IS NOT AN OFFICIAL GUIDE FROM UNISA. THE FRAMEWORK IS
NOT PREPARED NOR APPROVED BY UNISA, RATHER REPRESENTS A POSSIBLE
SOLUTION TO THE TASK CONSISTENT WITH THEORY. THIS ASSIGNMENT IS
INTENDED TO ASSIST STUDENTS IN GETTING STARTED WITH THEIR ASSIGNMENT,
AND IN NO CASE THIS DOCUMENT SHOULD BE USED FOR CHEATING. WE BELIEVE
THIS WILL BE A GOOD STARTING POINT AS IT WAS PREPARED BY OUR TEAM OF
PROFESSIONAL PRIVATE TUTORS WHO ARE EXPERTS IN THE FIELD, AND IT WAS
PREPARED USING VARIOUS SOURCES. ANY SIMILARITY WITH ANY EXISTING
THEORY OR DISCUSSION BY OTHER AUTHORS IS EXCUSED. THE AUTHORS
HOWEVER DO NOT CLAIM MONOPOLY TO KNOWLEDGE HENCE MODIFICATION OF
THE ANSWERS CONTAINED IN THIS FRAMEWORK MAY NOT BE PROHIBITED AS IT
CONTRIBUTES TO EXPANSION OF KNOWLEDGE. FOR ANY FURTHER GUIDELINE
ABOUT THE INFORMATION CONTAINED HERE AND THE MODULE IN GENERAL,
CONTACT PASSMATE TUTORIALS.
WE ASSIST WITH OTHER MODULES INCLUDING:
ECSs, FACs, MACs, MNGs, INTs, TRLs, HMEMS, PRMs, PROs, MNBs, DSC, QMI, MNMs,
MNO, MNPs, FIN, PUBs, MNMs, RESEARCH among others.
WE OFFER CLASSES, ASSIGNMENT GUIDELINES, EXAMINATION PREPARATION,
RESEARCH AND RESEARCH PROPOSALS, DISSERTATION EDITING etc.
OTHER THAN UNISA, WE ALSO ASSIST STUDENTS AT VARIOUS INSTITUTIONS
INCLUDING MANCOSA, REGENT, REGEYNESES, BOSTON, STADIO, OLG, UJ, UP etc
For any enquiries the following numbers can be used for calling, SMS, WhatsApp and
telegram
CONTACT PASSMATE TUTORIALS @061 262 1185/068 053 8213/0717 513 144
CONTACT PASSMATE TUTORIALS @061 262 1185/068 053 8213/0717 513 144
, PASSMATE TUTORIALS
QUESTION 1: KG Manufacturing (Pty) Ltd
Calculation of normal taxable income and normal income tax liability for the year
ended 28 February 2026
1. Sales
Sales of R15 875 278 constitute gross income because they arise from KGM's ordinary
manufacturing trade.
The R22 500 relating to the client liquidated on 21 February 2026 does not have to be
excluded from sales or gross income merely because the debtor was liquidated. The
amount was already included in KGM's gross income when the sale occurred.
However, because the debt became irrecoverable during the year, KGM qualifies for
a deduction for the bad debt under section 11(i), assuming the amount had previously
been included in income. Accordingly, the full sales figure of R15 875 278 is retained
in gross income, with R22 500 separately deducted as a bad debt.
2. Trading stock and cost of sales
Under section 22, opening trading stock is taken into account at its tax value, while
closing trading stock is generally based on cost, subject to a reduction where there
has been a qualifying diminution in value. SARS's current guidance confirms that
where market value exceeds cost, no diminution is available and cost remains the
relevant amount.
The opening stock's market value of R2 552 351 is therefore irrelevant because the
stated opening stock amount of R2 571 279 is the appropriate amount.
The closing stock's market value of R2 631 250 exceeds its cost of R2 625 871.
Therefore, there is no downward adjustment and the closing stock is taken at R2 625
871.
Cost of sales = 𝑅2 571 279 + 𝑅7 500 126 − 𝑅2 625 871
= 𝑅7 445 534
CONTACT PASSMATE TUTORIALS @061 262 1185/068 053 8213/0717 513 144
, PASSMATE TUTORIALS
The cost-of-sales calculation is therefore R7 445 534, not R7 426 606.
3. Other income
Interest from South African banks
The interest of R6 258 is taxable in KGM's hands. The annual interest exemption under
section 10(1)(i) applies to natural persons, not to a company such as KGM. SARS
confirms that the individual interest exemption is framed specifically for natural
persons.
Therefore:
𝑅6 258 taxable
Foreign dividend
The foreign dividend of R63 690 must initially be included in gross income. KGM holds
only 6% of the equity shares in the foreign company, so it does not qualify for the full
participation exemption, which requires at least 10% of the equity shares and voting
rights under section 10B(2)(a).
However, KGM qualifies for the partial exemption under section 10B(3). For a
company, the exempt portion is 7/27 of the foreign dividend.
7
𝑅63 690 × = 𝑅16 512.22
27
Thus:
𝑅63 690 − 𝑅16 512.22 = 𝑅47 177.78
is included in taxable income.
CONTACT PASSMATE TUTORIALS @061 262 1185/068 053 8213/0717 513 144
