TAX3701 ASSESSMENT 1 – SEMESTER 1 OF
2024
Question 1
Seeta (Pty) Ltd („Seeta‟) is a shoe manufacturing company that manufactures shoes for the local, African,
and overseas markets. Seeta is a registered VAT vendor on an invoice basis with a two-month VAT
period. The following amounts were extracted from the receipts and payments for the two-month period to
31 January 2024. All amounts are inclusive of VAT where applicable, unless otherwise stated.
Purchases R865 000
Additional information:
80% of the stock was purchased from local suppliers and 20% from a supplier in China.
10% of the stock ordered from China (not yet deducted in the purchases amount given), was returned as
damaged on arrival. Debit note DB200 was issued.
What is the input VAT claimable on the purchases? Round your answer to the nearest rand.
R112 826. (865 000 * 15 /115)
R129 750
R125 950
R103 800
Question 2
Which one of the following deductions is not prohibited in terms of section 23?
A. Portion of private expenses that were utilised for business purposes
B. The value for any insurance policy ceded to an employee director, their family, or a retirement
fund of which they are members
C. Expenses incurred in respect of exempt income
D. Bribes
Question 3
On which date should Seeta (Pty) Ltd pay the VAT due to SARS for the two-month VAT period ending 31
January 2024 if the return is submitted via e-filing and the payment is submitted electronic funds transfer?
A. 25 February 2024
B. 31 March 2024
C. 21 March 2024
D. 29 February 2024
,Question 4
Seeta (Pty) Ltd („Seeta‟) is a shoe manufacturing company that manufactures shoes for the local, African,
and overseas markets. Seeta is a registered VAT vendor on an invoice basis with a two-month VAT
period. The following amounts were extracted from the receipts and payments for the two-month period to
31 January 2024. All amounts are inclusive of VAT where applicable, unless otherwise stated.
A. R520 Input VAT
B. R616 output VAT
C. R520 Output VAT
D. R Nil-exempt
Question 5
Various court cases have tested the practical application of the principles of the general deduction
formula. Which one of the following is one of the most notable cases?
A. Port Elizabeth Electric Tramway Co Ltd v CIR 8 SATC 13 (in the production of income)
B. Caltex Oil (SA) Ltd V SIR 37 SATC 1) v (actually incurred)
C. Joffe & Co (Pty) Ltd v CIR 13 SATC 354 (expenditure and losses)
D. All of them
Question 6
Mojako (Pty) Ltd has an interest in a share-block company (from which it operates) and it paid levies of
R21 775 for the 2024 year of assessment. The trustees of the share-block company imposed a 15%
penalty on the amount paid due to late payment. Which of the following amounts is claimable in terms of
the general deduction formula for the 2024 year of assessment?
A. R25 041
B. R21 775
C. Rnil – deduction prohibited in terms of section 23(a)
D. Rnil – deduction prohibited in terms of section 23(c)
But some expenditure is prohibited in terms of s23(f).
, Question 7
Mr. J Tibane, who works as a journalist for a local newspaper station, won a prize of R80 000 for best
election build cover in Journalism for 2024 on 31st of January 2024. The amount was paid to Mr J Tibane
on the 29 February 2024. Choose the correct statement concerning the 2024 year of assessment?
A. R80 000 is closely connected to her income earning operations but did not accrue to her in
2021 year of assessment
B. R80 000 is an element of luck and is not taxable
C. The R80 000 is not closely connected to her income earning activities and is not taxable
D. The R80 000 is closely connected to her income earning activities and is taxable
Question 8
Reds, a UK resident disposed of a factory building situated in Germiston, Gauteng, South Africa for R2
500 000 to SA Jeans Manufacturers Ltd, a South African resident.
How much withholding tax must be withheld by SA Jeans Manufacturers Ltd in the current year of
assessment assuming Reds is a company and only one payment is to be made but is still outstanding at
year-end?
A. R nil as the Reds and SA Jeans Manufacturers are „connected‟ persons
B. R nil as there is no payment yet at year end
C. R250 000
D. R nil as Reds is a UK resident.
Question 9
Which of the following cannot register as a micro business?
A. Trust
B. Close corporation
C. Natural person
D. Company
2024
Question 1
Seeta (Pty) Ltd („Seeta‟) is a shoe manufacturing company that manufactures shoes for the local, African,
and overseas markets. Seeta is a registered VAT vendor on an invoice basis with a two-month VAT
period. The following amounts were extracted from the receipts and payments for the two-month period to
31 January 2024. All amounts are inclusive of VAT where applicable, unless otherwise stated.
Purchases R865 000
Additional information:
80% of the stock was purchased from local suppliers and 20% from a supplier in China.
10% of the stock ordered from China (not yet deducted in the purchases amount given), was returned as
damaged on arrival. Debit note DB200 was issued.
What is the input VAT claimable on the purchases? Round your answer to the nearest rand.
R112 826. (865 000 * 15 /115)
R129 750
R125 950
R103 800
Question 2
Which one of the following deductions is not prohibited in terms of section 23?
A. Portion of private expenses that were utilised for business purposes
B. The value for any insurance policy ceded to an employee director, their family, or a retirement
fund of which they are members
C. Expenses incurred in respect of exempt income
D. Bribes
Question 3
On which date should Seeta (Pty) Ltd pay the VAT due to SARS for the two-month VAT period ending 31
January 2024 if the return is submitted via e-filing and the payment is submitted electronic funds transfer?
A. 25 February 2024
B. 31 March 2024
C. 21 March 2024
D. 29 February 2024
,Question 4
Seeta (Pty) Ltd („Seeta‟) is a shoe manufacturing company that manufactures shoes for the local, African,
and overseas markets. Seeta is a registered VAT vendor on an invoice basis with a two-month VAT
period. The following amounts were extracted from the receipts and payments for the two-month period to
31 January 2024. All amounts are inclusive of VAT where applicable, unless otherwise stated.
A. R520 Input VAT
B. R616 output VAT
C. R520 Output VAT
D. R Nil-exempt
Question 5
Various court cases have tested the practical application of the principles of the general deduction
formula. Which one of the following is one of the most notable cases?
A. Port Elizabeth Electric Tramway Co Ltd v CIR 8 SATC 13 (in the production of income)
B. Caltex Oil (SA) Ltd V SIR 37 SATC 1) v (actually incurred)
C. Joffe & Co (Pty) Ltd v CIR 13 SATC 354 (expenditure and losses)
D. All of them
Question 6
Mojako (Pty) Ltd has an interest in a share-block company (from which it operates) and it paid levies of
R21 775 for the 2024 year of assessment. The trustees of the share-block company imposed a 15%
penalty on the amount paid due to late payment. Which of the following amounts is claimable in terms of
the general deduction formula for the 2024 year of assessment?
A. R25 041
B. R21 775
C. Rnil – deduction prohibited in terms of section 23(a)
D. Rnil – deduction prohibited in terms of section 23(c)
But some expenditure is prohibited in terms of s23(f).
, Question 7
Mr. J Tibane, who works as a journalist for a local newspaper station, won a prize of R80 000 for best
election build cover in Journalism for 2024 on 31st of January 2024. The amount was paid to Mr J Tibane
on the 29 February 2024. Choose the correct statement concerning the 2024 year of assessment?
A. R80 000 is closely connected to her income earning operations but did not accrue to her in
2021 year of assessment
B. R80 000 is an element of luck and is not taxable
C. The R80 000 is not closely connected to her income earning activities and is not taxable
D. The R80 000 is closely connected to her income earning activities and is taxable
Question 8
Reds, a UK resident disposed of a factory building situated in Germiston, Gauteng, South Africa for R2
500 000 to SA Jeans Manufacturers Ltd, a South African resident.
How much withholding tax must be withheld by SA Jeans Manufacturers Ltd in the current year of
assessment assuming Reds is a company and only one payment is to be made but is still outstanding at
year-end?
A. R nil as the Reds and SA Jeans Manufacturers are „connected‟ persons
B. R nil as there is no payment yet at year end
C. R250 000
D. R nil as Reds is a UK resident.
Question 9
Which of the following cannot register as a micro business?
A. Trust
B. Close corporation
C. Natural person
D. Company
